Factors to Consider When Choosing a Indices Broker

Indices Trading Choose a Indices Broker?

Factors to look for and consider when choosing a indices 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 indices broker.

It is not as easy as it sounds to choose a good one and the whole searching process might leave you confused due to the huge competition them, as they all offer different platforms, services, execution and capabilities. The 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 cannot participate in any illegal activity such as money laundering. This is why your indices broker asks for Identification documents and proof of residence from traders when they are registering, so when you are asked for this documents when opening an account, you will know why they are being asked for.

Some of These Regulatory Authorities are Listed Below:

National Futures Association (NFA) - USA

The NFA regulates all us based financial firms, the official website for NFA is https://www.nfa.futures.org/ where the list of USA indices 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 that are not favorable to the indices traders themselves. After these two NFA and CFTC introduced these rules many international indices brokers closed down their US based branches, Those that did not have US branches were forced to close and transfer the accounts of American citizens because CFTC threatened to sue any indices trading based firms that is not from America if they open accounts for American Citizens. This is why most indices brokers will not accept US Clients.

Commodity Futures Trading Commission (CFTC) - USA

The CFTC regulates all US based financial firms, CFTC is Similar to NFA

Cyprus Securities and Exchange Commission (CySEC) - Cyprus

The CySEC regulates all Cyprus financial firms, the official website is https://www.cysec.gov.cy where you can search for the registration and licenses number of those Indices brokers licensed by this regulator. The CySEC regulates brokers operating within the European Union Jurisdiction of Cyprus Member Country.

FCA- Financial Conduct Authority as of 2013 - UK

NOW FSA has changed name FCA, and 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 stock indices brokers licensed in the UK. FSA also registers other international firms and indices trading 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 the UK just go to the FSA Register.

German Federal Labor Market Authority (BaFin) - Germany

The BaFIN regulates all German financial institutions, the website for BaFin is https://www.bafin.de and BaFin is the Federal Supervisory Authority in German for Investment firms and institutions operating within German.

Australian Securities and Investments Commission (ASIC) - Australia

The ASIC regulates all firms in Australia

The Financial Futures Association of Japan (FFAJ) - Japan

Regulates all Japan based firms

Swiss Federal Department of Finance (FDF) - Switzerland

The FDF regulates all Swiss based firms

Canadian Investor Protection Fund (CIPF) - Canada

The CIPF regulates all Canadian firms

MiFID, Markets in Financial Instruments Directive

MIFID is more of a Regulation Standard for European Union Firms, than a Regulation Authority.

International Financial Services Centre (IFSC) - Mauritius

The IFSC regulates all Mauritius firms

The above Regulatory authorities are the 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 the most popular regulators.

About USA Based Regulations and USA Regulatory Authorities

NOTE: One thing you should know about regulators is that you should not chose NFA or CFTC American Regulators, who have these very strict rules:

• Max Indices Trading Leverage 50:1
• First In First Out Trading(open trades in 123 order must close then in 123 order, not 321, not 312, not 213)
• No Stop Loss Indices Order Setting

It is for the above rule that most indices traders will not open an account with USA brokers, most traders who traded with USA indices brokers closed their trading accounts and transferred them overseas with the introduction of this rules, around the year 2010.

In addition these regulators, will take to court any indices trading financial firm that opens an account for USA citizens, this is why no stock indices broker will open an account for an American, Only those in USA can open an Account for An American Citizen. The only ones accepting US clients are only those based in the USA.