A SEC forex broker refers to a forex (Foreign Exchange) brokerage firm which is regulated and authorized by the United States authority called Securities and Exchange Commission (SEC).
The SEC was founded in 1933 and is one of, if not the most, respected, and well-known financial sector regulatory body in the US.
The Securities and Exchange Commission (SEC) is active in overseeing many aspects of the financial sector, focusing on the stock market.
They are in fact, one of 4 key market regulators in the United States. The others are the CFTC, NFA, and FINRA. As such though, a broker must register with the SEC particularly if they are offering any stock brokerage services to traders.
To rank the best SEC-regulated brokers, we looked at the following elements:
- A valid SEC license
- Other protections and security offered
- Minimum deposit to begin investing
- Overall broker quality
What are the best SEC forex brokers?
Below is our curated list of the best forex brokers regulated by the SEC, with details and information about the regulation, the features, and the characteristics.
Interactive Brokers
best SEC broker overall
Interactive Brokers operates under SEC license n° 8-47257. Interactive Brokers allows USD accounts with a $0 deposit. Interactive Brokers facilitates trading on 130 global markets.
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About Interactive Brokers
Interactive Brokers is a global electronic broker founded in 1978, offering trading in stocks, options, futures, forex, bonds, ETFs, and cryptocurrencies across 150 markets in 33 countries. Interactive Brokers provides advanced trading platforms, low commissions, and access to a wide range of financial instruments. Interactive Brokers is known for its sophisticated technology and serves both retail and institutional clients. Interactive Brokers is regulated by multiple top-tier authorities worldwide. The CEO of the Interactive Brokers Group is Milan Galik.
Interactive Brokers Features
The features of Interactive Brokers are listed below.
- Interactive Brokers LLC is the entity authorized and regulated by the SEC with license n° 8-47257 since 1993 and a registered office in Greenwich, Connecticut.
- In the US, Interactive Brokers is also subject to NFA’s regulatory oversight along with FINRA.
- You can create USD accounts with Interactive Brokers and start with a minimum deposit of $0 under SEC oversight.
- Trading with Interactive Brokers is made on 130 global markets including forex pairs, futures, stocks, bonds, and more.
Interactive Brokers Pros and Cons
Advantages of Interactive Brokers
The advantages of Interactive Brokers are listed below.
- Low Trading Fees
- Advanced Trading Tools
- Wide Market Access
Disadvantages of Interactive Brokers
The disadvantages of Interactive Brokers are listed below.
- Not user-friendly
- No MetaTrader Support
- Additional Fees
Robinhood
SEC broker for beginners
Robinhood holds SEC license n° 8-69188. Robinhood offers SEC-regulated financial protection up to $100 million. Robinhood requires no minimum deposit for USD accounts.
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Robinhood Features
The features of Robinhood are listed below.
- Robinhood is SEC-regulated with a license n° 8-69188 and operates from Charlotte, North Carolina as Robinhood Financial LLC since 2012.
- Robinhood is also authorized to offer its services in the US by FINRA.
- Customers are protected by a further Robinhood coverage of up to $100 million under SEC regulation.
- Investment accounts at Robinhood are set in USD with no minimum deposit required under SEC regulation.
- Commission-free on stock trading, ETFs, options, and you can also invest in cryptos with SEC-regulated Robinhood.
Robinhood Pros and Cons
Advantages of Robinhood
The advantages of Robinhood are listed below.
Disadvantages of Robinhood
The disadvantages of Robinhood are listed below.
TD Ameritrade
most flexible SEC forex broker
TD Ameritrade possesses SEC license n° 801-60469. TD Ameritrade permits USD accounts from a $50 deposit. TD Ameritrade allows commission-free trading under SEC regulation.
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TD Ameritrade Features
The features of TD Ameritrade are listed below.
- TD Ameritrade is authorized by the SEC holding a license n° 801-60469 since 1979 and operates from Omaha, Nebraska as TD Ameritrade Inc.
- In the US, TD Ameritrade is also under the oversight of FINRA and CFTC.
- Depositing your funds with TD Ameritrade starts from a minimum of $50 to open USD accounts with SEC regulation.
- Commission-free trading in stocks, ETFs, and options while also TD Ameritrade provides for futures and forex trading under SEC oversight.
TD Ameritrade Pros and Cons
Advantages of TD Ameritrade
The advantages of TD Ameritrade are listed below.
Disadvantages of TD Ameritrade
The disadvantages of TD Ameritrade are listed below.
Charles Schwab
best stockbroking service
Charles Schwab secures SEC license n° 801-29938. Charles Schwab requires no minimum deposit for USD accounts. Charles Schwab supports diverse investments under SEC regulation.
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Charles Schwab Features
The features of Charles Schwab are listed below.
- Charles Schwab has had SEC regulation since February 1987, license n° 801-29938 and operates as Charles Schwab & Co., INC. with a local office in San Francisco, California.
- While being an SEC-regulated broker, Charles Schwab is also under FINRA oversight.
- USD deposits with Charles Schwab are available with wire transfers, electronic funds transfer, or checks under SEC oversight for a minimum deposit of $0.
- Under SEC regulation you can invest in stocks, retirement accounts, managed accounts, and other banking services with Charles Schwab.
Charles Schwab Pros and Cons
Advantages of Charles Schwab
The advantages of Charles Schwab are listed below.
Disadvantages of Charles Schwab
The disadvantages of Charles Schwab are listed below.
Fidelity
best overall investing experience
Fidelity obtains SEC license n° 8-23292. Fidelity sets no minimum deposit for USD accounts. Fidelity provides commission-free investing under SEC regulation.
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Fidelity Features
The features of Fidelity are listed below.
- Another SEC-regulated broker is Fidelity with license n° 8-23292 since 1979 and operates under the Fidelity Brokerage Services LLC business name from Smithfield, Rhode Island.
- Apart from the SEC, Fidelity is also enlisted among the FINRA-regulated brokers in America.
- No minimum deposit is required to open a Fidelity account which by default is denominated in USD under SEC regulation.
- You can invest in stocks, ETFs, mutual funds, and much more with Fidelity charging no commissions.
Fidelity Pros and Cons
Advantages of Fidelity
The advantages of Fidelity are listed below.
Disadvantages of Fidelity
The disadvantages of Fidelity are listed below.
How does the SEC work?
Now that you have taken a look at the very best SEC forex brokers, let’s examine the role of the SEC from the perspective of you as a forex trader, a little more closely.
As mentioned, the SEC is active throughout the financial industry in the United States, focusing especially on the stock market. The SEC does not oversee brokers only, but every company listed on the stock exchange is also overseen by the SEC for compliance.
The main functions and primary roles of the SEC are as follows:
- Protecting the investors
- Applying federal laws
- Stock market oversight
Any company that wishes to list and trade its stock publically must also have approval and regulation from the SEC. All of this is really aimed at protecting you as a trader and investor.
What are the characteristics and benefits of SEC?
Generally speaking, the SEC is one of the foremost regulatory bodies in the United States. To that end, the regulatory conditions in the US for brokers are typically very strict. This can be very good for you as a trader since only the best forex brokers will pursue this regulation due to the level of cost and difficulty involved.
SEC regulation really helps to filter out any untrustworthy brokers from the system and ensure maximum protection for you as a forex and stock trader.
What are the prohibitions with SEC?
The only major prohibition from a forex trading standpoint with the SEC is that CFDs cannot be offered for trading. This is a rule which goes across all of the US regulatory bodies and not just the SEC. So, no trading CFDs in the US.
Differences between SEC-regulated and SEC licensed brokers
The difference between a broker being SEC-regulated, or SEC licensed is related to process. A fully regulated broker is one that goes through the entire process of getting regulated by a body within that country . This can be costly, and time consuming on the brokers’ side.
A broker that is licensed, has not gone through this full regulation process, but is still allowed to offer trading services within that country. This may happen due to various reciprocal agreements that are in place between major regulators around the world.
Within the US, this situation can occur with the NFA, and CFTC regulated brokers, but the SEC is a stand alone regulator. This means that any broker wanting to be regulated by the SEC must complete the entire process first.
How to check if a broker is SEC-regulated
There are a couple of easy ways for you to check and verify SEC broker regulation. The first is you can go to the SEC official website to check the regulation directly. You can also check by following this link to Brokercheck (powered by FINRA) as another alternative.
In any case, to complete this check you will need to know the business name of your broker. This can generally be found at the bottom of their homepage.
How does SEC intervene in case of financial abuse?
As mentioned, the SEC has some very stringent regulations for brokers, and broad powers to report and punish these brokers. They have the ability to report any illegal act to the US court, they can also ban particular brokers from the country and fine them.
The SEC is very active and recently exercised this power in fining ICOBox $16 million for offering unregistered securities. They are almost always involved in high-level cases of fraud against some of the biggest names in global business.
How SEC can help you
There are a variety of ways that SEC regulation, and choosing an SEC-regulated broker can help you. If you feel that a broker is engaged in unfair practices, false advertising, or other activities that are not permitted under their regulations, then you can directly contact the SEC Official Website.
This is also the case if you feel you have been the victim of any type of fraud while trading in the US.