Despite the fact that legal provisions in the whole world are continuously evolving (e.g. the newest MiFID II), investment frauds, otherwise known as scams, remain a true plague in the industry. Brokers acting without a licence each year defraud large amounts of capitals of aspiring investors. Therefore, if you are starting your adventure with investing in financial markets or you have come across an interesting broker’s offer, but you do not know, if they have a relevant authorisation, you can verify them at any regulator in a few steps. One of the best registers for this purpose is the British Financial Conduct Authority (FCA), which has a large base co-related with bases of other regulators in the territory of the EU. Below we present, how you can verify your broker at this Register in a few steps.
Visit the website: https://register.fca.org.uk/ and in the visible window enter the broker’s
name or their licence number.
If, after entering the name or licence number, the
broker does not appear on the list, it is highly probable that this is a fraud.
However, if you have found your broker and entered their register, you can find
two possibilities.
Such status means that a given firm is licenced in the United Kingdom.
In this case the broker is licenced in one of other EU states.
Another issue that is worth noting is the type of
customers serviced by the broker. Many of them advertise as institutional
brokers, since they wish to attract more sophisticated customers, despite the
fact that they also provide services to retail customers. In order to verify
the above, you have to unwind the option “Permission”, and there, you have to
pay attention to the window “Arranging (bringing about)”. On the left we see a
broker who can provide services to any type of a customer and on the right, a
broker concentrated solely on larger customers.
The last but one issue worth noticing is the model of
broker’s operations. You can learn about differences between models here: MM, ECN and STP. The relevant information is given below the
information regarding broker’s authorisations. For example, a description of a
broker operating in the STP model is the following. After moving the cursor
over the given name, a detailed description thereof appears. The problem is
that this detailed information is available solely to brokers directly regulated
by the FCA.
The last important issue worth checking is, whether the broker operates under other names. Firms sometimes use other names when entering e.g. a new market.
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