Robert L803 Anderson

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What is capital adequacy in forex institutions and why is it vital?

Capital adequacy means maintaining sufficient reserves to absorb trading losses and operational risks. Regulators like Basel III require banks to hold capital ratios aligned with risk exposures. For forex dealers and brokers, adequate capital ensures client withdrawals and systemic stability. Benefits: protection against insolvency and trust in the system. Risks: insufficient capital leads to collapses like broker failures during CHF 2015. Retail traders should prefer brokers regulated with strict capital rules. Capital adequacy demonstrates that resilience comes from strength of balance sheets—not just strategies.