Regulated CFD Broker Guide
Trading CFD Choose a CFD Broker
Factors to look for & consider when selecting a cfd broker
Regulation is one of the guideline of choosing a broker. As a new trader your first challenge is to choose the right one. The best ones are those that are regulated. This should be the type of firm that you should choose: a regulated cfds trading broker.
It isn't as easy as it sounds to select a good one & the whole searching process might leave you confused due to the huge competition between them, as they all offer different trading softwares, trading services, order execution & capabilities. Best criteria in choosing is to find a regulated one.
Regulated brokers have to submit all their transactions every year to the regulation authority for audit. This means that these companies can't participate in any illegal activity such as money laundering. This is why your cfd broker asks for Identification documents and proof of residence from traders when they are registering, so when you as a trader are opening an account and are asked for these documents when opening an account, you'll know why they are being asked for.
Some of These CFD Trading Broker Regulatory Authorities are Listed Below:
USA
The NFA regulates all us based financial firms, official website for NFA is https://www.nfa.futures.org/ where list of USA cfd brokers are listed. NFA does not issue license to other international ones, unlike other regulatory authorities, NFA will only license US based firms. NFA just like CFTC have very overbearing regulation rules which are not favorable to the traders themselves. After these two NFA & CFTC introduced these rules many international cfd brokers closed down their US based branches, Those that did not have America branches were forced to close and transfer the accounts of American citizens because CFTC threatened to sue any cfd based firms that isn't from America if they open accounts for American Citizens. This is why most cfds brokers will not accept USA Clients.
USA
The CFTC regulates all America based financial firms, CFTC is Similar to NFA
Cyprus
The CySEC regulates all Cyprus financial firms, official website is https://www.cysec.gov.cy where you can search for registration & licenses number of those CFD companies licensed by this regulator. The CySEC regulates brokers operating within the European Union Jurisdiction of Cyprus Member Country.
UK
NOW FSA has changed name FCA, & regulation details can bound from either FSA or FCA.
The FSA regulates all financial firms in UK, the official website for FSA is https://www.fsa.gov.uk/ this website contains a list of cfd companies licensed in the UK. FSA also registers other international firms and cfd based firms from other countries that have an operating office within the UK. To check whether the financial institution you are trading with is regulated in UK just navigate to the FSA Register.
Germany
The BaFIN regulates all German financial institutions, website for BaFin is https://www.bafin.de and BaFin is Federal Supervisory Authority in German For Investment firms & institutions operating within German.
Australia
The ASIC regulates all firms in Australia
Japan
Regulates all Japan based firms
Switzerland
The FDF regulates all Swiss based firms
Canada
The CIPF regulates all Canadian firms
European Union Firms
MIFID is more of a Regulation Standard for European Union Brokers, than a Regulation Authority.
Mauritius
The IFSC regulates all Mauritius firms
Above Regulatory authorities are most trusted and the most famous regulatory authorities, it is best to open an account with a regulated broker that is licensed by one these regulatory authorities which are most popular regulators.
About USA Based CFDs Trading Broker Regulations & USA Regulatory Authorities
NB: One thing you should know about regulators is that you might not want to chose NFA or CFTC American Regulators, who have these very strict rules:
- Max CFD Leverage 50:1
- First In First Out FIFO Trading (open trades in 123 order, must close then in 123 trading order, not 321, not 312, not 213 trading order)
- No Stop Loss CFD Order Setting
It is for the above rule that most traders will not open a trading account with USA brokers, most traders who traded with USA cfds trading brokers closed their trading accounts and transferred them overseas with the introduction of this rules, around sometime in year 2010.
In addition these regulators, will take to court any cfd financial firm that opens an account for America citizens, this is why no cfd broker will open an account for an American, Only those trading brokers which are based in USA can open an Account For An USA Citizen. Only ones cfd brokers accepting America clients are only those brokers based in the USA.
