Deposit
What’s a Regulated Broker?
Regulated brokers are investment brokerages that are registered with a financial regulatory body for their country, for example, the Financial Conduct Authority (FCA), is a financial regulator for the United Kingdom.
Brokers that are registered and regulated by financial regulators are bound by quality control standards set forth by financial regulators, these strict rules are imposed to help safeguard investors against fraudulent activities.
Depending upon the jurisdiction that you reside in, trading online with a brokerage that is unregulated may be illegal, therefore, we advise traders to invest only with regulated brokerages.
Why You Should Only Invest with Regulated Brokers
Regulated brokers must operate within strict guidelines set down by regulators and are ultimately for your protection, so you would be doing yourself a disservice by considering trading with an unregulated brokerage.
If you live in a region where forex, contracts-for-difference or online trading is prohibited we recommend that you adhere to the laws set forth by your country.
If you are attempting to deposit with an unregulated broker because you know that day trading or certain styles of trading are banned where you reside you may be doing yourself more harm than you know.
Scammers have long since plagued the online investment arena with shady investment “brokers” that may look professional and legitimate to you but deep down are only there to fleece you out of your hard-earned money.
For those of you who have been in the online trading arena for the past half-decade, you will undoubtedly remember the notoriousness and large volume of binary option broker scams that plagued the online trading community.
These unregulated brokers reigned freely and fleeced thousands of investors out of their money and while binary options may be extinct you never know which forex, contracts-for-difference or options brokers are legitimate if they fail to be regulated or make any mention of regulation.
Additionally, just because a brokerage states that they are regulated does not mean that they are.
Many scam brokerages fabricate falsified regulation documents in the attempt to appear more legitimate when in a reality they were nothing but scams, therefore, make sure you always double-check brokers disclosed regulatory numbers to verify authenticity.
Regulators to Know in 2020
It is important to remember that the foreign exchange market is decentralized, therefore, there is no centralized exchange that is designated with the responsibility of handling forex transactions.
As a whole, the forex markets operate as an over-the-counter (OTC) market that is unregulated while the foreign exchange market is the largest financial market in the world generating a turn over well over $5.1 trillion per day.
To put that into perspective, that is a little over 20x times the trading volume of the stock market!
As a result of the unregulated nature of the foreign exchange market, governmental and independent bodies have been established to help monitor, supervise, and enforce regulations to help safeguard traders against fraudulent activities.
Recently we’ve compiled The Definitive Guide for Forex Regulations in 2020 where we go over a list of regulators for over 60 countries.
You may better familiarize yourself with regulators within your country through the guide while some of the main regulators that you should become familiar would be:
Australian Securities and Investment Commission (ASIC)Link: www.asic.gov.au
Autorité des Marchés Financiers (AMF)Link: www.amf-france.org
Bundesanstalt für Finanzdienstleistungsaufsicht (baFIN)Link:www.bafin.de
Cayman Islands Monetary Authority (CIMA) Link: www.cima.ky
Commission de Surveillance du Secteur Financier (CSSF)Link:www.cssf.lu
Cyprus Securities and Exchange Commission (CySEC)Link: www.cysec.gov.cy
Dubai Financial Services Authority (DFSA)Link:www.dfsa.ae
Financial Industry Regulatory Authority (FINRA) - USALink: http://www.finra.org/
Financial Services Agency of Japan (FSA Japan)Link: www.fsa.go.jp
Financial Services Board (FSC)Link: www.fscjamaica.org
Monetary Authority of Singapore (MAS)Link: www.mas.gov.sg
National Futures Association - (NFA) USALink: www.nfa.futures.org
Securities and Futures Commission (SFC) - Hong Kong Link: www.sfc.hk
Swizz Federal Bank Commission (SFBC) SwitzerlandLink: www.finma.ch
The U.S. Commodity and Futures Trading Commission (CFTC)Link: www.cftc.gov
The Investment Industry Regulatory Organization of Canada (IIROC) Canada Link: www.iiroc.ca
UK Financial Conduct Authority (FCA)Link: www.fca.org.uk
US Securities and Exchanges Commission (U.S. SEC)Link: www.sec.gov
How do Regulations Protect Traders?
Regulations protect traders by enforcing quality services and products, fair prices, and requiring brokers to operate in a more transparent capacity. Additionally, the enforcement of regulations on fair pricing allows traders to receive better services and deals with brokers through increased competition between rivaling brokers.- Transparency - Financial audits are a regular occurrence with regulated brokers which will help prevent your account from potentially being fleeced by scams or involved in fraudulent schemes.
- Risk Warnings - Regulated brokers are required to disclose transparent risk warnings when opening an account therefore customers are well-aware of the risks before trading live.
- Compensation - If a broker should declare bankruptcy, you are expected to receive a portion of your funds back. An example would be how CySec regulated brokers are required to sign up for an Investor Compensation Fund.
- Anti-Money Laundering & Credit Card Fraud - Part of a KYC Policy (Know-Your-Client), traders are required to provide a photo ID along with Proof of Address. While this process may seem time-consuming it is essential and helps prevent credit card fraud and money laundering.
7 Questions to Ask Before Investing with a Broker
- What are the minimum deposit, payment methods, and trading terms?
- Does this broker offer mobile, desktop, and web-based trading?
- Does the style of trading offer suit my investment style?
- Does the broker offer a free demo account for practicing?
- How helpful and relevant are answers given by customer support?
- What are other traders saying about the broker, are they highly rated?
- Is this broker regulated, and if so, does the regulation number match the subsidiary disclosed on the site?
How to Get a Free Demo Account
Many regulated brokers offer free demo accounts when registering with their platform. You should not be forced to deposit fiat currency into the brokerage to receive access to a broker’s demo account. Depending upon where you reside will dictate which regulated brokers are available to you along with whether or not they support a demo account. You can learn more regarding which regulated brokers are offering demo accounts where you reside by visiting our Ultimate Guide to Free Demo Accounts in 2020.What is an Islamic Broker Account?
A broker that offers an Islamic Forex trading account does not charge or pay interest, as per the laws of the Islamic faith.What Editorial Standards are Used to Rank Brokers?
We have strict editorial standards that we use to rank brokers. Given the many changes that have occurred throughout online trading, the financial markets, and the effects of global crisis’s we’ve been forced to adept a more thorough standard upon which we gauge an investment broker’s authenticity. Among the 5 Chief standards upon which we rate brokers would be:- Licensing, Regulation & Investor Safe Guards
- Usability, Research & Educational Resources, and Technology
- Corporate Transparency, Longevity, and Broker Security
- Trading Platform, Order Types, and Range of Offers
- Client Reviews, Cost-Points, and Customer Service
Additional Resources You May Find Helpful
- The Definitive Guide for Forex Regulations in 2020
- The Ultimate Guide to Free Demo Accounts in 2020
- Top 10 Forex Trading Books of 2020
- 7 Tips to Avoid Forex Trading Scams (2020)
- 6 Trading Lessons Traders WISH They Know Before Investing
You may also benefit from visiting our Performance Page where we document the success of our trading systems and strategies on a day-to-day basis.
