Safety and Regulation on eToro

Safety and Regulation

Overview

Safety and trader protection are some of the most important issues to consider while using a trading platform. Many online brokers, including eToro, are not listed on any stock exchange and do not disclose financial information, so ensuring your money and personal data are safe should be a key concern. Below we will address some key aspects of customer security and protection on the eToro platform.

(NOTE: Before we continue, we have to give a disclaimer that the trading products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. CFDs are complicated instruments that are never guaranteed to provide you supplemental earnings.  In fact, Around 68% of all retail investors experienced a loss while trading CFDs. Make sure to keep this in mind before attempting to use the eToro platform yourself. All the information found on this website is not official trading advice and all practices shown are referenced for the use of the Demo account only.)

Regulation

eToro is an officially registered Cypriot Investment Firm under the number of HE20058. Since the company operates globally, its activities are of course monitored and regulated by multiple regulatory financial authorities, in particular FCA, ASIC and CySEC. 

Traders who are citizens of the United Kingdom can open an account under eToro (UK) Limited and which is regulated by the FCA. In case of unfortunate event where eToro becomes insolvent, eToro UK clients can be compensated by an amount of up to £85,000 guaranteed by the Financial Services Compensation Scheme (FSCS).

Investors from other European countries can register their trading accounts with eToro (Europe) Limited, regulated by the Cypriot regulatory authority CySEC under the license 109/10. The amount of investment protection coverage at eToro Europe is of a maximum of €20,000, determined by the Cypriot Investors Compensation Fund. Both the UK and European platforms comply with the Markets in Financial Instruments Directive (MiFID), an EU law providing a regulatory regime for investment services.

Clients from Australia eToro Australia covered by ASIC, the Australian regulatory financial authority. ASIC however does not provide any obligatory investor protection for a specific monetary amount. eToro in the USA is registered with FinCEN as a Money Services Business. eToro also provides negative balance protection for forex spot and CFD trading, but only for retail clients from the European Union. Professional and non-EU clients are not covered for such negative balance protection.

Hence the protection mechanisms for each client depend on their geographical location. Since eToro operates three legal entities and serves customers based on their residency, the entity you belong to defines the Terms and Conditions you agree too upon registering on the platform. This ensures there are multiple official measures implemented aimed at protecting customers. For more details, also check eToro’s description of its regulation and license.

Background check

Broker reputation is one of the key indicators of their trustworthiness. eToro is a relatively well established platform (registered in 2007 in Israel) in this young industry, with customers from more than 140 countries and is suited for traders with different level of skill and understanding. This is a very good indicator as the longer the track record of a broker and the larger it is, the more customers have put it under test and the more funds it has available to invest into security concerns.

eToro is a privately-owned fintech startup, backed with venture capital from various owners including funds like Commerz Ventures Gmbh, the VC arm of Commerzbank, several Israeli firms and other investors from all over the world. eToro is lead by Yoni Assia, its founder and currently the CEO.

Because eToro is one of the largest firms in its industry, its highly transparent profile is closely monitored and being regulated by top-tier authorities is a great sign for eToro’s safety. eToro values its reputation highly and does its best to avoid regulatory noncompliance or other forms of malfunction.

Funds’ safety

Customers’ money is kept in segregated bank accounts in accordance with the applicable laws and regulations. For more information please refer to this article as well as Terms and Conditions.

Data protection

Client identity verification

To avoid any potential fraud or speculation, avoid suspicious activity and keep the platform safe, each new user undergoes identity verification. This includes submission of certain verification documents and confirmation of identity details.

Login verification

Accessing your account should be as safe as possible, and eToro offers a Two Factor Authentication process while login into you account. A verification code to be entered while logging in will be sent to your mobile phone via a text message by SMS. Active session is be allowed at only one device at a time, the number of login attempts is limited and measures to impede automation attacks are implemented. These security settings can be altered on your eToro Account Settings.

Encryption

Being a relatively big broker, eToro invests heavily into customer security. Since clients’ data privacy is one of the key concerns for eToro, the platform heavily employs data security and various safety tools, including firewalls and SSL data encryption. eToro transmits sensitive data using encryption, ensures the most updated security protocols and various other security mechanisms.

Summary

Hopefully this article clears all concerns regarding safety and regulation on eToro. In case of any remaining doubts, do not hesitate to ask them in the comments section below. Do not forget that trading involves capital loss risks and should be done responsibly. Good luck trading!

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eToro is a multi-asset platform that offers both investing in stocks and crypto assets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.

Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorized and regulated by the Cyprus Securities and Exchange Commission.

Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.