Regulated Vs Unregulated Brokers: Key Differences

Share On Facebook
share on Linkedin

The forex markets are awash with billions of dollars being traded every hour, and with that amount of money involved, there will be a lot of competition to get your business. If you are in need of a broker to handle your investments, there are going to be so many choices it can make your head spin, and they can be regulated by a governing body or not.

©

Deciding on what type of broker to go with is going to be essential, so it is pertinent to understand the difference between regulated and unregulated brokers. There are some key differences that you need to take into account before making a decision.

 

Transparency

It is important that you are able to see, and understand, what is happening with your money when investing. It is not only the best regulated forex brokers that are being transparent, they are required to be by the regulatory body. You will have full insight into everything that is happening with your money, and your broker must submit consistent reports to keep everyone updated.

Unregulated brokers do not have the same rules and regulations, so you must be upfront about your expectations in this department. This is not to say unregulated brokers are purposely going to be keeping you in the dark, only that you must be cautious and careful.

 

Accountability

With a regulatory body governing their actions, regulated brokers are held to certain standards and must offer certain services. If you have questions or concerns for the person handling your investments, it is good to be able to contact them. Regulated brokers are required to have a point of contact for customer service, unregulated brokers do not have the same requirements.

As well, becoming a regulated broker can cost a lot of money, and any broker with sense would never risk losing that status. This means that you can be ensured that a regulated broker will follow the guidelines and you can feel some security. If there have been any incidents over the years they are tracked and you can easily look into the reputation of the broker.

 

Protection

Having protection on your money is going to help you feel better about risking it on the forex markets. When using a regulated broker you can be guaranteed that they will do all of your tradings by the book and not risk doing anything shady. Getting a regulated status could be seen as a badge of honor, and it shows that the broker should be trusted.

This is going to become even more important when you get into dealing with ECN brokers as technology is going to play a more prominent role. It is important to have protection when dealing with newer technology and procedures, especially when it comes to your money.

 

Why Are There Unregulated Brokers?

There is really one main reason you see unregulated brokers, that is going to come down to money. As it can be very expensive to get regulated by the governing body a lot of brokers just can’t afford the luxury. This doesn’t mean that there is anything wrong with the way they do business, just that they may be a smaller or newer operation.

You are also going to get brokers that don’t exactly want to play by the rules, and you have to be wary of these types. There is going to be no governing body to protect you, and the potential of being deceived or cheated is always there. Regulated brokers are going to be your best bet, and only once you do the proper homework.

Click Here to register for free on Investors Hub

This area of the investorshub.advfn.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of Investors Hub. Investors Hub does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at Investors Hub is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by investorshub.advfn.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.

Comments are closed

 


Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.