Not every broker is equally regulated. The differences between regulatory authorities can mean the difference between protection and total loss in a crisis.

The Most Important Regulatory Authorities

BaFin (Germany)

The Federal Financial Supervisory Authority regulates all brokers based in Germany. Strengths: Strict capital requirements, deposit insurance up to 100,000 euros, ban on CFDs with margin call obligation. BaFin-regulated brokers: Trade Republic, Scalable Capital, comdirect, ING.

FCA (United Kingdom)

The Financial Conduct Authority is considered one of the strictest regulatory bodies worldwide. Strengths: FSCS protection up to 85,000 GBP, strict conduct-of-business rules. After Brexit, UK brokers no longer count as EU-regulated in the EU — watch out for deposit insurance.

SEC/FINRA (USA)

The Securities and Exchange Commission together with FINRA regulates US brokers. Strengths: SIPC protection up to $500,000 (including $250,000 cash), strict reporting requirements. Interactive Brokers is SEC/FINRA regulated.

CySEC (Cyprus)

The Cypriot supervisory authority regulates many CFD and forex brokers operating in the EU. Weaknesses: Historically less strict enforcement, deposit insurance only up to 20,000 euros. eToro is CySEC regulated — significantly less protection than BaFin.

What to Watch Out For

Check regulation: Every broker must state their license in their legal information. Verify the license number on the regulator website.
No offshore: Brokers based in the Bahamas, Marshall Islands, or Belize have virtually no regulatory oversight. Stay away.
EU passport: EU-regulated brokers can operate throughout the EU. But deposit insurance depends on the home country — a Cypriot broker offers only 20,000 euros protection, even when operating in Germany.

What Happens When a Broker Loses Its License?

When BaFin revokes a broker license, it must cease operations. Your securities (segregated assets) are not affected — you can transfer them to another broker. Cash balances are protected by deposit insurance.

Different with unregulated brokers: You have no protection whatsoever. In the worst case, your money is gone — as thousands of investors painfully learned with various crypto exchanges (FTX, Celsius).

Bottom Line: Regulation is not a bureaucratic detail — it is your life insurance as a trader. Only trade with regulated brokers, and prefer BaFin, FCA, or SEC regulated providers.