How to check a broker

Before you let an electrician rewire your home, you check that they have a license. It's the same with a broker, only more money is at stake.

- Find the regulator. Strict regulators of brokers are, for example, in the UK (FCA), in Cyprus (CySEC, under European Union rules) and in Australia (ASIC). A license from some small island guarantees almost nothing. - Check the register. Open the regulator's website yourself, not through the broker's link, and find the broker in the list by name and license number. Check the website address: scammers make copies with similar names. - Check the company in the contract. A big broker often has several companies. One of them may hold the strict license, while clients from your country are signed up through another one on an island — and then the protection doesn't apply to you. The company name in the contract must match the register letter for letter. - Negative balance protection. In the European Union and the UK, a broker must not let a private client go into debt: even in a sharp jump you lose no more than what is in your account. - Money kept separately. An honest broker keeps clients' money separate from its own. If the broker goes bust, the people it owes money to can't take this money.