Online trading regulators in Europe

The fact that online trading is a part of the financial industry means it also happens to be one of the most regulated industries in Europe. Today, several regulators are tasked with overseeing and regulating the market and the brokers that operate on it.

Since Brexit, a lot of things have changed in the region, including the way that online brokers are regulated and licensed in Europe. Here’s a look at how the online trading industry is managed and controlled these days.

The two main regulators

After Brexit, Europe was divided into two separate entities – the UK and the EU – and both regions have their own financial regulators. However, this was also the case before Brexit and the main difference nowadays is that online brokers operating in the UK can’t rely on a broker licence from anyone other than the Financial Conduct Authority (FCA), while every country in the EU accepts a licence from the Cyprus Securities and Exchange Commission (CySEC). 

1. Financial Conduct Authority (FCA)

The FCA is the main financial regulator in the UK. They are tasked with regulating and controlling all financial business that operates within the UK, including banks, the London Stock Exchange, insurance companies and online brokers.

The FCA has for many years been considered one of the strictest financial regulators in the world, and they still live up to that reputation. This means that getting approved by the FCA is no easy task and only the best of the best end up getting an FCA license, regardless of what financial service that business offers.

For a consumer, this means that any financial operator that has an FCA license can be considered safe to use. And if there was ever an issue with payments, lost funds or safety breaches, users can rely on the FCA to back them up. This list of the best FCA-regulated brokers in the UK provides more information.

2. CySEC

The Cyprus Securities and Exchange Commission (CySEC) is the main regulator of online brokers for the rest of Europe. Following Directive 2014/65/EU (more commonly known as MiFID 2 (Markets in Financial Instruments Directive two), they are tasked with licensing and regulating online brokers all over the EU (except for in Belgium).

CySEC is just as reliable and serious as the FCA and any broker that manages to be licensed from this organisation can be considered one of the best in the world.

Local regulators

But it doesn’t end here, because, in addition to CySEC, every country in the EU also has their own financial regulators that brokers have to adhere to. In most cases, a broker who wants to start offering online trading in the EU has to first be issued a CySEC license and then be approved by the local financial regulators in the countries in which they wish to operate.

• The Autorité des Marchés Financiers (AMF) regulates the financial markets in France, and, if an online broker wants to offer to trade in France, they need at least a CySEC licence and approval by the AMF.
• The Financial Supervisory Authority (Finanssivalvonta or FIN-FSA) is tasked with regulating financial and insurance operators in Finland. Similar to AMF, FIN-FSA approves every broker that operates in the country
• The Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht or BaFin) is the main financial regulator in Germany and they regulate all brokers that operate in the country. Some of the financial regulation in the country is handled by the Bundesbank, but brokers are always regulated by BaFin.
• The Commissione Nazionale per le Società e la Borsa (CONSOB) is the authority that oversees the financial markets in Italy. Their main goal is to protect the investing public, hence regulating online brokers and all other businesses in offering trading and investments. 
• Finansinspektionen (FI) is the governmental financial regulator of Sweden and they are one of the strictest agencies in all of Europe. This means that any broker with a CySEC and FCA licence as well as approval from FI adheres to the absolute strictest financial regulations in the world. 

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