Regulated Metals Trading Broker Tutorial
Metal Trading Select a Metal Trading Broker
Factors to look for and consider when choosing a metals 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 metals broker.
It isn't as easy as it sounds to select a good one & the whole searching process might leave you confused due to the huge competition between them, as they all offer different trading softwares, trading services, order execution & capabilities. 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 can't participate in any illegal activity such as money laundering. This is why your metal broker asks for Identification document and proof of residence from the traders when they are registering, so when you as a trader are opening an account and are asked for these documents when opening an account, you will know why they are being asked for.
Some of These Metal Broker Regulatory Authorities are Listed Below:
USA
The NFA regulates all us based financial firms, official web site for NFA is https://www.nfa.futures.org/ where the list of USA metals brokers are listed. NFA doesn't 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 which are not favorable to the traders themselves. After these two NFA & CFTC introduced these rules many international metals brokers closed down their America based branches, Those that did not have America branches were forced to close & transfer the accounts of American citizens because CFTC threatened to sue any metals trading based firms that is not from USA if they open accounts for American Citizens. This is why most metals brokers won't accept USA Clients.
USA
CFTC regulates all America based financial firms, CFTC is Similar to NFA
Cyprus
The CySEC regulates all Cyprus financial firms, official web-site is https://www.cysec.gov.cy where you can search for the registration and licenses number of those Metals brokers licensed by this regulator. The CySEC regulates brokers operating within the European Union Jurisdiction of Cyprus Member Country.
UK
NOW FSA has changed name FCA, & regulation details can bound from either FSA or FCA.
The FSA regulates all financial firms in UK, the official web site for FSA is https://www.fsa.gov.uk/ this web-site contains list of metals brokers licensed in the UK. FSA also registers other international firms and metals 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 UK just go to the FSA Register.
Germany
The BaFIN regulates all German financial institutions, web-site for BaFin is https://www.bafin.de and BaFin is the Federal Supervisory Authority in German for Investment brokers and institutions operating within German.
Australia
The ASIC regulates all firms in Australia
Japan
Regulates all Japan based firms
Switzerland
The FDF regulates all Swiss based firms
Canada
The CIPF regulates all Canadian firms
European Union Firms
MIFID is more of a Regulation Standard for European Union Firms, than a Regulation Authority.
Mauritius
The IFSC regulates all Mauritius firms
The above Regulatory authorities are most trusted & 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 Metal Broker Regulations and USA Regulatory Authorities
NOTE: One thing you should know about regulators is that you might not want to chose NFA or CFTC USA Regulators, who have these very strict rules:
- Max Metals Trading Leverage 50:1
- First In First Out FIFO Trading (open trades in 123 trading order, must close then in 123 trading order, not 321, not 312, not 213 order)
- No Stop Loss Metals Order Setting
It is for the above rule that most traders won't open an account with USA brokers, most traders who traded with USA metal brokers closed their accounts & moved them overseas with the introduction of these new rules, around sometime in year 2010.
In addition these regulators, will take to court any metals trading financial broker that opens an account for USA citizens, this is why no metal broker will open an account for an American, Only those trading brokers which are based in USA can open an Account For An USA Citizen. Only ones metals brokers accepting America clients are only those brokers based in USA.
