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Best FINRA Regulated Brokers 2020
FINRA Regulated Brokers Comparison Table
Introduction to FINRA Regulation
The United States of America is very serious and strict when it comes to the regulation of financial entities operating and offering their services in the U.S. The country is home to various regulatory bodies with many guidelines and laws imposed by them. One of the most reputable and respected authorities in the financial sector is the Financial Industry Regulatory Authority (FINRA). This authority is a self-regulatory association, working in accordance with a list of elite regulatory powers in the U.S. By being self-regulated it is not funded or operated by the government, this makes it a rather rare regulatory authority in the United States. With its establishment, the authority took on the responsibilities of the National Association of Securities Dealers (NASD). This came with the approval of the Securities Exchange Commission (SEC) to have a self-regulatory authority of the financial markets. Thus leading to FINRA’s establishment in 2007.
The authorities main goal or purpose is to protect the consumers from financial crimes and to prevent any financial malpractices from ever happening. They ensure this through their numerous regulatory guidelines imposed on brokers and the financial markets.
FINRA is a self-regulatory body that supervises and implements regulatory guidelines on financial firms that deal in securities, equities, bonds, futures, and options. This includes all the financial products listed on the U.S. markets. FINRA’s regulatory framework is considered to be quite extravagant and strict with many restrictions imposed on brokers who offer their financial services to the public. Their regulation is free from any government intervention and is carried out solely by them. Although FINRA is required to work according to the guidelines laid out by the SEC.
A financial area in which FINRA holds no regulatory authority over is the trading of Forex and commodities. These financial products are regulated by the National Futures Association (NFA) and the U.S. Commodity Futures Trading Commission (CFTC). With this in mind, every financial company operating out of the U.S. and offering their services to American citizens must operate under their relevant authority.
Although FINRA isn’t the only regulatory authority in the United States, it is the largest and most important authority which has been responsible for the protection and integrity of the financial markets.
Being such a large and important regulatory authority, FINRA has taken on plenty of responsibilities. The agency is now responsible for the supervision and regulation of more than 4000 registered brokerages and around 650,000 registered entities in the U.S. With such a grand number of financial firms under their regulatory power, FINRA has become a very well-respected authority on the field of broker regulation.
With the supervision and regulation of all these companies, FINRA is responsible for issuing investigations to ensure compliance with their rules and guidelines. Since it’s foundation in 2007, FINRA has generated more than $200 million in fines and restitutions. The authority has zero tolerance for scams or financial malpractices and will impose heavy penalties and fines on those who fail to comply with their regulation.
As well as issuing investigations, FINRA is also responsible for the creation and implementation of new laws and regulatory guidelines. The organization works closely with US Congress and the SEC regarding this matter.
All in all, FINRA is responsible for the protection of consumers and the integrity of financial markets in the U.S. They do this by creating and implementing laws, supervising and investigating firms, the licensing of competent firms, and the education and preparation for their regulatory guidelines.
How FINRA Regulation Protect You
Traders and investors in the U.S. financial markets are protected by the highly reputable regulations imposed by the FINRA. Consumers benefit from being protected from any financial malpractices they might encounter. FINRA has an excellent arbitration service put in place to address and resolve issues set forth by investors and employees against any financial organization. This service has proven to be quite competent in the just resolution between parties. FINRA has even been able to recover money for investors who fall victim to dishonest brokers. As well, FINRA will issue warnings of fraudulent brokerages in hopes to prevent any scams from ever happening. Also, they provide educational information for investors through various methods on their website.
Consumers can feel protected when dealing with brokerages regulated under FINRA. They are delighted with peace of mind knowing they are protected through the regulation imposed by them.
Guidelines for FINRA Regulated Brokers
Since FINRA is dedicated to the protection of investors, they enforce strict guidelines on their regulated brokers to ensure consumers safety. For instance, all FINRA regulated brokerages must be licensed and regulated under FINRA to ensure investors safety. Brokers undergo an intense licensing process, requiring them to pass and excel at their qualifying exams that test the brokers’ ability in a wide range of financial services. As well, brokers must submit periodic audit reports to ensure they are complying with the financial requirements set out for them. Brokers are also required to follow certain advertising methods in which they represent the company in a true and fair way to consumers. These guidelines and rules are set in place to prevent fraudulent brokerages from operating within the country, and failure to comply will result in hefty fines and possible license removal.
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