eToro ASIC Regulation 2024: Supervision, Investor Protections, and More

eToro is a forex and CFD broker offering online trading services to traders and investors worldwide. The broker provides a diverse range of trading instruments, including Cryptocurrencies, Stocks, Commodities, Currencies, crypto, ETFs. It also supports multiple trading platforms and tools such as eToro Trading Platforms.

Although eToro is regulated by several authoritative bodies, including SEC, FINRA, FCA, CySEC, FSA-S, SIPC, ADGM, it is not regulated by ASIC (Australian Securities and Investments Commission). In this article, we will explore eToro’ regulations, and its features, and provide a list of alternative brokers that are regulated by ASIC.

Does eToro Operate Under ASIC?

No, eToro does not operate under ASIC (Australian Securities and Investments Commission) regulations. The broker is regulated by several other reputable financial authorities, including the SEC, FINRA, FCA, CySEC, FSA-S, SIPC, ADGM. These regulatory bodies ensure compliance with various standards for financial stability, transparency, and investor protection, though they do not provide the specific protections offered by the ASIC in Australia.

What Other Regulations Does eToro Have?

FCA (Financial Conduct Authority)

eToro is regulated by the Financial Conduct Authority (FCA) in the UK. The FCA, established in 2013, is responsible for regulating financial markets and firms in the United Kingdom.

The FCA requires eToro to adhere to strict guidelines for financial conduct, including maintaining adequate capital, safeguarding client funds, and ensuring transparency in its operations. This includes keeping client money separate from company funds and providing regular financial reports. FCA regulation helps ensure that eToro operates securely and fairly, offering a high level of protection and trust for clients in the UK and across Europe.

CySEC :

eToro is regulated by CySEC. Established in 2001, Cysec is Cyprus’s financial regulator. Since Cyprus joined the European Union in 2004, CySEC’s regulations align with the MiFID directive, ensuring compliance with EU-wide financial standards and investor protection. This regulation allows the broker to offer services across the European Economic Area (EEA) under the MiFID II directive, ensuring investor protection and transparency. CySEC regulation requires brokers to follow strict guidelines for handling client funds, including segregation and periodic reporting.

SEC:

eToro is regulated by the U.S. Securities and Exchange Commission (SEC) under the regulations that apply to foreign financial service providers operating in the U.S. The SEC, established in 1934, is the primary regulatory body overseeing securities markets and protecting investors in the United States.

For brokers like eToro, the SEC requires adherence to rigorous standards for transparency, financial stability, and investor protection. This includes regulations for maintaining sufficient capital, safeguarding client assets, and providing clear and accurate financial disclosures. The SEC’s oversight ensures that eToro operates with high standards of integrity and reliability for clients dealing with U.S. markets.

FINRA:

eToro is also regulated by the Financial Industry Regulatory Authority (FINRA) for its operations involving U.S. clients. FINRA, established in 2007, is a non-governmental organization that regulates member brokerage firms and their registered representatives.

FINRA requires eToro to adhere to strict standards for financial stability, transparency, and client protection. This includes maintaining adequate capital reserves, keeping client funds separate from company assets, and ensuring accurate and timely reporting. FINRA’s oversight helps ensure that eToro operates fairly and transparently, protecting U.S. investors and maintaining trust in the financial markets.

SIPC:

eToro is a member of the Securities Investor Protection Corporation (SIPC). The SIPC, established in 1970, protects customers of brokerage firms if the firm fails financially.

While SIPC protection primarily covers the return of customers’ securities and cash (up to $500,000, including a $250,000 limit for cash claims) in cases of broker-dealer insolvency, it does not protect against losses from market fluctuations or investment losses. The SIPC helps ensure that client’s assets are protected in the event of a broker’s financial failure, adding an extra layer of security for investors.

ADGM:

eToro is regulated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM). The ADGM, established in 2013, is an international financial center located in Abu Dhabi, United Arab Emirates.

The FSRA of ADGM oversees financial institutions to ensure they operate with high standards of integrity and transparency. For eToro, this includes requirements for maintaining adequate capital, safeguarding client funds by keeping them separate from company assets, and providing clear financial reporting. This regulation helps ensure that eToro offers secure and reliable services for clients in the ADGM and globally.

FSA -S : / FSA in Seychelles

eToro is regulated by the Financial Services Authority (FSA) of Seychelles. The FSA, established in 2013, oversees the financial services sector in Seychelles to ensure compliance with regulatory standards and to protect investors.

The FSA requires eToro to adhere to guidelines for managing client funds, which include keeping client money separate from company funds and providing regular financial reports. This regulation helps ensure that eToro operates securely and transparently, particularly for clients in Seychelles, and maintains a trustworthy trading environment.

Best ASIC Regulated Forex Brokers: Alternatives to eToro

eToro is one of the leading forex and CFD brokers. The broker is not regulated by ASIC. It is regulated by other top-tier regulators including SEC, FINRA, FCA, CySEC, FSA-S, SIPC, ADGM. There are several ASIC regulated brokers that can serve as alternatives to eToro. These brokers include: 

These brokers operate under ASIC  regulation. According to ASIC rules, they offer leverage up to 30:1 and provide negative balance protection for retail traders. To learn more about ASIC-regulated forex brokers, you can read our content on the best ASIC-regulated forex brokers.

How Can I Verify If My Broker is ASIC Regulated?

To verify if your broker, such as eToro, is regulated by the ASIC, follow these steps:

1. Find the Broker’s Reference Number or Name: Obtain this information from the broker’s website.
2. Search the ASIC Register: Visit the ASIC Financial Services Register and enter the broker’s reference number or name.
3. Check the Broker’s Authorization: Ensure that the broker is authorized to provide “Rolling spot forex contract” services to retail customers in Australia.
4. Match Firm Details: Verify that the details on the ASIC website, such as the broker’s website and email, match those provided by the broker. Any discrepancies might indicate an unauthorized broker, and you should avoid trading with them.

Frequently Asked Questions ( FAQs)

What is eToro?

For over 15 years, eToro has been championing the art of social trading among forex traders. It has built a huge community comprising over 30 million traders who interact with each other while investors automatically copy the trades of expert traders. Additionally, you can trade real stocks, ETFs, and cryptos with eToro.

Is eToro Considered Safe?

Yes, eToro is considered safe. The broker is regulated by multiple top-tier regulatory authorities, including SEC, FINRA, FCA, CySEC, FSA-S, SIPC, ADGM. It offers negative balance protection and holds client funds in segregated bank accounts. Additionally, eToro provides an investor protection scheme for clients regulated under FCA and CySEC, making it a reliable and trustworthy broker.

Does eToro Offer Negative Balance Protection?

Yes, eToro offers negative balance protection. All ASIC-regulated brokers must offer negative balance protection. Negative balance protection means that traders are protected from losing more money than they have in their trading accounts. If a trade results in losses that exceed the amount of funds in the account, negative balance protection ensures that the trader’s balance cannot go below zero. This prevents the trader from owing the broker any additional money.

Is eToro regulated in Australia?

No, eToro is not regulated in Australia. The broker is not regulated by ASIC, the Australian regulator. However, it accepts Australian clients under its global entity. eToro is regulated by several other authorities, including SEC, FINRA, FCA, CySEC, FSA-S, SIPC, ADGM.