✔️ Information reviewed and updated in April 2024 by Pedro Martínez González
If you want to start investing and trading, an important decision (perhaps the most important) is to choose a ✅ REGULATED BROKER ✅, we cannot overemphasize this as it is vitally important. A broker that generates confidence and that guarantees that your investment is safe is something fundamental. To avoid further inconvenience, it is good to hire brokers that are under the supervision of financial regulatory bodies.
Each broker regulatory body has its rules and requires intermediaries to meet certain conditions so that the investor is not affected, and above all, to protect clients. These bodies are in charge of protecting both the investor and the money invested. In some cases, it is essential that the broker has liquidity to cover its operations.
Keep in mind that the better and more serious regulation, the more measures that the broker is obliged to take and follow, to protect the client, the trader, that is, you. Trading with a regulated broker is vitally important.
Some broker regulatory bodies:
⚖️ National Securities Market Commission (CNMV) ️
✅ This body regulates the operations of brokers in Spain. It is in charge of inspecting the activity of the Spanish Stock Market. Its main objective is to ensure the protection of Spanish investors and the transparency of market intermediaries.
️ Financial Conduct Authority (FCA) ️
✅ It is considered that a broker regulated by this prestigious body offers confidence and a lot of security to the investor. It is headquartered in the UK and its aim is to keep the markets running smoothly and protect investors, financial markets and the intermediary companies they oversee.
In our opinion, it is one of the most respected regulators in the world. Together with the SEC, BaFIN and a few other regulators, it is probably one of the best regulators out there.
️ Cyprus Securities and Exchange Commission (CySEC) ️
✅ Cyprus-based broker regulation body, whose objective is to guarantee the legality and safety of the operations carried out in the investment markets and to protect the investor. CySEC is the entity in charge of ensuring the proper functioning of the Cyprus Stock Exchange.
It receives applications and is in charge of granting operating licenses and revoking them and imposing sanctions when necessary. Supervises and protects investors' transactions and securities.
As far as we are concerned, CySEC is in a gray area, since it is a European regulation, it is supposed to be serious and good, but at the same time, many brokers regulated by CySEC have left many unhappy clients. And in those cases CySEC has done very little, in our view, to protect these disgruntled customers.
️ International Financial Services Commission (IFSC) ️
✅ Government organization located in Belize, whose objective is to grant operating licenses to brokers that can verify their legality and offer security to investors. Companies that provide financial services must abide by a code of conduct in order to improve these services.
This regulator is much more relaxed and less secure than, for example, the FCA.
️ Australian Securities and Investments Commission (ASIC) ️
✅ This regulatory body aims to improve the functioning of the financial system and promote the participation of investors. In charge of enforcing and regulating the laws of financial services and companies, markets and services provided by the financial sector, to protect Australian consumers, investors and creditors.
It is a regulator that we believe, it is not one of the best, nor one of the worst. Really regular, we would never say that it is one of the best or strictest regulators.
️ Financial Services Agency (FSA) ️
✅ It is the main regulatory body in Japan, it is based in Tokyo and its objective is to improve the functioning of the financial system and promote the participation of investors. He is responsible for the stability of the financial system of Japan and is in charge of the control of the investigation and analysis on the common risks inherent to it.
This regulatory entity has the power to impose punishments ranging from the limitation of operations, to prison sentences for those responsible for irregularities. It is, without a doubt, one of the best and strictest regulators in the world.
Can regulators be trusted?
Hello Joaquín, in some more than in others, you always have to check well.
Greetings.