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What does your broker’s license say about them?

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What licenses are the most authoritative?

License is one of the most important criteria which helps to choose the binary options broker. However, not all the licenses can confirm the quality of the broker. I collected the most popular license of the brokers and described what they mean.

Which license can guarantee the quality of broker’s services?

A key criterion when choose a binary options broker is the presence of a license. The broker’s license lets you know which of the financial market regulators confirms the quality of broker’s services.

There are so many licenses for binary options brokers. However, not all the licenses can confirm the high quality of your broker.

Consequently, the value of a license for broker services may be different. For example, there is a big difference between a license from NFA and a license from the Republic of Botswana.

The broker’s place in the ratings is mostly determined by the presence of a broker license.

The presence of the license is the condition that allows your broker to work with real money.

However, I warn you that even the presence of a license doesn’t guarantee that you won’t have any problems with your broker. There are known examples when an authoritative broker, having some reputable licenses, refused traders withdrawals of several thousand dollars. When choosing a broker, you must check the criteria that are most important.

Most popular binary options brokers’ licenses

• National Futures Association (NFA)
• Commodity Futures Trading Committee (CFTA)
• Financial Services Authority (FSA).

Other commercial and non-commercial finance companies

• Federal Financial Markets Service (Russia): An organization that regulates financial markets (with the exception of banking and auditing). Now, it doesn’t exist.
• FMRRC (Russia): A non-profit organization that controls the level of service quality and gives the licenses to brokers.
• CySec (Cyprus): This financial regulator is a full member of the EU and has the same powers as the British FSA.
• FINRA (US): This independent regulator of US brokers has a main function to protect US investors and issue brokerage licenses.
• MiFID (EU): This directive of the European Union is part of a plan to create a single European financial market. MiFID requirements are mandatory for compliance in 27 European countries.
• SIPC (US): A non-profit organization that protects the interests of stock market investors. SIPC licenses guarantee the investor will get back all the funds in case of broker bankruptcy, which generally increases the level of confidence in the US stock market.
• CECEI (France): An organization that regulates the terms of banking and brokerage services in France.
• FinTRAC (Canada): An organization dedicated to the evaluation and analysis of financial intelligence. The main objective of FinTRAC is a struggle with SCAM organizations.

So, check your broker’s license. If your broker doesn’t have any of these licenses, maybe it’s better to change brokers. If you know other licenses, don’t hesitate to write. It would be great if we can distinguish between SCAM and honest brokers.

Comments

SanPaulo's picture

Thanks so much for the info. As I see all the licences can't guarantee the 100% security. I don't trust CySEC, however I see it's authoritative.

SanPaulo

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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