Interactive Brokers regulation

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

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

Why Interactive Brokers 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 Interactive Brokers as of September 2024:

• Interactive Brokers is regulated by several authorities of which at least one is top-tier, which is vital for safeguarding your money.
• Interactive Brokers must separate client funds/assets from its own operations; this makes all the difference for the safety of your investments.
• As Interactive Brokers 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 Interactive Brokers in our comprehensive Interactive Brokers 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.

Interactive Brokers operates in several countries and is supervised by the following financial authorities:

• UK - Financial Conduct Authority (FCA)
• United States - Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA)
• Canada - Canadian Investment Regulatory Organization (CIRO)
• Australia - Australian Securities and Investments Commission (ASIC)
• India - Securities and Exchange Board of India (BSE)
• Japan - Japanese Financial Services Agency (FSA)
• Hong Kong - Hong Kong Securities and Futures Commission (SFC)
• Ireland - Central Bank of Ireland
• Hungary - Central Bank of Hungary

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, Interactive Brokers 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 Interactive Brokers’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 Interactive Brokers commits fraud and uses client assets for its own purposes, you can still recover your money if you have access to investor protection.

Interactive Brokers Group is an international broker, operating through multiple entities globally. This matters for you because the investor protection amount and the regulating authority differ from entity to entity.

Interactive Brokers in Australia, Ireland, and the United Kingdom provide negative balance protection for its retail clients trading CFDs. Professional clients are not covered with this negative balance protection.

You can also hear directly from Interactive Brokers chairman and founder Thomas Peterffy about the safety of client funds held at brokers in general and at Interactive Brokers accounts in particular, by watching this CNBC interview (interview date: March 13, 2023).

*If you are a client of Interactive Brokers in the UK, the regulator and the protection amount also depends on the type of assets that you are trading:

• If you trade CFDs, non-US stock index options and futures, you are protected by the FCA, up to the amount of £85,000.
• If you trade stocks, bonds, funds and US stock index options, you are protected by the US investor protection (the protection amount is $500,000 with a cash limit of $250,000).

**In general, SIPC covers notes, stocks, bonds, mutual funds and other investment company shares, as well as 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.

***If you are a client of Interactive Brokers Ireland Limited or Interactive Brokers Singapore Pte. Ltd., the protection amount also depends on the type of assets that you are trading:

• If you trade stocks, bonds, funds and US stock index options, you are protected by the US investor protection (the protection amount is $500,000 with a cash limit of $250,000).

****For funds, clients have a protection of INR 2.5 million against the broker becoming deficient.

Since Interactive Brokers 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 Interactive Brokers, check out BrokerChooser's Interactive Brokers 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.