BAFIN Regulated Forex Brokers

BAFIN Regulated German Forex Brokers

The Federal Financial Regulatory Authority of Germany (Bundesanstalt für Finanzdienstleistungsaufsicht or BaFin) is the agency responsible for regulation of the financial marketplace and German forex brokers. All firms operating in the financial industry in Germany are covered by BaFin’s regulatory microscope. These firms include banks, insurance companies and brokers in the forex and equities markets.  The Financial Services Integration Act was passed in 2002, and this law gave birth to BaFin.

Top BAFIN Regulated Forex Brokers 2017

The following table lists our top BaFin regulated forex brokers. For more information and account details about each broker please click on the review button in the table.

Rank
Broker
Special Offer
Min Deposit
Spreads From
Rating
Max Leverage
Regulations
Support
Start Trading
1
No commissions
$50
0.8 PIPs
30:1
CIMA, NFA, CFTC, FCA, IIROC, ASIC, FFA Japan, MAS, SFC of Hong Kong
Forex trading involves significant risk of loss and is not suitable for all investors.
1
Spreads From 0.8 PIPs
Max Leverage 30:1
Min Deposit $50
Register now
2
Lifetime demo account
$250
0.1 PIPs
30:1
CFTC
2
Spreads From 0.1 PIPs
Max Leverage 30:1
Min Deposit $250
Register now
3
0.01 minimum lot
$10
1.2 PIPs
500:1
3
Spreads From 1.2 PIPs
Max Leverage 500:1
Min Deposit $10
Register now

About BAFIN

bafin logoThe functions of BaFin can be broadly classified into two:

a)    Solvency supervision

b)    Market supervision

c)     Investor protection

In performing its solvency supervision mandate, BaFin helps ensure that banks (some of whom are into forex brokerage business), financial services institutions and BaFin regulated forex brokers are able to meet their payment obligations to their clients.

Under its market supervisory role, BaFin also makes sure that industry best practices and standards in professional conduct are maintained so as to ensure the integrity of the financial markets and investor confidence.

BaFin also has a role in investor protection. BaFin also actively tries to prevent financial services firms from conducting unauthorized financial business.

In a more general sense, BaFin’s duties can be broken down as follows:

a)    Monitoring of the credit worthiness of financial institutions and BaFin regulated forex brokers. The premise behind this is that when the credit worthiness of a BaFin regulated forex broker is in doubt, this could be the first indications that all is not well with a broker. Thus monitoring this metric could potentially save investors from calamitous loss of their funds.

b)    Monitoring of BaFin regulated forex brokers to ensure they are solvent and liquid, with appropriate risk control and management strategies.

c)     BaFin also requires that all BaFin regulated forex brokers must submit their audited reports and financial statements periodically for assessment.

d)    BaFin checks to ensure that abuses by any of BaFin regulated forex brokers in the area of price manipulations are avoided.

e)    BaFin is also empowered to carry out investigations and prosecute errant forex brokers who are suspected of dealings which are inimical to the progress of the market.

 

Guidelines for BAFIN Regulated Brokers

What does it take to become an BAFIN regulated forex broker? In discussing this, we have to rememeber that BaFin regulates forex brokers, as well as the banking industry in Germany. Deutsche Bank and Commerzbank are two of the largest banks in Germany and as liquidity providers in the forex market, the relationship of BaFiN regulated forex brokers and these banks are relevant.

a)    BAFIN-regulated forex brokers must meet a minimum capital requirement. This capital must cover credit risks, market risks and operational risks on the part of the broker. This is necessary so that customers’ positions are guaranteed, and withdrawal requests can be settled promptly. Many of these BaFin regulated forex brokers maintain accounts with Commerzbank and Deutsche Bank, who are also players in the forex industry. Depending on the category of the financial institution, this amount ranges from 730,000 Euros to 5 million Euros.

b)    There are reporting standards that all BaFin regulated forex brokers must comply with. Financial reports which have been audited must be submitted to BaFin periodically. One of the parameters that brokers must declare is their state of liquidity. As BaFin regulates the German banking industry, it is usually easier to detect the state of actual solvency of BaFin regulated brokers and compare it with what the brokers have declared in their reports.

c)     BaFin regulated forex brokers must have at least two senior managers (executive directors), who must have acquired during their professional careers to date sufficient theoretical knowledge and practical experience to enable them perform their duties. Such persons must also not be blacklisted by the Federal Central Register and the Central Commercial Register.

d)    Before a broker can be licensed as a BaFin regulated forex broker, the authorization application must have business plan which is viable and indicates the nature of the proposed business, the organizational structure and the proposed internal control systems.

 

Assessing the Standing of an BAFIN Regulated Broker

BaFin has mechanisms in place to allow the investing public check on the standing of a BaFin regulated forex broker before committing their funds to such a broker. This is usually done via the BaFiN website by giving traders and users the opportunity to request for a broker’s status, and sometimes by BaFin itself taking the initiative to make periodic announcements about brokers that are either unregulated, or those who have run foul of BaFin’s high standards.

A comparison table of BAFIN regulated brokers has been provided for your perusal. You can choose from any of our list of approved BAFIN regulated brokers and trade with peace of mind.

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