Interactive Brokers ASIC Regulation 2024: Supervision, Investor Protections, and More

Interactive Brokers 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  Stocks, options, futures, currencies, bonds, and funds. It also supports multiple trading platforms and tools such as WebTrader, FIX API, MobileTrader (MobileApp), TWS.

Although Interactive Brokers is regulated by several authoritative bodies, including SEC, CFTC, FCA, FSCS, FINRA, FCM,  IIROC, MAS, FSA, it is not regulated by ASIC (Australian Securities and Investments Commission). In this article, we will explore Interactive Brokers’ regulations, and its features, and provide a list of alternative brokers that are regulated by ASIC.

Does Interactive Brokers Operate Under Asic?

No, Interactive Brokers does not operate under ASIC (Australian Securities and Investments Commission) regulations. The broker is regulated by several other reputable financial authorities, including the SEC, CFTC, FCA, FSCS, FINRA, FCM,  IIROC, MAS, FSA . 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 the UK.

What Other Regulations Does Interactive Brokers Have?

SCB (Securities Commission of The Bahamas):

Interactive Brokers is also regulated by SCB. Established in 1995, SCB  regulates and oversees the financial services industry. The SCB ensures that Interactive Brokers follows guidelines for maintaining adequate capital, protecting client assets, and ensuring transparent operations for clients from various regions, particularly those outside Europe and Australia.

CFTC:

Interactive Brokers is regulated by the Commodity Futures Trading Commission (CFTC) for its operations involving U.S. clients. The CFTC, established in 1974, is an independent U.S. government agency that regulates the futures and options markets.

The CFTC requires Interactive Brokers to adhere to strict standards for financial conduct, including maintaining sufficient capital, segregating client funds from company assets, and ensuring transparency in trading practices. The CFTC’s oversight helps protect U.S. investors by ensuring that brokers like Interactive Brokers operate with integrity and comply with regulatory requirements.

MAS:

Interactive Brokers is regulated by the Monetary Authority of Singapore (MAS). MAS, founded in 1970, is the government body responsible for overseeing financial institutions in Singapore, ensuring financial stability and investor protection.

Under MAS regulation, Interactive Brokers must follow strict rules, including maintaining enough capital, keeping client funds separate from company assets, and providing regular financial reports. MAS supervises forex trading and limits the maximum leverage to 1:20 to manage risk. Although there is no specific protection scheme, MAS’s oversight ensures that Interactive Brokers operates safely and transparently. For more details, you can visit their website: http://www.mas.gov.sg.

FINRA

Interactive Brokers 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 Interactive Brokers 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 Interactive Brokers operates fairly and transparently, protecting U.S. investors and maintaining trust in the financial markets.

IIROC:

Interactive Brokers is regulated by the Investment Industry Regulatory Organization of Canada (IIROC). IIROC, established in 2008, is a national self-regulatory organization responsible for overseeing investment dealers and trading activities in Canada’s debt and equity markets.

IIROC requires Interactive Brokers to comply with strict standards, including maintaining sufficient capital, segregating client funds from company assets, and providing transparent, regular financial reporting. IIROC’s regulation ensures that Interactive Brokers operates with integrity, offering a secure and transparent trading environment for clients in Canada, protecting investors, and ensuring market fairness.

FSCS

Interactive Brokers is also covered by the Financial Services Compensation Scheme (FSCS) in the UK, which provides essential protection for clients. The FSCS was established to safeguard consumers in the event that a regulated financial firm, such as Interactive Brokers, is unable to meet its obligations. Under this scheme, clients can receive compensation of up to £85,000 per person if the broker becomes insolvent.

This coverage reinforces the confidence clients can have in Interactive Brokers, as it ensures their funds are protected in a dynamic trading environment. The FSCS plays a vital role in maintaining trust and security within the financial markets, assuring clients that their investments are secure and fostering a high level of integrity in Interactive Brokers’s operations.

FCM

Interactive Brokers is also regulated as a Futures Commission Merchant (FCM) by the Commodity Futures Trading Commission (CFTC) in the United States. The CFTC, established in 1974, oversees the derivatives markets, ensuring their integrity and protecting market participants from fraud and abuse.

As an FCM, Interactive Brokers is required to adhere to stringent regulations that include maintaining sufficient capital, segregating client funds, and providing transparency in trading operations. This regulation helps ensure that client funds are safeguarded and that trading practices are fair and compliant with industry standards. By being regulated as an FCM, Interactive Brokers offers clients in the U.S. added confidence and security, reinforcing its commitment to maintaining a trustworthy trading environment.

FSA

FSA regulation refers to the rules and oversight provided by the Financial Services Agency (FSA) of Japan. Established in 2000, the FSA supervises financial institutions including banks, insurance companies, and forex brokers to ensure the stability and fairness of Japan’s financial system. It works to protect investors and maintain confidence in the market.

Financial service providers, such as forex brokers, must be licensed by the FSA to operate in Japan. The FSA enforces strict standards on capital requirements, risk management, and transparency. It requires firms to segregate client funds to ensure their protection and implement robust measures to prevent financial misconduct. By enforcing these regulations, the FSA plays a key role in upholding market integrity and safeguarding investor interests.

Best Asic Regulated Forex Brokers: Alternatives to Interactive Brokers

Interactive Brokers 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, CFTC, FCA, FSCS, FINRA, FCM,  IIROC, MAS, FSA. There are several Asic regulated brokers that can serve as alternatives to Interactive Brokers. 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 Interactive Brokers, 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 the UK.
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 Interactive Brokers?

Founded in New York, USA in 1978 by Thomas Peterffy, Interactive Brokers has grown into a global brand with over 2.1 million clients. It has become one of the leading online trading solutions for traders, investors, and advisors. The brokers give access to over 5000+ tradable assets including forex, CFDs, warrants, ETFs Options, Futures, Mutual Funds, and Bonds. To trade online, IBKR offers WebTrader, FIX API, MobileTrader (MobileApp), and TWS trading platforms.

Is Interactive Brokers Considered Safe?

Yes, Interactive Brokers is considered safe. The broker is regulated by multiple top-tier regulatory authorities, including SEC, CFTC, FCA, FSCS, FINRA, FCM,  IIROC, MAS, FSA. It offers negative balance protection and holds client funds in segregated bank accounts.

Does Interactive Brokers Offer Negative Balance Protection?

Yes, Interactive Brokers 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 Interactive Brokers regulated in Australia?

No, Interactive Brokers is not regulated in Australia. The broker is not regulated by ASIC, the Australian regulator. However, it accepts Australian clients under its global entity. Interactive Brokers is regulated by several other authorities, including SEC, CFTC, FCA, FSCS, FINRA, FCM,  IIROC, MAS, FSA