Trust and Regulation

Trust and reputation are the most valuable ranking factors we have for brokers. Brokers who manipulate or steal from their customers, or who lack the respect of the industry and their clients, are fundamentally flawed and we will always warn traders away from these companies. On the other hand, we endeavour to highlight those who have leading accreditation and who champion and support their client base.

Trust

When judging a broker, our priority is always to establish how trustworthy they are. It is absolutely essential for traders to be able to trust their broker, but there are only a few ways for trust to be established.

Verifying which regulator(s) have licensed a broker is the only truly reliable mechanism of determining trust. There are many regulatory agencies around the world, but as their regulatory powers vary, and their commitment to consumers can be influenced, accreditation from some agencies is recognised as being superior. To rate how trusted a broker is, we must consider which regulator(s) have oversight over their processes.

To gauge the commitment of regulators to consumers, we use a tiered system to assign a trust score to regulators, where tier 1 contains the leading and most respected agencies in the world, and tier 4 are regulators in name only. The chart below shows how we have organised regulatory agencies into jurisdictions.

Reputation

While there are awards and events to honour brokers, and other third-party tools which seek to establish their trustworthiness, time and again we resort to regulation to determine if a broker can be trusted with client funds.

Awards ceremonies are ultimately marketing events where each of the entrants needs to pay a fee to be eligible for near-certain awards, and the more events a broker is enrolled with, the more awards they will receive.

While it is true that brokers often deserve credit for these awards, the nomenclature used by those that grant the awards can be an exaggeration of the reality. Brokers who choose not to involve themselves in these marketing events are often better than those that do, so taking these awards as a true indication of quality could be misleading.

We have chosen to include awards as a part of our reviews because, despite their distorted view of the industry, we feel they are valuable to the reader and highlight the strengths of each individual broker; but we do stop short of using this metric as a good indication of reputation. For this, we rather refer to customer comments and the broker’s willingness to work with customers on their grievances.