Regulated broker: a guarantee for traders

Although it comes with many opportunities, the popularization of the Internet has also opened doors for scammers. Especially in online trading, there are indeed malicious brokers who do not hesitate to use aggressive marketing to mislead and trap traders. Fortunately, it is perfectly possible to avoid these fraudulent brokers. The regulation of online brokers is, among other things, the best insurance for investors.

Beware of fraudulent brokers

The online trading market is now booming. Especially since the introduction of binary options in 2008, this stock market speculation activity has become widely popular among individuals. This type of trading is indeed very easy, undoubtedly the simplest way to carry out stock market transactions. However, with the arrival of this new generation of traders, the associated dangers are also intensified. Many scammers are present on the web and are determined to seduce these investors, some of whom are still poorly informed.

broker scammers

In the course of their negotiations, the latter are exposed to significant risks of loss, due in particular to the insecurity that has developed in the field of trading. Moreover, scam brokers have merged into the lot to be less detectable and often use very tempting promises to attract traders. The offers proposed by these brokers have everything to seduce.

As a result, many new investors still fall into the trap, thinking they have found a good investment deal. The problem is that the amounts invested in this type of broker will simply be lost. Winning withdrawals are impossible and, to get even more money from traders, some of them still ask for additional deposits when they withdraw. Investors who have registered then have no opportunity to file a complaint or request refunds. Because most of the time, these scammers are located in tax havens and, above all, they are not regulated on the market.

The advantages of a regulated broker

The advantage of choosing a regulated broker is, above all, to avoid the risk of scams. The regulation of binary options trading has been put in place to ensure that standards are respected by each party. Thus, a regulated broker is subject to regulations and is required to comply with them, under penalty of sanctions. In particular, it must offer transparent and secure trading conditions to each of its clients. As part of the transactions, all data provided on the sites are kept confidential and are protected by encryption systems. The risks of identity theft are thus eliminated, provided, of course, that the trader does not share his information with third parties.

regulated brokerThe regulation of online brokers also requires the protection of investors’ funds. The latter’s accounts are placed in an independent bank and are separate from the brokerage company’s accounts. Thus, even if the broker goes bankrupt, his clients are assured of being able to dispose of their money. Regulated brokers are also required to apply a policy of transparency in their activities. Among other things, they must warn traders about the risks associated with online investments. They must also provide detailed documents on the conditions of use and mention any fees applied.

And if, despite all the precautions taken, there is a dispute between the broker and the broker, the regulation also allows traders to claim compensation. All he has to do is contact the inspection body concerned to file a complaint. The institution will then take charge of studying the situation and sanction the broker if there is really any prejudice. As mentioned above, however, such a procedure is not possible if the broker is not regulated. If such a situation arises, the trader can do practically nothing, except to choose a regulated broker for his future investments.

The AMF or Autorité des marchés financiers

Launched in 2003, the AMF is the reference authority for broker regulation in Europe and internationally. The organization is based in France and its main mission is to regulate players and trading products. In particular, it issues regulations on stock market speculation and only authorises brokers who meet the required criteria to operate. The AMF also conducts investigations and ongoing controls to maintain order in the trading market. He does not hesitate to apply sanctions in the event that the rules are not respected and, moreover, he holds a blacklist containing all high-risk brokers. This blacklist is based on complaints from investors, but also on non-compliance with established standards. Updated quarterly, it allows traders to detect risk brokers and thus avoid them more easily.

regulatory agency

In addition to the AMF, there are also other financial control institutions to be aware of, including CySEC or the Cypriot Financial Trade Security Commission. Most binary option brokers are regulated by this institution, mainly as a result of strong pressure from the AMF. The Banque de France, as well as the FSA or Financial Services Authority in the United Kingdom, also regulate online brokerage players. Compliance with MiFID, the Markets in Financial Instruments Directive, is also an insurance certificate for traders in the European market. Of course, other institutions control trading operations outside Europe. Thus, anywhere in the world, the most important thing is always to check the broker’s regulation before launching.