Checking a provider
Four checks in a fixed order, done in a few minutes, that rule out the large majority of disreputable offers.
Step one: authorization. Is the provider listed in a European regulator's public register? These registers are freely searchable. Can't find it, stop right there.
Step two: contracting party. Which legal entity are you actually contracting with? That's in the imprint and contract documents, not the advertising. Often a regulated entity advertises while a different one in a third country signs the contract.
Step three: withdrawals. Search specifically for reports about withdrawals. With disreputable providers, depositing works smoothly and withdrawing doesn't. That's the single most reliable trait there is.
Step four: outreach. Were you contacted, or did you go looking yourself? Reputable providers never call anyone, don't pressure, and don't promise returns. Anyone pushing you to deposit wants exactly that and nothing else.
Register checks should run through national regulators' databases as well as the European regulator's central register. Many regulators also publish warning lists of firms operating without authorization. These lists are free to check and updated regularly.
For group structures, what matters is the contracting entity, since oversight, investor protection, and legal recourse follow its jurisdiction. A sister company's authorization in a member state offers no protection for contracts signed with an entity in a third country.
A further checkable trait is the separation of client funds and the named custodian. At regulated providers, this information is available. If it's missing or points to an affiliated entity, independent verification of the holdings' existence disappears, which was the central cause of loss in documented collapses.
Summary
- Register, contracting party, withdrawals, outreach. In that order.
- What matters is the contracting entity, not the advertising one.
- Smooth depositing with difficult withdrawing is the clearest signal.
Did you get it?
Which entity determines your protection?
The contracting one. A sister company's authorization doesn't protect you.
What are regulators' warning lists?
Free, regularly updated lists of firms operating without authorization.
What trait was central in documented collapses?
The lack of separation of client funds and a non-independent custodian.
Related
- Finding a reputable brokerStage 1
- Loss rates on CFDsReality Check
- Reading a balance sheetStage 3