3 Ways To Make Sure Your Broker Is Regulated

Sadly, fraud is present in almost every remit of the financial system. No matter where money is handled, scams are likely to be found. Most financial markets, luckily, have forms of regulation in place to protect users and traders against financial risk and abusive practices.

In most instances, where money will be traded, brokers will carry out these transactions and trades on your behalf. Whilst most brokers are legitimate, there are some who are, unfortunately, not to be trusted and have their own interests at heart. Unregulated traders have no regulated organisation monitoring their trades or work, which means they are under their own control of what they do with their trades. Before making trades online, there are some things you can keep in mind to make sure your broker is regulated. Let’s take a look at 3 ways you can make sure that your trading broker is a regulated one.

They Won’t Make A Cold Contact

You should always be wary of brokers or “investment advisors” who get in touch with you unsolicited and with who you’ve never done business. This contact could take place via a phone call, email, letter or even through a chat on a trading platform. It’s important to not get sucked into this correspondence, as some unregulated brokers will try and tempt you with invites to seminars, virtual conferences or even free lunches or gifts in an attempt to get you to lower your guard and invest with them.

Be wary of “brokers” who use high-pressure sales tactics in an attempt to get you to invest with them, steering clear of “once in a lifetime” investment opportunities as these are often forms of unregulated broker scams.

Do Some Research  

One of the first things you should do when considering trading using a broker is to research them. A simple online search using just their broker or firm name should, if they are regulated, bring up plenty of information and trader reviews. For unregulated brokers, this search could shed some light on alleged wrongdoing, previous disciplinary actions or fines, online client conversations via forums and background information.

A lot of independent brokers will also have their own website, which for genuine regulated brokers, is typically well-designed and provides plenty of information. It is said that genuine Forex brokers can’t not afford a quality site, so if a broker gets in touch trying to redirect you to their website and you find it is of poor quality, badly designed and sparse of content, this should be a warning sign to their legitimacy as a broker.

You should also search for some regulatory agencies directly, as financial advisors and professionals, as well as their firms, are legally required to be registered. A lot of registration is available to be viewed by the public, as well as information or details of disciplinary action.

Check Statements Regularly

Any trader will know that the worst thing you can do is to put your investments in a state of autopilot. You should be regularly checking your statements, whether you receive them virtually or via letter, as this can help you to detect any wrongdoings or mistakes. If your investment returns aren’t showing what you expected or if you spot any unusual changes or transactions, then you can ask your broker questions as to what has happened.

If your broker tries to provide you with complicated information or reasonings as to why this might have happened, then request to speak to someone higher up. A legitimate, regulated broker will instantly attempt to help you and rectify mistakes, whereas unregulated brokers may get overly defensive or cease communication. If you ever suspect wrongdoing or are in doubt, then request to withdraw your funds from the broker or investment advisor. You can then consider making a complaint or raising a legitimate dispute.

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