Regulation
The Forex market, unlike any of the national stock, bond, or commodities markets is international, Internet based and diffuse. These factors make it nearly impossible to regulate. When you begin to deal with a market-maker, it is important to do what is called "due diligence" and make sure that the market-maker is legitimate. International currency trading is the life-blood of the global economy. The reality of today's global economy is that currency trading is also the life-blood of international terrorism, and of the illicit economy of criminal organizations' money-laundering.
The industry is self-regulating to some degree, by reputation. The various market-makers are all engaged in reputation building activities, to bolster their own trade. On the other hand, since the Forex market is international by definition, and a market-maker needn’t ever be more than a computer with an Internet connection, it is difficult to impossible to assure credibility of a market-maker without lots of research.
