Charles Schwab regulation

Trying to find out whether Charles Schwab is regulated? Not sure which authorities are overseeing Charles Schwab and why this matters?

Rest assured, the lack of regulation at Charles Schwab is not a reason for worry. Our brokerage experts have determined that Charles Schwab is a fully regulated broker, overseen in USA, UK, Hong Kong, Singapore. We gathered all the information on the regulatory profile of Charles Schwab and will explain why this matters.

Why Charles Schwab is trustworthy

Why [Broker name] is trustworthy

Adam Nasli

Forex • Algo Trading • Market Analysis

I am a seasoned forex trading expert, with nearly a decade of experience in both manual and algorithmic trading. I have personally tested more than 40 different forex brokers, developing an in-depth understanding of the most common platforms, products and fee structures offered by forex brokers.

Learn about our methodology

Adam Nasli

Forex • Algo Trading • Market Analysis

I have personally tested several brokers globally and I am familiar with the regulatory and licensing procedures of at least a dozen financial authorities globally. Here are my key insights into the regulatory status of Charles Schwab as of July 2024:

• Charles Schwab is regulated by several authorities of which at least one is top-tier, which is vital for safeguarding your money.
• Charles Schwab must separate client funds/assets from its own operations; this makes all the difference for the safety of your investments.
• As Charles Schwab is regulated by several authorities, it is super important that you open an account with an entity that has top-tier regulation.
• Explore the services of Charles Schwab in our comprehensive Charles Schwab review for 2024 and browse other top-tier regulated brokers with our unique Find My Broker tool.

Think of a broker with strict regulatory oversight like a lifeguard at the beach. Just as the lifeguard keeps you safe in the water, offering immediate help when you need it, brokers operating with top-tier regulation protect your investments. They make sure your investments are secure and handled with integrity and transparency.

Charles Schwab operates in several countries and is supervised by the following financial authorities:

• USA and clients except for Hong Kong, Singapore - Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA)
• Clients opening futures account - Commodity Futures Trading Commission (CFTC)
• UK - Financial Conduct Authority (FCA)
• Hong Kong - Hong Kong Securities and Futures Commission (SFC)
• Singapore - Monetary Authority of Singapore (MAS)

Why does all this matter? We are contacted by an alarming number of people who ended up working with unregulated brokers and they share with us some sad and frightening stories. Here’s an example.

Marco invested a substantial amount using what appeared to be a credible online trading platform. Initially, his investments showed gains, and he was able to make several withdrawals without issues. Encouraged, he increased his investments, but when he tried to withdraw some profits after a successful trade, his requests went unanswered, and customer service became unreachable. Further investigation revealed the broker was not regulated by any financial authority. Eventually, the platform vanished overnight, taking John's investments with it, leaving him with no recourse to recover his funds.

Choosing a broker with top-tier regulation means you're in safe hands. This level of strict oversight ensures that your investments are protected, you're getting fair pricing, and trading conditions are transparent and favorable.

As a broker with top-tier regulation, Charles Schwab is legally required to keep the funds and assets of its clients separate from its own money. This is a game changer in terms of the safety of your investments.

Client fund segregation is like having your money in a separate safe from Charles Schwab’s own cash. Thus, if your broker ever runs into financial trouble, your funds won't be touched to settle their debts - they're entirely off-limits. It’s a crucial setup because it protects your money, ensuring that what you’ve invested stays secure and accessible only to you. This segregation is a requirement imposed by top-tier regulators and not something you can request your broker to do. You will only have access to this safety net if your broker has the appropriate regulation.

In the highly unlikely event that Charles Schwab commits fraud and uses client assets for its own purposes, you can still recover your money if you have access to investor protection.

Charles Schwab operates several legal entities globally, but all customers are covered by the US investor protection scheme, called the Securities Investor Protection Corporation (SIPC). This is because Charles Schwab & Co., Inc., the US legal entity, holds the assets on behalf of all other legal entities.
SIPC investor protection protects against the loss of cash and securities in case the broker goes bankrupt. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. This amount is substantially higher than the amount most investor protection schemes provide.
Not all investments are protected by SIPC. In general, SIPC covers notes, stocks, bonds, mutual fund and other investment company shares, and other registered securities. It does not cover instruments such as unregistered investment contracts, unregistered limited partnerships, fixed annuity contracts, currency, and interests in gold, silver, or other commodity futures contracts or commodity options.
For an overview of the different regulators, legal entities and investor protection amounts, see the table below:

Additional brokerage insurance, beyond SIPC protection, is provided to Charles Schwab & Co., Inc. accounts through underwriters in London. Charles Schwab’s coverage with Lloyd's of London and other London insurers, combined with SIPC coverage, provides protection of securities and cash up to an aggregate of $600 million, and is limited to a combined return to any customer from a Trustee, SIPC, and London insurers of $150 million, including cash of up to $1.15 million. This additional protection becomes available in the event that SIPC limits are exhausted.
Charles Schwab does not provide negative balance protection. However, this is only relevant if you're trading futures or shorting equities or options.

Since Charles Schwab is regulated by multiple authorities, it's crucial to open an account with an entity that has top-tier regulation. This ensures your investments are always protected under the highest standards.

Whenever possible, avoid signing up with entities that are regulated in off-shore countries such as the Seychelles, the Bahamas, St. Vincent and Grenadine, etc. While you may have access to a much higher level of leverage for your trades, this is extremely risky and you run a much higher risk of losing all your invested money.

In addition, rules and regulations imposed by regulators in these countries are typically less severe, potentially damaging the safety of your investments. If you are offered the option to choose which entity you open an account with, go with the one that operates under a stricter regulator.

For detailed insights into trading conditions, costs, and service quality at Charles Schwab, check out BrokerChooser's Charles Schwab review for 2024. All our broker reviews are based on the analysis of nearly 600 data points and direct experience. When we review a broker, we go hands-on by opening a real-money account and trading on its platforms, giving us a complete view of what it offers and how it performs.

The BrokerChooser team has personally tested and reviewed more than 100 brokers globally, all of which have top-tier regulation. All our experience and expertise is included in the Find My Broker tool. Simply answer a few questions and get a personalized broker list.