Since trading has become accessible to individuals, the number of brokers has also increased significantly. With the pandemic crisis, many individuals in Australia and all over the world are learning to trade for profit or to supplement their income. Due to this influx of traders, many brokers have emerged, but a large part of them are not regulated. More than anything, choosing a regulated broker is the first step in making successful stock market investments. We explain why regulation is a significant thing in trading.
Why must you choose a regulated broker to trade in Australia?
Nowadays, individuals can easily access binary options, and many of these new traders don’t know the realities of online trading. These novice traders may then come across a bad broker choice. However, this is the first command in the field of trading. As experts know, this is the main rule which should not be broken: always choose a regulated broker.
If regulation is a fundamental criterion in trading, it is not without reason. Regulation is a system put in place to ensure that trading players follow standards so that traders can trade in good conditions. Indeed, when a broker is regulated, this means that he must comply with rules concerning the security of transactions and the protection of investor funds.
If you are looking for a mobile-enabled regulated trading platform, we suggest you see the best stock trading apps Australia that are regulated and reliable. By choosing among these brokers, you will not have to fear for your investments.
The benefits of a regulated broker in Australia
Among the advantages of a regulated broker is the principle of account segregation. This feature is present in all regulated brokers. Through this system, investors' funds are placed in separate accounts, thus ensuring solvency to investors. Since the money is thus invested in independent banks, this fund remains secure even if the financial situation of the brokerage firm collapses.
In addition, broker regulation also concerns the level of security of transactions. The same applies to information on the website and banking data that are protected by encryption systems. The trading conditions are presented and in case of problems, the trader can trust the customer service or control institutions.
Moreover, these bodies can sanction the broker if he does not respect the rules they indicate. So if you find an unregulated broker, that one probably has bad intentions. Unfortunately, many novice traders are getting screwed by these crook brokers. And the sad thing is, no legal process is possible if you get caught by brokers.
Australian Securities and Investments Commission or ASIC
The Australian Securities and Investments Commission, or ASIC, is the financial regulator in Aussieland. It is an independent organization, which works with the Australian government. ASIC plays an important role in protecting brokers' clients. The financial regulator explains financial products to brokers' clients, certifies brokers and helps improve the service provided to clients.
For brokers, ASIC ensures that client accounts are segregated from the broker's operating accounts. The organization also conducts regular financial audits to ensure that the broker is serious. Among the most famous brokers regulated by ASIC, there is eToro which is the most reliable broker of the moment.
