At InvestinGoal, we adhere to strict standards to ensure an unbiased review process. We conduct our reviews by examining each broker’s offering and performance across 4 key categories. A final rating is produced for each forex broker based on a total of 187 data points. Learn more about our review process and methodology.
When you are making a best forex brokers comparison between a wide number of choices such as those that are available in the industry, one of the most important choices is always regulation.
If you are a US-based trader, this becomes even more important. The SEC is one of the most respected regulatory bodies in the United States, and so, SEC regulated brokers will feature heavily in your mind if you are looking for the best US forex brokers.
For that reason, and to help you choose the best SEC forex broker possible, we have put together a list of the top SEC regulated forex brokers, and some additional information about the SEC to help you along the way.
Table of contents
What is the 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) are 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.
Top 5 best SEC Regulated Forex Brokers
Here then, are the top SEC regulated forex brokers that we have found for you to choose from:
How the SEC works
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. SEC do 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 who wishes to list and trade their 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.
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.
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 which 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 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.
About the Author