Brokers regulations

When we are going to open an account with a broker one of the most important factors is the regulation. In this regard, it is very important to consider the financial and social tradition of the broker’s country. Although that does not guarantee that the broker will not do bad practices.

Scammers are everywhere.

Broker regulation USA

Even The United States is full of scandals coming from brokers.

In some cases, evident scams, like the schemes built by Madoff and others. In other cases there is the actual bankruptcy of the broker, like PFG Best, and in other cases there are bad practices, by which the brokers get penalized by the regulatory institutions.

Stock broker regulations

Investors and traders are very concerned about the security of their funds. That is why many of those tend to choose traditional stock and futures brokers.

That type of brokers is less likely to be involved in problems of security or bad practices. When you deal with a typical stock broker you can be guaranteed that your stops are not being chased, at least not the way the “are” in Forex.

The only interest of traditional brokers is to get the customer to trade as much as possible so they can make more commissions.

They have no interest in the customer losing money per se like some market makers might have.

The international traditional brokers, whether in Spain, EEUU or United Kingdom are the ones that offer the best protection to their customers and therefore the ones with a tighter regulation.

The scandals and problems start when we start increasing the leverage.

Hence, the most secure brokers follow this order:

Stocks > Funds, ETFs > Futures, options, Warrants > CFDs, Forex > Binary Options

Futures broker regulation

The futures are as strong regulated as the stocks are, but their inherent risk is quite bigger, simply because they are derivative products and the risk in them is huge.

Just remember cases like Man Financial or Refco.


One of the best things we can see when opening an account is that the broker is listed in any of the major indices.

A broker whose shares are listed on a stock market is a plus. If the stock market belongs to America, England, Germany or Japan, even better.

Though, it is not easy to be listed in a stock market, since it requires a huge size. Not everybody can afford it.

Broker Banking regulation

Another aspect that tells us of the quality of a broker regulation is if it has a banking licence or not.

That is why having accounts with JP Morgan, Morgan Stanley or Deutsche Bank is guarantee that our funds are very safe. In those cases we know that regulation is on our side.

Forex broker regulation

The best we can do is to open accounts with brokers that have offices and licenses in the most advanced countries.

I would not open an account in a broker of a second world country.

Very serious regulations, apart from the typical of EEUU or UK, are those of Australia, Hong Kong, Singapore, New Zealand, and etcetera.

Classical regulations in the world of brokerage are those of United Kingdom, United States, France, Germany, Canada, or even Cyprus with their huge industry of Forex, CFD and Binary Options brokers.

All the countries in the world have their own regulatory body, except North Korea or Cuba, in which cases there are no markets to regulate.

Main Word brokers regulations

  • Germany: Bafin
  • Australia: ASIC
  • Canada: IIROC and CIPF
  • Cyprus: CySEC
  • Spain: CNMV
  • Hong Kong: SFC
  • Japan: JSFA
  • New Zealand: FSPR
  • United Kingdom: FCA
  • Singapore: MAS
  • Switzerland: FINMA
  • UE: MiFID

Best broker regulated

The preference for a Spanish investor is a broker regulated in Spain; for an American, a broker regulated in the States, and so on.

One region with an important growth in brokerage business is that of Eastern Europe with a very significant market in Russia, where we already can find some good brokers.

In the Hispanic World, it would be interesting that the South American countries continued their growth, which would result in a bigger potential for the brokerage industry.

All in all, it will always be better to open an account in a broker regulated by the British FCA than in any off-shore country.