Sometimes you see a phrase two or three times, fairly close together.
And it kind of imprints itself on your awareness?
And then because of that, you keep noticing it even more?
So over the last few weeks, while reading trading stuff online, I’ve seen this phrase Subscription Service Regulator a few times and not known what it is. And earlier today or maybe yesterday I’m pretty sure I saw it in this forum though I can’t find it now.
But like anyone here I can see what a big issue regulators are, so I’m asking.
What’s a subscription service regulator and does it matter to me?
And why am I getting a pop-up telling me that my topic is similar to something called Euro-Zone Service-Based Acitivity Unexpectedly Improves?
Welcome to the forum, @TheVolatileOne and I hope you find the volatility you seek.
Two of the people here with decades of experience in this industry who will be able to answer in more detail are @SchmaltzHerring and @TheodoreThring . I’ve tagged them both, and hope one of them will also reply to your question.
Diva is exactly right. In professional financial/trading circles, “subscription-service regulator” is the derogatory, maybe-slightly-slang term for a kind of pretend regulator that’s designed to look to potential customers like a legitimate, independent, official financial institution that can regulate brokers, but actually has no real power at all.
They’re called that because they’re paid for mostly or entirely by subscription-fees from the brokers they pretend to regulate, and provide the service of never ruling against them.
Those brokers are just buying the right to claim on their websites, and in other places, and through their paid affiliates, often via paid-for forum-posts, that they’re regulated. In exchange the “regulators” get their wages and rent paid, and a pretty easy life (sometimes on a low-tax or no-tax Caribbean or Pacific island) as long as they don’t ever give a ruling against their own subscriber-brokers.
It’s an unethical, corrupt business model, obviously, but very widespread indeed: there are far more of them than real, proper regulators.
The real regulators are the government-funded ones in most of the European Union, Australia, North America, the United Kingdom, and Switzerland.
Three other EU countries - Bulgaria, Malta and especially Cyprus - have regulators widely regarded in the trade as “borderline”: they’re real regulators, but they’re just soft, not-very-good ones who don’t protect retail customers very well. They’re effectively broker-friendly rather than retail customer-friendly, albeit not through any intentional dishonesty, and certainly not through anything like fraud. They’re definitely not subscription-service regulators, but many forex brokers do choose to be regulated in Cyprus specifically because it’s light regulation, while still retaining the ability to announce on their websites that they’re “EU-regulated”.
It should matter to all of us.
Real regulation gives you safety of funds: real regulators require brokers to hold their clients’ funds in segregated bank accounts, and never to use those funds at any given time for their own operations. That means that if the broker goes under (and some really do, though almost never the properly regulated ones!) your money’s still there. In some countries those investor funds have to be insured, too, so as to guarantee prompt reimbursement to the account-holders, rather than leaving them awaiting for the liquidation/bankruptcy to be resolved by inevitably slow-moving legal processes.
In the UK, traders’ funds held by FCA-regulated brokers also have their first £80,000.00 protected by a government-backed guarantee, and you don’t need to be either a UK-resident or a British citizen to be protected by the UK’s Financial Ombudsman Service (as you can see for yourself, on their website).
There’s also real transparency. Properly regulated brokers have to provide honest and transparent services because there’s a real, independent body that oversees what they do. This can prevent identity theft, platform manipulation and dishonest promotions. They can’t tell lies on their websites, which are regularly inspected for the specific purpose of preventing customers from being misled.
Real regulators also perform random checks on all the operations of companies under their jurisdiction, to keep them honest in all their operations and services.
You’re also guaranteed fair resolution in the event that a dispute arises. Proper regulators exist in order to protect investors. That’s why governments fund them, and quite rightly, often in response to public demand.
This means that you can expect fair, just and independent treatment if you ever need to resolve any issue that arises between you and the broker. Not just a quick “ruling” in the broker’s favour because they pay the “regulator” an annual subscription-fee!!
Real regulators have actual power over the broker.
For all the above and many other reasons, using a broker that isn’t properly regulated by a recognized regulator really is an extremely poor and ill-advised decision!
It’s also very well worth knowing that any broker willing to give you leverage higher than 1:30 (or 1:50 in the U.S. only) is by definition one that’s chosen not to be properly regulated, because real regulators aren‘t allowed, by law, to permit that.
These Babypips Pipsology School lessons can also help.
