Forex Brokers in Brazil

Brief History of Forex Trading in Brazil

The Central Bank of Brazil which is the regulatory body responsible for Forex trading played a key role in currency trading in the past. Currency trading in the country only improved after the regulations were loosened. Before 2005, Brazilian residents that could execute financial transactions had to seek approval from the primary regulator. The bank ensured that it tracked all the transactions separately and this meant that the Brazilian traders were quite restricted. Owing its thanks to the regulations adopted in 2005, the Brazilian Forex trading business is not easy and efficient.

What did these changes bring about? You may be wondering. Well, the CMN Resolution 3265 meant that the Forex brokers were free to trade currencies as they wished. Forex brokers no longer have to make transactions while consulting with the Central Bank. Today, Forex brokers and traders are free to transact with much more freedom. With more partners being able to trade currencies on the Brazilian market, there has been a surge in the total number of traders. A lot of international Forex brokers have also set up shops in the country due to the improved trading conditions. These include popular Forex brokers that are known to be licensed by various financial regulators such as the Financial Conduct Authority, Cyprus Securities and Exchange Commission, etc.

Regulation of Forex brokers in Brazil

For many years, the FX market in Brazil has been tightly regulated by the Central Bank of Brazil. The Central Bank of Brazil is in charge of making the regulation and overseeing currency traders in the country. The Comissão de Valores Mobiliários (CVM) or commonly known as the Securities and Exchange Commission of Brazil is also in charge of monitoring the good functioning of financial entities and exchanges. It is also responsible for protecting investors against fraud. This entity has several powers including the power to warn unregulated Forex brokers, investigate irregularities in the securities market, and also impose any sanctions if necessary.

Unlike other countries with lax laws, a currency trading transaction in Brazil is only allowed if the agents are licensed by the Central Bank. Forex traders in the country can only trade if they are residents and own a Brazilian bank account. They, however, need to have their money in the local Brazilian currency. These rules were largely brought about by the difficult financial environment in the past. After 2005, the CMN Resolution 3265 was drafted and aimed to provide a better trading environment for Forex brokers.

The resolution mainly allowed free negotiations between trading agents that are authorized to trade currencies and their clients. The best thing about the resolution was that the laws applied to all natures of transactions without any limitations whatsoever. You do not have to seek authorization for any transaction as high as it may be. This meant that it was finally possible to carry out Forex transactions in the country as long as it is for a legal purpose, which is appropriately documented.

In the country, only authorized agents are allowed to carry out these Forex transactions. Commercial banks have been given a major leeway to perform all types of Forex transactions but this does not mean that other institutions are also not authorized. For example, other financial institutions that have been approved include credit societies, stock brokerage firms, investment firms, securities and stock dealers associations, and even tourism agencies. Tourism agencies are, however, allowed to only conduct small transactions.

Another provision brought about by this resolution was that all Forex transactions need to be formalized through the use of a form called the foreign exchange contract. For this form to be valid, it needs to be recorded in an electronic system that should be able to identify the client, the value of the transaction, the type of transaction, and any other related data. Any Forex transactions that do not exceed $10,000 should be notified to the Central Bank of Brazil although this formality is not necessary. One of the major provisions that streamlined Brazil’s Forex trading market is that exporters and other international traders are allowed to keep their profits abroad without any legal requirements. Brazilian residents are allowed to maintain up to 100% of their funds abroad.

The new regulations meant that there was little to no restriction to sending or even receiving foreign currencies in the global Forex market. Unlike the past where the central bank needed to be involved in all the transactions, transfers today can be done through an authorized agent. This is done even without the approval of the central bank. These regulations apply to all Brazilian residents and even allow them to conduct foreign transactions for various reasons including the accumulation of assets. Forex trading in the country is now conducive thanks to its lax regulations.

Features of Brazil Forex Brokers

Here are a couple of things to expect when you are looking for a Brazilian Forex broker.

Trading platforms

There is a range of top-of-the-line software and trading platforms that are supported by Forex brokers in Brazil. These include the MT4, MT5, and even Sirix traders that have been customized to the needs of Forex traders in the country. Forex brokers in Brazil provide various platforms since they are easy to use and have a great user interface. With these trading platforms, you get to experience a lot of advantages. First, you get some great execution speeds and various financial analysis tools. You will also get access to well-functioning charts that are always up-to-date and which feature real-time financial quotes. Other brokers allow you to have a demo account, which you can use to improve your financial skills before you commit to investing your funds.

Spreads and Commissions

One of the most important things that you need to consider before you decide if a Forex broker is a good fit for you is whether they have some good spreads and commissions. For those with no idea what a spread is, it is the total sum between the buying and selling price of each currency pair that you purchase. You always want to choose the Forex brokerage firm that has the lowest spreads while still offering great services. A brokerage firm with a widespread means that the total amount of profit that you get from each transaction will be lower. Brazilian Forex brokers either offer fixed spreads or floating spreads. For floating spreads, the amount that they take will depend on the market prices of the currency pair. Some people prefer fixed spreads since you always have a clue about the amount you will pay in fees.

Types of accounts

Most Forex brokers offer a variety of account types and you can choose one that suits your needs. These account types are always designed to ensure they cater to the local Brazilian residents. For example, some of the popular Forex brokerage firms are known to offer mini, micro, and standard accounts to the Brazilian people. Others have VIP and premium accounts. All of these different types come with different options such as varying minimum deposit requirements, advantages, and different leverages. Ensure that you review all the conditions of the different Forex brokers before you set out for an account as it will affect how you trade.

Customer services

Any highly experienced Forex broker will tell you the importance of good customer service when trading. It is impossible to have a successful trading career if your Forex broker is not responsive during an emergency or even when you want to inquire about anything. It is also important that you choose a Forex broker that has its customer service in the native Brazilian language. Having language barriers when you want to solve a problem can be very frustrating and only work to destroy the entire trading process. To get the best Brazilian Forex broker, they need to be available through phone, live chat, and email. You should also ensure that customer support is always available 24/5.

Extra services

A good Forex broker offers additional services to ensure that their clients have a great trading experience. These include a wide learning resource, seminars, webinars, and market analysis that is always updated. Other Forex brokers go as far as offering news, TV channels, and chart pattern analysis.

Limitations and Comparisons to other countries

In comparison to other countries in South America, Brazil is one of the top Forex destinations in the region. Most of the other countries in South America do not have advanced foreign exchange markets and this is why Brazil becomes a top destination. However, the country does not fare well when compared to other countries with better foreign exchange markets. The USA, for example, is known for its tight Forex regulations but it offers traders a better trading environment and safety. Canada is also a great Forex destination for anyone that needs to trade currencies in America. What makes some of these countries better than Brazil? You are probably wondering.

Well, there are a lot of trading restrictions if you compare Brazil to other FX destinations such as Cyprus. Although there have been a lot of efforts to reduce the restrictions placed on financial firms and banks in Brazil, the country is still far from achieving a desirable trading environment. Countries such as the USA have some tight regulations but this is mostly to protect the funds of investors and not to limit the trading of currencies. Also, the country has a population of over 200 million countries but only a fraction of these are active Forex trade participants. This means that the state is not doing enough to improve the financial and trading conditions of its residents.

Popular Forex Brokers in Brazil

FXTM

This is a popular brokerage firm that has been in operation for more than 8 years. Forex Time was established in 2011 when one co-founder of Al Pari moved away to form their own FX company. Since this period, the company has grown to be a favorite FX broker for many traders around the world. The company offers more than 240 trading instruments that include cryptocurrencies, currency pairs, and CFD among others. FXTM also offers a wide range of features including different trading platforms, various trading accounts, and extra features.

Easy Markets

Founded in 2003 as Easy Forex Trading Ltd, Easy Markets has grown to provide its services to more than 160 countries. It also offers a wide range of products that total about 175 including metals, cryptocurrencies, CFDs, currencies, and even futures contracts among others. The company is regulated by CySEC and is a member of the Investor Compensation Fund. This acts as a last resort for clients that lose their funds when trading with Easy Markets.