Forex Industry in Sweden
When you imagine where your forex broker might be based, your mind likely drifts to financial world capitals such as London, New York and Tokyo. The majority of foreign exchange business transactions are conducted in these hubs. What many people forget is that businesses and wealth are everywhere. There are no boundaries to where companies can operate from these days, especially for the electronic trading industry, which is now almost exclusively conducted online. While the number of forex brokers in Sweden is few, they do exist. One good example of a Swedish forex broker is Stockholm based Scandinavian Capital Markets. This company works with professional traders, money managers and hedge funds not just in Sweden, but around the world.
Does Location Matter
Historically, the location of financial market participants was critical. The information institutions needed to exchange didn’t move anywhere near as fast as it does today. It was only a couple of decades ago that traders were physically located on the trading floor in the New York Stock Exchange. Because of this need to be geographically located as close as possible to the trading venue, ancillary services were developed nearby. Banking, lending, accounting, and reporting services were all built around these hot spots. Today, however, pit traders have been replaced by algorithmic trading software installed on servers as close as possible with the shortest cables as possible. Because of the advancement of technology, the location has become less critical.
Forex Regulation in Sweden
While the location of a broker has become less critical from a proximity point of view, it remains crucial from the perspective of stability. It’s not just the UK, the USA and Japan which have sophisticated legal systems, diligent financial service watchdogs, reliable banking services and an educated workforce. Many countries, including Sweden, have a well-established environment for doing business.
The Swedish Financial Supervisory Authority is called Finansinspektionen. The agency is responsible for overseeing the financial markets offered in Sweden and protecting Swedish citizens. Companies wanting to provide forex trading from Sweden will need to register with the Finansinspektionen. While most jurisdictions do have a government body responsible for overseeing domestic markets and foreign companies providing services to their citizens, not all are equal. For example, Seychelles FSA could not be considered equivalent to the Swedish Finansinspektionen.
Finansinspektionen Oversight
Finansinspektionen is Sweden’s financial markets supervisory authority. Sweden is part of the European Union and the country is known for having very high standards when it comes to ensuring integrity in all walks of life, be it healthcare, public services or financial services. The body is responsible for overseeing a range of financial markets; such as banks, insurance providers, fund management companies and more. Being part of the European Union, firms who are registered with Sweden’s Finansinspektionen are obliged to follow MiFID II and EMIR directives. The regulator follows the same high standards as the rest of Europe, except with the well-know Scandinavian acumen, fairness and equality.
Conclusion
The view that finance companies must be operated from financial centres is outdated. There are many stable countries which have a thriving financial services industry, and Sweden is an excellent example of this. Brokers like Scandinavian Capital Markets are living proof that traditions can be broken.