Regulated vs unregulated

Broker Discussion
14

This is a fasle statement and we are conditioned to beleive that “regulated” brokers are better than the non-regulated ones. For example Man financial, MF Global and Lehman brothers are better than lets say Alpari (because at one time they were also unregulated). I’m not saying Aplari is the best, there are numerous “offshore” brokers that are somtimes also refered to as unregulated brokers.

I see your response as derogatory and full of frustration. However, Im not sure why you would not just ignore a topic that you dont like. There are a lot of other posts on this forum to have conversation at.

I agree with @Hadden a 100%

My question is WHY is regulated broker better than an unregulated broker.

Here are some facts about regulated brokers

  1. FXCM got sued by CFTC for falsifying their B-Book model
  2. MF Global redirected their clients funds to buy Euro bonds and went bust
  3. very recently a large UK broker Beaufoet securities got busted for money laundering and investors will not get their money back until the audit is over (https://www.pwc.co.uk/services/business-recovery/administrations/beaufort.html)
  4. Average client loss ratio at so called “regulated” broker is ~77% based on ew ESMA disclosure
  5. Latest ESMA regulations require all “regulated” brokers to get so called “B-Book” license if they want to keep offering services to retail clients.

SO, if there is 77% probability of retail clients making a loss and “regulated” brokers are operating with the right to “b-book” you, I dont see what makes them any better.

Theoretically, all derivative trading is zero-sum-game (a very well proven fact). SO one trader’s loss is another traders gain. So in a mathematical world, your probability of making money is 50%. But in practial sense One trader’s loss is another traders profit (MINUS commissions).

So mathematically, the larger the commission, the less and less are your changes of making money because the probability of you making money decreases as the commissions increase.

Now lets compare commissions of regulated brokers and offshore brokers (so called “unregulated” brokers). Anyone who has dome some research on commission knows the answer to this already.

It is important to do your research when choosing a broker. The most important thing to look out for is

  1. Broker’s reputations and reviews online (because no matter weather he is regulated or not, if he is reputed and trusted among traders, he is way more likely not to fall for your 10 cents and rather focus on maintaining their own business image) Regulated or not, it will not matter because reputation is more important to any financial services company

  2. Broker’s commissions. For me this is the most important matrix because I know my probability to make money decreases exponentially with slight increase of commissions

  3. Client Support.This is important becase when things go wrong you dont want to keep staring at your computer and hope to get a reply from broker that is more than a simple recitation of their long policies and client contracts

I can go on and on about my argument, but I will stop here, with a closgin argument, to save you time.

CFH is a leading “regulated” broker and Liquidity provider who recently got bought in Playtech (a gambling pioneer). Not sure why a gambling leader has so much interest that they bought a regulated broker/liquidity provider for 120 Million USD Dollars ?

Here is the link : Playtech acquires CFH Group for $120 million LeapRate

Are you still inclined to think that “regulated” brokers are better :wink: , is Yes, then best of luck and please keep sharing your experiences.

And last but not the least, there is another thread here on babypips that I follow a lot. You might find that useful

Hope that helps :slight_smile: