Online Brokers: Which Financial Regulators Supervise Them? [FCA, CySec & More]


The Definitive Guide To The FCA, CYSEC & More
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Trading commodities can be a risk which is why you don't want to compound that risk by taking a gamble on using an unregulated broker. All brokers we review and recommend are regulated by government agencies that safeguard the general public.

These agencies wield powers to sanction firms that fail to adhere to their standards. Ultimately, they help protect the integrity of the brokerage industry.

Regulatory Agencies

Unfortunately, not all regulators are born equal. We examined some of the most important global regulatory agencies to provide you with facts about how safe your online broker really is.

AMF 🇫🇷

The Autorité des Marchés Financiers (AMF), or Financial Markets Authority, regulates the French financial market, its participants, and the distributed investment products. It also falls under the auspices of MiFID.

Who Does the AMF Regulate?

The AMF regulates financial markets, financial companies, and their underlying infrastructure. It also regulate financial companies that provide investment services and advice including credit institutions. It oversees collective investment products invested in financial instruments, token issuers, and digital asset service providers.

What Does the AMF Do?

The AMF ensures that:

  • Savings and financial instruments offered to the public are protected
  • Consumers are properly informed and receive assistance from a financial ombudsman
  • Markets where financial instruments are traded function efficiently.

What Powers Does the AMF Have?

  • Bringing about regulatory change and licensing financial firms
  • Monitoring, surveillance, investigation, and inspection of financial firms
  • Imposing sanctions and proposing settlements for infractions 
  • Inform and support consumers and provide mediation services.

How Does the AMF Protect Investors?

The AMF can impose sanctions on people or companies that violate the financial laws and regulations within its jurisdiction. It also ratifies settlement agreements and takes part in providing information to professionals and retail traders.

Interesting fact: The AMF is also responsible for “sustainable finance” practices within France and Europe as a means of addressing climate concerns.

ASIC 🇦🇺

The Australian Securities and Investments Commission (ASIC) is an independent Commonwealth Government body that serves to regulate the corporate, markets, financial services and consumer credit sectors in Australia.

According to the ASIC website, the broad goals of the agency are “promoting investor and consumer trust and confidence, ensuring fair and efficient markets and providing efficient registration service.

Who Does ASIC Regulate?

Companies, financial markets, financial services organizations, and professionals that operate in Australia and deal and advise in investments, superannuation, insurance, deposit taking, and credit.

What Does ASIC Do?

ASIC operates under the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the Corporations Act 2001. These acts give the agency power to maintain and improve the way markets perform and to advocate for confident and knowledgeable participation by traders and consumers in the financial system.

What Powers Does ASIC Have?

  1. Registering companies, investments, auditors and liquidators
  2. Granting financial services licenses
  3. Maintaining public records on companies and financial service providers
  4. Making rules to ensure the integrity of markets
  5. Investigating breaches of laws and issuing infringement notices
  6. Administering investor compensation schemes in the event of broker insolvency.

How Does ASIC Protect Investors?

As the ultimate financial regulator, ASIC ensures that markets and their participants operate efficiently, honestly, and fairly.

Interesting fact: ASIC began regulating licensed equity, derivatives, and futures markets in 2010.

Reputation

Some critics have accused ASIC of having a political agenda. However, Australian financial markets have a stellar reputation, and most see ASIC as an honest and strict enforcer of securities laws.

BaFin 🇩🇪

The Federal Financial Supervisory Authority (BaFin) is an independent federal institution and the financial regulatory authority in Germany. Legislation in 2002 merged three predecessor agencies and empowered BaFin as the principal financial regulator.

Who Does BaFin Regulate?

BaFin oversees:

  • Banks and financial services providers
  • Insurance undertakings
  • Pension funds
  • Stock exchanges and markets
  • Asset management and investment firms
  • Securities and investment prospectuses
  • Start-up companies
  • Fintech firms
  • Foss-sector issues such as Brexit
  • Supervisory disclosures

What Does BaFin Do?

BaFin is responsible for the overall protection of consumers in financial services and markets. The agency administers a consumer helpline and assists with resolving customer disputes with its regulated entities.

BaFin also administers deposit and investor compensation schemes and helps educate consumers about banking and loan charges, insurance products, and investing.

What Powers Does BaFin Have?

  1. Supervising the German banking industry (along with the Deutsche Bundesbank)
  2. Assisting in supervision of the European banking system
  3. Ensuring that credit institutions and financial institutions meet capital and liquidity requirements
  4. Ensuring that investment prospectuses contain sufficient information.

How Does BaFin Protect Investors?

BaFin enforces rules on insider trading, market manipulation, short-selling, high-frequency trading, and transparency.

Reputation

BaFin enjoys a solid reputation as a reliable consumer watchdog agency.

BVIFSC 🇻🇬

Established in 2001, the British Virgin Islands Financial Services Commission (BVIFSC) is a regulatory body responsible for supervising financial services in the British Virgin Islands (BVI). 

Who Does BVIFSC Regulate?

The BVIFSC regulates financial products and companies in the following sectors: insurance, banking, financial and investment services, trustees, and insolvency. It is also responsible for incorporation and intellectual property.

What Does BVIFSC Do?

The BVIFSC performs the following functions:

  • Public education around the financial system and its products
  • Policing regulated activity, reducing financial crime, and preventing market abuse
  • Safeguarding the privacy and confidentiality of legitimate business transactions.

What Powers Does BVIFSC Have?

  • Ensuring compliance with BVI financial laws and relevant international standards, issuing relevant directives, and imposing fines and sanctions on transgressors
  • Registration of articles of incorporation and revoke licenses 
  • Intellectual property registration and issuance of cease and desist orders.

How Does BVIFSC Protect Investors?

The BVIFSC protects traders by:

  • Ensuring firms that offer financial services within the BVI are financially sound and competent
  • Enforcing relevant consumer protection laws
  • Monitoring and prosecuting financial crimes
  • Ensuring compliance with international standards and laws and monitoring the effectiveness of regulatory legislation
  • Educating the public about the risks of financial products
  • Providing continuing education for financial services advisors. 

CBofI 🇮🇪

The Central Bank of Ireland (CBofI) was established in 1943 and is responsible for safeguarding the monetary and financial stability of Ireland by ensuring the best interests of consumers and the wider economy. 

Who Does CBofI Regulate?

The CBofI regulates financial, credit, and investment firms in Ireland.

What Does CBofI Do?

The primary functions of the CBofI are to:

  • Maintain the stability of Ireland's financial system
  • Regulate financial services providers and markets
  • Ensure consumer protection around financial services 
  • Resolve disputes related to financial, credit, and investment firms
  • Operate the Central Credit Register, the Deposit Guarantee Scheme, and the Insurance Compensation Fund.

What Powers Does CBofI Have?

  • Licencing and registration of banks and financial institutions as well as revocation of these authorizations
  • Regulating payment systems
  • Investigating and sanctioning regulated firms and individuals
  • The CBofI can issue cautions, reprimands, fines up to €10 million, and other punitive actions.

How Does CBofI Protect Investors?

The CBofI concentrates on these consumer protection outcomes:

  • Creating a consumer-focused culture in all firms it regulates
  • Ensuring that consumers’ best interests are protected
  • Regulating firms in a fair and transparent way.

CFTC 🇺🇸

The Commodities and Futures Trading Commission (CFTC) is an independent US government agency that regulates futures and options markets. The agency began its work in 1975 after Congressional authorization. Subsequent US legislation, including the Dodd-Frank Act of 2010, expanded CFTC’s authority.

Who Does CFTC Regulate?

CFTC regulates all individuals and firms engaging in commodity and futures trading in the United States including over-the-counter derivatives markets, exchange-based commodities and futures markets, foreign exchange markets, and options on futures markets.

What Does CFTC Do?

The CFTC mission is to facilitate “open, transparent, competitive, and financially sound markets.” The agency works to limit systemic problems and safeguard market participants, consumers, and the general public from fraud, manipulation, and abusive practices.

What Powers Does CFTC Have?

  1. Policing the derivatives markets for abuses
  2. Establishing regulations for commodities markets
  3. Overseeing and enacting regulations for designated contract markets (e.g., crude oil, heating oil, and copper) and swaps markets
  4. Regulating commodities markets to ensure fair and orderly trading.

How Does CFTC Protect Investors?

The CFTC brings enforcement actions against market violators. The agency also operates a disposition program through which it helps resolve disputes between customers and investment professionals.

Interesting fact: CFTC considers cryptocurrencies to be commodities and, therefore, regulates the industry.

Reputation

The CFTC has won some key enforcement victories including its successful LIBOR manipulation settlement with Barclays in 2012. However, the agency has received criticism for being understaffed.

CIMA 🇰🇾

The Cayman Islands Monetary Authority (CIMA) was created in 1997 to merge the previous Financial Services Supervision Department of the Cayman Islands Government and the Cayman Islands Currency Board. The goal of the agency is to regulate financial services and maintain monetary stability.

Who Does CIMA Regulate?

CIMA regulates banking services of all types, fiduciary services, the insurance sector, and investment and securities businesses.

What Does CIMA Do?

As part of its broad authority mandates, CIMA manages Cayman Islands currency and provides regulation and supervision of all financial services.

What Powers Does CIMA Have?

  • Licensing and registration of regulated firms and agents as well as the power to suspend or revoke them
  • Appointing or replacing an officer, shareholder, or controller to firms under its auspices
  • Applying to the Grand Court for the dissolution of an entity
  • Recommending the prosecution of a service provider.

How Does CIMA Protect Investors?

CIMA works to reduce the possibility for the criminal use of financial services businesses, ensures the international competitiveness of Cayman Islands financial services, encourages innovation in the sector, and strives to be transparent and fair.

Interesting fact: Cayman Islands-regulated funds reported total gross assets at $7.35 trillion for the financial year 2018.

CySEC 🇨🇾

The Cyprus Securities and Exchange Commission (CySEC) is the financial regulatory agency of Cyprus. As an EU member state, Cyprus’s financial and securities laws must comply with Europe’s Markets in Financial Instruments Directive (MiFID), which coordinates financial regulations across the EU region.

Who Does CySEC Regulate?

CySEC regulates current and former Cypriot investment firms, Undertakings for Collective Investment in Transferable Securities (UCITs) and management companies, Alternative Investment Funds, and their managers, regulated markets, issuers, and Administrative Service Providers (ASPs).

What Does CySEC Do?

CySEC oversees the entire regulatory and risk-based framework for financial companies and traders operating in Cyprus. The agency is responsible for investment services laws, transparency laws, short selling, and market abuse among other areas.

What Powers Does CySEC Have?

  1. Granting and suspending financial services operating licenses
  2. Supervising and regulating stock markets and agencies under its supervision
  3. Imposing disciplinary sanctions provided by law
  4. Issuing regulatory directives
  5. Applying to appropriate courts to enforce laws
  6. Cooperating and sharing information with other Cyprus agencies.

How Does CySEC Protect Investors?

CySEC serves as an ombudsman for markets. The agency collects complaints regarding investment firms, processes whistleblower complaints, and oversees the Investor Compensation Fund.

Reputation

In the past, European authorities have criticized CySEC for its lax oversight of retail brokers. However, the agency has improved many deficiencies in its regulatory practices.

DFSA 🇦🇪

The Dubai Financial Services Authority (DFSA) is the financial regulatory agency of the special economic zone within Dubai known as the Dubai International Financial Center (DIFC).

Who Does DFSA Regulate?

The DIFC operates with its own securities laws and regulations that are distinct from those that govern the rest of Dubai. All entities that conduct financial services business in the DIFC – individuals, firms, and market institutions – receive regulatory oversight from the DFSA.

What Does DFSA Do?

The DFSA is the sole independent financial services regulator for the DIFC. Its stated approach is “to be a risk-based regulator and to avoid unnecessary regulatory burdens.” DFSA directs its activities toward mitigating financial and regulatory risks that would otherwise be unacceptable.

What Powers Does DFSA Have?

The DFSA has five separate powers:

  1. Authorization: The DFSA has the authority to issues licenses that specify the type of financial services that an entity can conduct. 
  2. Registration: Registered auditors and Designated Non-Financial Business or Professions (DNFPBs) need to register with the DFSA.
  3. Recognition: DFSA confers recognition on entities. Recognized members and recognized bodies have permission to conduct certain financial services on an Authorized Market Institution within the DIFC.
  4. Supervision: The DFSA operates a risk-based supervisory framework for firms. This involves engaging with firms through ongoing site visits and transaction testing.
  5. Enforcement: DFSA has the power to conduct investigations into suspected violations of the legislation it administers. It has the power to conduct inspections, compulsorily obtain books and records, or require individuals to participate in interviews under oath or affirmation.

How Does DFSA Protect Investors?

The DFSA investigates and brings enforcement actions against market violators. It has the power to compel suspected violators to provide it with evidence.

Interesting fact: The 2004 laws in the United Arab Emirates that created the DIFC also established the DFSA to regulate activity within this zone.

FCA 🇬🇧

The Financial Conduct Authority (FCA) is a UK financial regulatory body that operates as a non-governmental watchdog group for the financial services industry. The aim of the FCA is to protect consumers, enhance market integrity, and promote competition. The agency formed as a result of the passage of the Financial Services Act of 2012.

The UK's Financial Conduct Authority is arguably the gold standard of regulators.

Who Does FCA Regulate?

FCA regulates banks, credit unions, consumer credit firms, electronic money institutions, financial advisers, fintech businesses, insurers, investment managers, mortgage lenders, mutual societies, payment institutions, sole advisers, and wealth managers.

What Does FCA Do?

FCA establishes listing rules for public companies. The agency helps implement European Market Infrastructure and MiFID Regulation on derivatives. FCA also regulates benchmarks and establishes regulations related to securities depositories.

What Powers Does FCA Have?

  1. Enforcing competition laws that prevent cartels and anti-competitive agreements
  2. Enforcing consumer protection laws through civil, criminal and regulatory means
  3. Requiring regulated firms to comply with the FCA Handbook
  4. Registering and supervising financial firms that operate in the UK.

How Does FCA Protect Investors?

FCA enforces rules on market abuse, short selling, and transaction reporting. The agency also levies fees on FCA member firms, which help fund the Financial Services Compensation Scheme (FSCS). FSCS provides compensation to traders when financial firms become insolvent.

Reputation

FCA has a reputation as a tough advocate for small traders and has taken a hard line against financial firms that abuse consumers.

If your chosen broker is overseen by the FCA then not only are you likely to be afforded the greatest level of consumer protection of all the regulators listed here (in the form of the FSCS) but it also means that your broker has met the FCA's stringent standards.

FinCEN 🇺🇸

The Financial Crimes Enforcement Network (FinCEN), part of the US Department of the Treasury, safeguards the US financial system from illicit use, prevents money laundering, and protects national security through financial intelligence.

Who Does FinCEN Regulate?

FinCEN monitors money laundering and terrorism financing. 

What Does FinCEN Do?

FinCEN receives and disseminates financial data for law enforcement purposes and cooperates with other countries to thwart financial crimes by:

  • Monitoring and enforcing compliance with money laundering or terrorism financing laws
  • Manages financial data collection, processing, storage, dissemination, and protection and provides it to other governmental agencies 
  • Supports law enforcement investigations and prosecutions
  • Conducts analysis to support policymakers

What Powers Does FinCEN Have?

FinCEN primarily works with law enforcement and other agencies by providing financial analysis and data within its monitoring systems.

How Does FinCEN Protect Investors?

Although FinCEN doesn't provide direct consumer protections, it protects US citizens by monitoring and reporting on financial activities that may fund criminal pursuits.

FINMA 🇨🇭

The Financial Markets Supervisory Authority (FINMA) is a government agency responsible for financial markets regulation in Switzerland. FINMA is an independent legal body and reports directly to the Swiss parliament. A federal act established the agency in June 2007.

Who Does FINMA Regulate?

FINMA regulates banks and securities dealers, insurers, institutions, and products subject to the Collective Investment Schemes Act, insurance intermediaries, self-regulatory organizations, financial intermediaries, financial market infrastructure, foreign market participants, rating agencies, and fintech companies.

What Does FINMA Do?

FINMA engages in forward-looking supervision of the financial sector. The agency employs a risk-based approach, which means it supervises more intensely those areas of the financial sector where risk is greatest. FINMA issues license to financial participants and assign categories of risk, which determine levels of supervision.

What Powers Does FINMA Have?

  1. Investigating suspected violators of laws and regulations
  2. Initiating enforcement proceedings against suspected violators
  3. Imposing measures and penalties on violators
  4. Monitoring securities markets
  5. Collecting data to monitor the conduct of market participants.

How Does FINMA Protect Investors?

FINMA monitors financial institutions and markets to ensure that they function properly. The agency aims to protect clients of financial institutions against institutional insolvency, disreputable business practices, and to ensure equitable stock exchange execution. However, FINMA does not settle claims by traders. Only civil-law courts or arbitration hearings can settle those claims.

Reputation

FINMA’s mandate to protect the reputation of Swiss banks may present a conflict of interest with its mission to protect individual traders. Historically many Swiss banks have been used for money laundering.

FINRA 🇺🇸

The Financial Industry Regulatory Authority (FINRA) is a not-for-profit organization authorized by Congress to protect American traders. The organization was formed in 2007 as a self-regulatory organization and is the successor organization to the National Association of Securities Dealers.

Who Does FINRA Regulate?

FINRA regulates broker-dealers and funding portals operating in the United States.

What Does FINRA Do?

FINRA is the watchdog group for the US brokerage industry. The organization regulates brokers, examines their actions and searches for misconduct by market participants.

What Powers Does FINRA Have?

  1. Writing and enforcing securities laws for brokers
  2. Examining broker-dealers to ensure their compliance with rules
  3. Disciplining brokers who break rules
  4. Employing technology to scan markets for abuses.

How Does FINRA Protect Investors?

FINRA ensures that anyone who sells a securities product has been tested, qualified, and licensed. The organization also ensures that statements about investments are truthful, that brokers make sure the investments they sell are suitable for their clients, and that traders receive proper disclosures about investments.

Interesting fact: In 2018, FINRA collected $61 million in fines and mandated $25.5 million returned to harmed traders.

Reputation

FINRA has a reputation for using sophisticated technology tools to find market abusers. However, some say the organization spends too much energy chasing small violators while letting large firms go unchecked.

FMA 🇳🇿

The Financial Markets Authority (FMA) is the regulator of financial markets in New Zealand. Established as a result of the Financial Markets Authority Act 2011, the FMA has a mission to “promote and facilitate the development of fair, efficient, and transparent financial markets.”

Who Does FMA Regulate?

FMA regulates auditors, authorized financial advisers, brokers and custodians, crowdfunding platforms, directors and officers of companies, derivatives issuers, equity and debt issuers, financial market infrastructures, fund managers, independent trustees, market operators, peer-to-peer lenders, qualifying financial entities and advisers, registered financial advisers and supervisors.

What Does FMA Do?

FMA enforces securities, financial reports, and company laws pertaining to markets. The agency regulates securities exchanges, financial advisers, brokers, auditors, trustees, and issuers. FMA also provides information and guidance to market professionals and firms.

What Powers Does FMA Have?

  1. Setting and enforcing standards for market participants
  2. Monitoring and assessing compliance, conduct, and competency of market participants
  3. Investigating market misconduct and enforcing related laws.

How Does FMA Protect Investors?

FMA ensures a level playing field for traders through its regulations. The agency licenses firms and professionals operating in the securities industry, investigates market abuses, takes actions to remedy abuses, and routinely assesses compliance of market participants. FMA has the authority to seek compensation for traders for broker breaches of conduct.

Reputation

In its short history, FMA has shown a willingness to aggressively go after market abusers.

FSA 🇯🇵

The Financial Services Agency (FSA) is an integrated government agency in Japan responsible for overseeing the country’s banking, securities, exchanges, and insurance sectors. The agency, which was founded in 2000, reports to the Ministry of Financial Services.

Who Does FSA Regulate?

FSA regulates major banks and brokers, foreign bank branches, regional financial institutions, insurance companies, financial services companies, credit rating agencies, trust companies, financial conglomerates, money lenders, credit guarantee corporations, and the general infrastructure of financial markets.

What Does FSA Do?

FSA engages with businesses to ensure that they have effective business models, risk management procedures, and financial stability. The agency also serves as a consumer protection watchdog. FSA ensures integrity and facilitates the strength of securities markets.

What Powers Does FSA Have?

  1. Planning and making policies regarding the financial system
  2. Supervising private financial institutions
  3. Developing rules for conducting business in financial markets
  4. Developing accounting rules and procedures and supervising accounting firms.

How Does FSA Protect Investors?

FSA conducts onsite inspections of financial services businesses to root out compliance infractions and evidence of misconduct. The agency also promotes transparent disclosure of fees and business practices by financial institutions. The FSA devotes resources to finding the root causes of compliance infractions and remedying them with new regulations.

A separate entity called the Japan Investor Protection Fund manages the investor compensation scheme.

Reputation

FSA has recently taken a more proactive approach toward banking and securities regulation in Japan, which bodes well for consumers.

FSCA 🇿🇦

The Financial Sector Conduct Authority (FSCA) is the South African financial regulatory agency that replaced the Financial Service Board (FSB) in 2018. It is responsible for supervising and overseeing all financial services companies and their products. It licenses firms like banks and insurance companies, oversees retirement funds, and looks after financial market infrastructure.

Who Does FSCA Regulate?

FSCA regulates the entire financial services industry, which includes banks, retirement funds, short-term and long-term insurance companies, individual and collective investment schemes, including unit trusts and stock markets, hedge funds, financial advisors and brokers, credit banking services, and foreign exchange transactions.

What Does FSCA Do?

The agency’s mission is to promote and ensure the soundness of financial markets in South Africa, promote fairness in financial practices, and provide consumers with financial education.

What Powers Does FSCA Have?

  1. Developing legislation pertaining to capital markets and litigating disputes
  2. Investigating market abuse offenses
  3. Implementing market conduct regulatory and supervisory frameworks
  4. Protecting traders’ retirement funds from abuse.

How Does FSCA Protect Investors?

FSCA investigates and penalizes abusers who engage in insider trading, market manipulation, and false reporting of information to the public. The agency also makes onsite visits to investment managers to investigate complaints and ensure compliance with laws.

Interesting fact: The FSCA, which governs all financial entities in South Africa, replaced the FSB which was more narrowly focused on non-banking financial institutions and investment firms.

FSRA 🇨🇦

The Financial Services Regulatory Authority of Ontario (FSRA) replaced the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO). It is an independent regulatory agency created to improve consumer and pension plan beneficiary protections in Ontario, Canada.

Who Does FSRA Regulate?

Industries regulated by FSRA include all types of insurance, credit unions, loan and trust companies, mortgage brokers, and pension plans. As of mid-2020, there is proposed legislation in progress to widen its domain to the regulation of financial planners and advisors.

What Does FSRA Do?

The FSRA's auspices include:

  • Promoting ethical standards of business conduct
  • Fostering a sustainable, competitive financial services sector
  • Assuring appropriate administration of insurance and pension plans
  • Encouraging innovation.

What Powers Does FSRA Have?

FSRA’s enforcement actions against firms that violate its regulations may include license revocation, license suspension, and monetary penalties.

How Does FSRA Protect Investors?

By monitoring and enforcing Ontario's regulations, the FSRA works to ensure that consumers get fair treatment from the financial firms it oversees.

IFSC 🇧🇿

The International Financial Services Commission (IFSC) is a financial regulatory agency in Belize that has oversight of financial market participants including exchanges. The IFSC sets and enforces rules for financial markets. Many online trading firms obtain licenses from IFSC.

Who Does IFSC Regulate?

The 1990 International Business Companies Act established the regulatory framework for Belize and seven subsequent measures expanded on this mandate.

IFSC regulates corporations, trusts, financial services, insurance, protected cell companies, mutual funds, limited liability partnerships, retirement services, and limited life companies.

What Does IFSC Do?

IFSC has the mandate to promote Belize as an international financial center, protect its reputation, provide supervisory and regulation of financial services, formulate policies to regulate those services and collect, store and disseminate reliable and timely information on changes to those services.

What Powers Does IFSC Have?

  1. Licensing international financial service providers
  2. Developing a statutory code of conduct for international financial service providers
  3. Ensuring compliance with internationally-accepted best practices.

How Does IFSC Protect Investors?

IFSC helps enforce prohibitions against money laundering. The agency formulates policies related to financial services and advises the government on implementing those policies. However, IFSC largely relies on the industry to monitor its own actions and comply with laws and regulations.

Reputation

IFSC is viewed as very friendly to trading firms, which largely self-regulate their compliance. This isn't always in the best interests of you as a trader. If a broker is licensed solely by IFSC (ie, not regulated in numerous jurisdictions as many of the most reputable brokers are) then it might be worth doing some additional due diligence.

IIROC 🇨🇦

The Investment Industry Regulatory Organization of Canada (IIROC) oversees all investment and trading firms and activities on debt and equity marketplaces throughout Canada.

Who Does IIROC Regulate?

The IIROC maintains a list on its website of all the investment and trading firms it regulates as well as those which are suspended.

What Does IIROC Do?

The IIROC takes the following actions to protect financial consumers in Canada:

  • Oversees the registration of regulated investment dealers, firms, and individuals
  • Writes regulatory and investment industry standards
  • Screens all investment advisors employed by IIROC-regulated companies
  • Conducts financial and trading conduct compliance reviews
  • Conducts market surveillance and trading review analysis oversight
  • Investigates possible dealer or marketplace misconduct.

What Powers Does IIROC Have?

In summary, the IIROC has the authority to collect fines, collect evidence of regulatory violations, and confer statutory immunity on witnesses.

How Does IIROC Protect Investors?

The IIROC looks out for Canadian traders by inspiring confidence and deterring wrongdoing and by delivering efficient securities regulation.

MAS 🇸🇬

The Monetary Authority of Singapore (MAS) is a combination of Singapore’s central bank and an integrated financial regulator for the island nation. Their mission is to promote sustained economic growth and a progressive financial center.

Who Does MAS Regulate?

MAS conducts oversight of all financial institutions in Singapore, including banks, insurers, capital market intermediaries, financial advisors, and stock exchanges. It is also responsible for financial markets and investor education.

What Does MAS Do?

It manages Singapore’s exchange rate, official foreign reserves, and liquidity in the banking sector, as well as overseeing monetary policy and conducting macroeconomic surveillance and analysis.

What Powers Does MAS Have?

The Monetary Authority of Singapore Act of 1970 gives the MAS the power to act as a banker and financial agent of the Singaporean government. As such, it issues licenses to the firms it oversees and it can impose financial and civil penalties as well as issue reprimands and warnings to firms and individuals. 

How Does MAS Protect Investors?

MAS establishes rules for financial institutions that are implemented through legislation, regulations, directions, and notices.

NFA 🇺🇸

The National Futures Association (NFA) is an industry-wide self-regulatory organization for the US derivatives industry. The agency, which began its operations in 1982, was authorized by the legislation that created the CFTC.

Who Does NFA Regulate?

NFA was designated by CFTC as a registered futures association. Membership in this self-regulatory organization (SRO) is mandatory and includes all commodity trading advisors, commodity pool operators, futures commission merchants, introducing brokers, major swap participants, retail foreign exchange dealers, swap dealers, exchanges, and associates.

What Does NFA Do?

The Commodity Exchange Act (CEA) requires certain firms that conduct business in derivatives to register with the CFTC, and all CFTC members must join NFA. NFA identifies industry best practices and mandates them for its members.

What Powers Does NFA Have?

  1. Developing and enforcing rules for the derivatives industry
  2. Providing programs and services that protect market integrity
  3. Imposing disciplinary measures on members when appropriate
  4. Arbitrating disputes between member firms and customers.

How Does NFA Protect Investors?

NFA offers traders resources to perform due diligence on investments. The association also educates its members about their regulatory responsibilities to customers.

Interesting fact: NFA offers training to other self-regulatory organizations around the globe.

Reputation

NFA has a solid reputation. However, the collapses of both Peregrine Financial Group and MF Global have led some to question whether they need to do more to protect customers’ funds.

SEC 🇺🇸

The Securities and Exchange Commission (SEC) is an independent US federal agency that proposes and enforces securities laws and regulates the securities industry. The agency was founded in 1934 and has a mission to protect traders; maintain fair, orderly, and efficient markets; and help companies with raising capital.

Who Does SEC Regulate?

The SEC regulates the financial sector in the US through its five divisions:

  1. Corporation Finance – disclosures of public companies
  2. Trading and Markets – self-regulatory organizations (SROs) such as FINRA
  3. Investment Management – investment companies such as mutual funds
  4. Enforcement – responsible for actions against alleged violators
  5. Economic and Risk Analysis – integrates data into SEC’s work.

What Does SEC Do?

The SEC is an investor advocate. The agency protects traders, advocates for fairness in markets, and disseminates information to market participants to help them make educated investment decisions.

What Powers Does SEC Have?

  1. Detecting, investigating and pursuing securities laws violations
  2. Reviewing company disclosures to ensure they are adequate
  3. Regulating the type and structure of investment products
  4. Regulating markets to ensure fair and orderly trading.

How Does SEC Protect Investors?

The SEC serves as a watchdog for all market abuses including investment scams, insider trading, market manipulation, and inadequate disclosures of risks on investment products. The SEC has the authority to pursue civil, but not criminal, actions.

Interesting fact: The SEC has five commissioners who are appointed by the President of the United States and approved by the US Senate.

Reputation

The SEC reputation is mixed. The agency has enormous resources at its disposal. However, it is often criticized for its failure to police the largest US banks.

SFC 🇭🇰

The Securities and Futures Commission (SFC) of Hong Kong was set up in 1989 to regulate Hong Kong's securities and futures markets. It derives its powers from the Securities and Futures Ordinance (SFO) and subsidiary legislation. It is funded by transaction levies and licensing fees.

Who Does SFC Regulate?

The SFC regulates brokers, investment advisers, fund managers, and intermediaries carrying out the following activities:

  • Dealing in securities or futures contracts, leveraged foreign exchange trading and trading on Hong Kong Exchanges and Clearing Limited (HKEX)
  • Advising on securities, futures, or corporate finance
  • Providing automated trading services
  • Securities margin financing
  • Investment products and market participants (including traders).

What Does SFC Do?

  • Approve and monitor licenses and issue guidelines to inform the industry about expected standards of conduct and set financial resources requirements
  • Investigate complaints about the misconduct of licensees
  • Regulate, review, and authorize investment products offered to Hong Kong residents
  • Carry out surveillance of listed companies, including investigation of fraudulent transactions
  • Oversee the performance of The Stock Exchange of Hong Kong Limited (SEHK)
  • Approve the creation of new markets and new products
  • Monitor unusual market movements and direct suspension of trading in specific stocks to maintain informed and orderly markets
  • Investigate and take action against market misconduct and other breaches of the law

What Powers Does SFC Have?

The SFC has the power to issue punishment for misconduct, deter wrongdoers from repeating misconduct, and ensure remedies are followed through.

How Does SFC Protect Investors?

The SFC offers three main protections for Hong Kong consumers:

  1. Protection against loss due to financial defaults by market participants
  2. Protection against abuse by financial intermediaries like brokers and investment advisers via rules that limit abusive practices, compliance inspections, and disciplinary actions when rules are broken.
  3. Protection against abuse by other shareholders, particularly controlling shareholders, company directors, and executive management.

UKNF 🇵🇱

The mission of the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego or UKNF) is to ensure the stability and safe development of financial markets within Poland. It does so by limiting excessive risk by the firms it regulates, strengthening the transparency of the Polish financial market, and assisting the market in building its position in Europe.

Who Does UKNF Regulate?

The UKNF oversees companies involved with banking, capital markets, insurance, pension schemes, and electronic payments.

How Does UKNF Protect Investors?

In Poland, there are numerous institutions authorized to take action with regard to irregularities in the activity of financial service providers. However, these institutions are not obliged to manage each individual case.

FAQs

What was the Financial Service Board (FSB)?

The FSB was a financial regulatory agency in South Africa. It was replaced by the Financial Sector Conduct Authority (FSCA) in 2018. The FSCA serves the same financial functions as the FSB did. For more information about the FSCA, see our guide above.

How do I find a broker's listing on a regulator's site?

Most regulatory sites have a search function that will allow you to find registered brokers. For example, if you go to the ASIC website, you'll see a search box on the right side called Search Our Registers. Next, click Companies and then Search now on ASIC Connect. The landing page will allow you to search by company name or registration number.

What is the Markets in Financial Instruments Directive (MiFID)?

The Markets in Financial Instruments Directive (MiFID) is an EU regulation launched in 2007 designed to increase transparency. MiFID harmonizes securities laws across the 28 EU member states as well as Iceland, Liechtenstein, and Norway. MiFID incorporates the concept of a passport, which means that firms that have regulatory approval to operate in one EU state can offer their services in the others as well.

What is the Financial Services Compensation Scheme (FSCS)?

The FSCS is a free service for UK consumers that helps protect their money if a financial service fails. The scheme pays claims from funds collected from financial services firms by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA). If a firm fails and cannot pay its customers money that was deposited with them, the FSCS will pay the claim.


Credits: Original page written by Lawrence Pines. Major updates and additions in July 2020 by Natalie Mootz with contributions from the Commodity.com editorial team.

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