US Securities and Exchange Commission (SEC) Brokers 2024
This guide ranks the top brokers regulated by the US Securities and Exchange Commission (SEC), a federal government agency responsible for protecting investors within the securities markets. We investigate the agency’s powers and regulations, track record and how brokers are supervised. Our team also explain how to carry out a company search and a regulations check.
Best SEC Brokers
The SEC enforces regulations and oversees firms to protect US retail traders. These are the top brokers authorized by the SEC:
#1 - Interactive Brokers
Why We Chose Interactive Brokers
Interactive Brokers (IBKR) is a premier brokerage for experienced traders, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.
"Interactive Brokers is one of the best brokers for advanced day traders, providing powerful charting platforms, real-time data, and customizable layouts, notably through the new IBKR Desktop application. Its superb pricing and advanced order options also make it highly attractive for day traders, while its diverse range of equities is still among the best in the industry."
- DayTrading Review Team
- Instruments: Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies
- Regulator: FCA, SEC, FINRA, CBI, CIRO, SFC, MAS, MNB
- Platforms: Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, eSignal, TradingCentral
- Minimum Deposit: $0
- Minimum Trade: $100
- Leverage: 1:50
Pros
- The TWS platform has clearly been built for intermediate and advanced traders and comes with over 100 order types and a reliable real-time market data feed that rarely goes offline.
- The new IBKR Desktop platform takes the best of TWS while adding bespoke tools like Option Lattice and Screeners with MultiSort to create a genuinely impressive trading experience for day traders at every level.
- There's a vast library of free or paid third-party research subscriptions catering to all types of traders, plus you can enjoy commission reimbursements from IBKR if you subscribe to Toggle AI.
Cons
- TWS’s learning curve is steep, and beginners may find it challenging to navigate the platform and understand all the features. Plus500's web platform is much better suited to new traders.
- You can only have one active session per account, so you can’t have your desktop program and mobile app running simultaneously, making for a sometimes frustrating trading experience.
- Support can be slow and frustrating based on tests, so you might find it challenging to reach customer service representatives promptly or encounter delays in resolving issues.
#2 - Moomoo
Why We Chose Moomoo
Moomoo is an SEC-regulated app-based investment platform that offers a straightforward and affordable way to invest in Chinese, Hong Kong, Singaporean, Australian and US stocks, ETFs and other assets. Margin trading is available and the brand offers a zero-deposit account as well as several bonuses.
"Moomoo remains an excellent choice for new and intermediate stock traders who want to build a diverse investment portfolio. What really stands out is the broker's user-friendly app and the low trading fees."
- DayTrading Review Team
- Instruments: Stocks, Options, ETFs, ADRs, OTCs
- Regulator: SEC, FINRA, MAS, ASIC, SFC
- Platforms: Desktop Platform, Mobile App
- Minimum Deposit: $0
- Minimum Trade: $0
- Leverage: 1:2
Pros
- There are reduced options contract fees from $0.65 to $0
- There is no minimum deposit requirement making the broker accessible for beginners
- The ‘Moomoo Token’ generates dynamic passwords for transaction security - a unique and helpful safety feature
Cons
- There is no negative balance protection, which is a common safety feature at top-tier-regulated brokers
- It's a shame that there is no 2 factor authentication (2FA), despite the other security features on offer
- There is no phone or live chat support - common options at most other brokers
#3 - eToro USA
Why We Chose eToro USA
eToro is a social investing platform that offers short-term and long-term trading on stocks, ETFs, options and crypto. The broker is well-known for its user-friendly community-centred platform and competitive fees. With FINRA and SIPC oversight and millions of users across the world, eToro is still one of the most respected brands in the industry. eToro securities trading is offered by eToro USA Securities, Inc.
"eToro remains a top pick for traders looking for leading social investing and copy trading services. With a low deposit, zero commissions and an intuitive platform, the broker will meet the needs of newer day traders."
- DayTrading Review Team
- Instruments: Stocks, Options, ETFs, Crypto
- Regulator: SEC, FINRA
- Platforms: eToro Trading Platform & CopyTrader
- Minimum Deposit: $10
- Minimum Trade: $10
Pros
- The broker's Academy offers comprehensive learning materials for beginners to advanced-level investors
- eToro USA Securities is a trustworthy, SEC-regulated broker that is a member of FINRA and SIPC
- Investors can access Smart Portfolios for a more hands-off approach, covering a range of sectors and markets such as renewable energy and artificial intelligence
Cons
- There's no MetaTrader 4 platform integration for traders who are accustomed to using third-party charting tools
- There's a narrower range of day trading instruments available compared to competitors, with only stocks, ETFs and cryptos
- The proprietary terminal doesn't support trading bots and there are no additional stock market analysis tools
#4 - Empower
Why We Chose Empower
Empower, previously Personal Capital, is a US-based and SEC-regulated trading platform and advisory firm. Clients can access pensions, robo-advisors and do-it-yourself investing in stocks, mutual funds, fixed-income products and ETFs. Millions of clients trust Empower with their long-term investments, attracted by the suite of free financial planning tools and excellent reputation.
"Empower is best for hands-off investors looking for a US-regulated platform and robo-advisor with free financial planning services. However, investors need to be willing to make a large minimum investment and pay higher than average fees for premium services."
- DayTrading Review Team
- Instruments: Stocks, ETFs, Mutual Funds, Fixed Income
- Regulator: SEC, FINRA
- Platforms: Own
- Minimum Deposit: $1 (Cash), $100,000 (Robo Advisor)
- Minimum Trade: Variable
Pros
- Highly rated mobile app available on Apple and Android devices
- Award-winning customer support team
- Beginner-friendly financial dashboard with customizable widgets
Cons
- Only available in the US
- 0.49% - 0.89% management fees are high vs alternatives
- $100,000 is needed for the robo-advisor service
#5 - Personal Capital
Why We Chose Personal Capital
Empower (formerly Personal Capital) is a popular, SEC-regulated US financial advisory and investment platform that offers pensions, ready-made investment plans and do-it-yourself, commission-free investing through a large range of mutual funds, ETFs, individual equities and fixed-income securities. The broker has an impressive 3.4 million clients.
"Personal Capital (now Empower) is a great option for investors seeking a flexible way to build an investment portfolio or pension plan. It is a particularly good fit for US traders owing to the SEC oversight."
- DayTrading Review Team
- Instruments: Stocks, ETFs, Mutual Funds, Fixed Income
- Regulator: SEC
- Platforms: Own
- Minimum Deposit: $1 (Cash), $100,000 (Robo Advisor)
- Minimum Trade: Variable
Pros
- FDIC-insured cash account with no minimum balance requirement
- Segregated client funds with a top-tier custodian bank
- Well-known and popular investing platform
Cons
- No forex, futures or cryptocurrencies
- US residents only
- An annual advisory fee of 0.89%
What is the SEC?
The independent federal government agency aims to protect investors while ensuring the functionality of securities markets. The SEC also helps achieve transparency in the markets while preventing frauds, scams and malpractice.
To do the above, the regulatory body utilises a range of reporting and enforcement techniques. In addition, prospective members, such as forex brokers, must complete registration for a SEC licence before they can conduct business.
SEC Brokers
#1 - Interactive Brokers
Why We Chose Interactive Brokers
Interactive Brokers (IBKR) is a premier brokerage for experienced traders, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.
"Interactive Brokers is one of the best brokers for advanced day traders, providing powerful charting platforms, real-time data, and customizable layouts, notably through the new IBKR Desktop application. Its superb pricing and advanced order options also make it highly attractive for day traders, while its diverse range of equities is still among the best in the industry."
- DayTrading Review Team
- Instruments: Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies
- Regulator: FCA, SEC, FINRA, CBI, CIRO, SFC, MAS, MNB
- Platforms: Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, eSignal, TradingCentral
- Minimum Deposit: $0
- Minimum Trade: $100
- Leverage: 1:50
Pros
- The TWS platform has clearly been built for intermediate and advanced traders and comes with over 100 order types and a reliable real-time market data feed that rarely goes offline.
- There's a vast library of free or paid third-party research subscriptions catering to all types of traders, plus you can enjoy commission reimbursements from IBKR if you subscribe to Toggle AI.
- The new IBKR Desktop platform takes the best of TWS while adding bespoke tools like Option Lattice and Screeners with MultiSort to create a genuinely impressive trading experience for day traders at every level.
Cons
- IBKR provides a wide range of research tools, but their distribution across trading platforms and the web-based 'Account Management' page lacks consistency, leading to a confusing user experience.
- You can only have one active session per account, so you can’t have your desktop program and mobile app running simultaneously, making for a sometimes frustrating trading experience.
- TWS’s learning curve is steep, and beginners may find it challenging to navigate the platform and understand all the features. Plus500's web platform is much better suited to new traders.
#2 - Moomoo
Why We Chose Moomoo
Moomoo is an SEC-regulated app-based investment platform that offers a straightforward and affordable way to invest in Chinese, Hong Kong, Singaporean, Australian and US stocks, ETFs and other assets. Margin trading is available and the brand offers a zero-deposit account as well as several bonuses.
"Moomoo remains an excellent choice for new and intermediate stock traders who want to build a diverse investment portfolio. What really stands out is the broker's user-friendly app and the low trading fees."
- DayTrading Review Team
- Instruments: Stocks, Options, ETFs, ADRs, OTCs
- Regulator: SEC, FINRA, MAS, ASIC, SFC
- Platforms: Desktop Platform, Mobile App
- Minimum Deposit: $0
- Minimum Trade: $0
- Leverage: 1:2
Pros
- Moomoo's analytics and insights are impressive and detailed compared to other brands
- It is reassuring that Moomoo holds licenses with the US Securities and Exchange Commission (SEC) and the Monetary Authority of Singapore (MAS), among others
- Moomoo is a Member of FINRA and the Securities Investor Protection Corporation (SIPC), adding another level of security for prospective clients
Cons
- There is no negative balance protection, which is a common safety feature at top-tier-regulated brokers
- There is no phone or live chat support - common options at most other brokers
- It's a shame that there is no 2 factor authentication (2FA), despite the other security features on offer
#3 - eToro USA
Why We Chose eToro USA
eToro is a social investing platform that offers short-term and long-term trading on stocks, ETFs, options and crypto. The broker is well-known for its user-friendly community-centred platform and competitive fees. With FINRA and SIPC oversight and millions of users across the world, eToro is still one of the most respected brands in the industry. eToro securities trading is offered by eToro USA Securities, Inc.
"eToro remains a top pick for traders looking for leading social investing and copy trading services. With a low deposit, zero commissions and an intuitive platform, the broker will meet the needs of newer day traders."
- DayTrading Review Team
- Instruments: Stocks, Options, ETFs, Crypto
- Regulator: SEC, FINRA
- Platforms: eToro Trading Platform & CopyTrader
- Minimum Deposit: $10
- Minimum Trade: $10
Pros
- The broker's Academy offers comprehensive learning materials for beginners to advanced-level investors
- eToro USA Securities is a trustworthy, SEC-regulated broker that is a member of FINRA and SIPC
- The online broker offers an intuitive social investment network with straightforward copy trading on cryptos
Cons
- Average fees may cut into the profit margins of day traders
- The proprietary terminal doesn't support trading bots and there are no additional stock market analysis tools
- There's no MetaTrader 4 platform integration for traders who are accustomed to using third-party charting tools
#4 - Empower
Why We Chose Empower
Empower, previously Personal Capital, is a US-based and SEC-regulated trading platform and advisory firm. Clients can access pensions, robo-advisors and do-it-yourself investing in stocks, mutual funds, fixed-income products and ETFs. Millions of clients trust Empower with their long-term investments, attracted by the suite of free financial planning tools and excellent reputation.
"Empower is best for hands-off investors looking for a US-regulated platform and robo-advisor with free financial planning services. However, investors need to be willing to make a large minimum investment and pay higher than average fees for premium services."
- DayTrading Review Team
- Instruments: Stocks, ETFs, Mutual Funds, Fixed Income
- Regulator: SEC, FINRA
- Platforms: Own
- Minimum Deposit: $1 (Cash), $100,000 (Robo Advisor)
- Minimum Trade: Variable
Pros
- Millions of active users and good industry reputation
- Highly rated mobile app available on Apple and Android devices
- Robo-advisor service with pre-built portfolios and investment strategies
Cons
- Only available in the US
- 0.49% - 0.89% management fees are high vs alternatives
- No forex, commodity or crypto trading
#5 - Personal Capital
Why We Chose Personal Capital
Empower (formerly Personal Capital) is a popular, SEC-regulated US financial advisory and investment platform that offers pensions, ready-made investment plans and do-it-yourself, commission-free investing through a large range of mutual funds, ETFs, individual equities and fixed-income securities. The broker has an impressive 3.4 million clients.
"Personal Capital (now Empower) is a great option for investors seeking a flexible way to build an investment portfolio or pension plan. It is a particularly good fit for US traders owing to the SEC oversight."
- DayTrading Review Team
- Instruments: Stocks, ETFs, Mutual Funds, Fixed Income
- Regulator: SEC
- Platforms: Own
- Minimum Deposit: $1 (Cash), $100,000 (Robo Advisor)
- Minimum Trade: Variable
Pros
- A wealth of free financial analysis and planning tools
- FDIC-insured cash account with no minimum balance requirement
- Mobile app
Cons
- US residents only
- An annual advisory fee of 0.89%
- Wealth management services only for customers with $100,000+ in invested assets
Purpose
The SEC’s mission is split up into three distinct parts:
- Protect investors
- Facilitate capital formation
- Maintain and encourage market functionality
It’s worth noting the primary purpose is to supervise both organisations and individuals in the markets. Specifically, this means the agency turns its attention to brokers, exchanges, dealers, and registered investment advisors. Their scope extends from insider trading investigations to forex day trading rules and regulations.
Fortunately, you don’t need to wait for the news to find out about new regulations and filings. This is because the SEC facilitates investor access to registration statements, financial reports and other documentation via its EDGAR database.
The regulatory agency receives its mandate from several pieces of legislation:
- 1933 – Securities Act
- 1934 – Securities Exchange Act
- 1939 – Trust Indenture Act
- 1940 – Investment Company Act
- 1940 – Investment Advisers Act
- 2002 – Sarbanes-Oxley Act
- 2010 – Dodd-Frank Wall Street Reform and Consumer Protection Act
- 2012 – Jumpstart Our Business Startups (JOBS) Act
The SEC is financed by the taxpayer, as well as through registration and nominal fees. The SEC charges a tiny transaction fee on the value of all equities sold. This cost is separate to any broker commissions. These fees are given to the US Treasury, who then pay for the SEC’s regulation of brokers and markets.
History
In 1929 the US stock market crashed. As a result of false or misleading information, securities from a number of companies ended up worthless. Unsurprisingly, public confidence in the markets plummeted.
To repair the damage, following conferences and debate, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. Section 4 of the latter gave life to the SEC. The initial schedule directed them to ensure companies made truthful statements and that institutions, such as brokers, acted fairly and honestly.
Following expansion over the years, the meaning and purpose of the SEC have also extended to giving lending guidance and maintaining institution standings.
Structure
Divisions
The SEC headquarters can be found in Washington DC. The structure is relatively straightforward. The body has five divisions:
- Enforcement – The enforcement department works alongside the other divisions. They conduct investigations into securities violations and regulations. They have a range of powers, which will be broken down further below.
- Trading and Markets – This division manages self-regulatory bodies, including the FINRA and MSRB. It also includes broker-dealers and investment houses. The department plays a key role in amending regulations and monitoring industry operations. Note the SEC outsources the majority of enforcement to the FINRA. As such, all trading companies without regulatory oversight from other SROs must hold a licence with FINRA. Finally, individual traders must pass FINRA exams in order to be a registered representative.
- Corporation Finance – This department supervises disclosures made by public companies. It is also concerned with the registration of transactions and mergers.
- Investment Management – As the name suggests, this department manages registered investment companies, including investment advisors. Duties include responding to no-action letters and interpreting legislation and regulations.
- Economic and Risk Analysis – This division offers insight and analysis to aide SEC regulations and policy development. This includes potential risks and data analytics.
Offices
The SEC also has 11 regional offices. Some of the most relevant include the offices of:
- The General Counsel – This office is effectively the agency’s lawyer. It offers legal advice to the commissioner and other offices.
- Compliance, Inspections and Examinations – This office monitors and conducts investigations into brokers, exchanges, credit rating agencies, and investment companies.
- The Chief Accountant – This body plays a key role in enforcing accounting and auditing regulations.
- The Whistleblower – This office has proven particularly effective over the years. It came to life in the wake of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It offers a financial reward for information that leads to enforcement actions and sanctions in excess $1 million. Individuals can receive anywhere from 10% to 30% of the final sanctions.
Powers & Regulations
There are a number of actions the SEC takes to ensure compliance with regulations. One of the standard actions requires regulated companies to submit quarterly and annual financial reports. Company executives may also have to offer a narrative account, known as management discussion and analysis (MD&A). As mentioned above, consumers can head to the online EDGAR database to view important information.
Access to the above information is perhaps more important now than ever before. This is because you may get access to cryptocurrency and blockchain data to help you make informed investment decisions.
In the case of civil suits, the SEC primarily uses two sanctions:
- Injunctions – These aim to prevent future violations. The consequences of ignoring injunctions can range from fines to prison time. Before an injunction is given out, the body can demand documentation and testimony from suspects and witnesses.
- Penalties and disgorgements – The body can also take action that sees culprits pay hefty fines or give up profits. In addition, the commission may prevent individuals from acting as company directors.
Regulatory action can also include suspending registration, as well as cease and desist orders.
Note the regulatory agency does not have criminal authority. Instead, it can refer issues to the necessary prosecutors. Alternatively, it can seek civil action in a US District Court or an independent administrative proceeding.
It’s also worth bearing in minds the words used in liquidity rules and financial reporting manuals, for example, are often difficult to misinterpret. As a result, the regulatory agency is often successful when it comes to pursuing enforcement actions.
Track Record
The SEC has brought a number of enforcement actions against regulated and approved brokers. In fact, the regulatory body plays a significant role in almost every large case of financial malpractice.
Often, offences include fraud, misleading or false information and insider trading. In particular, the SEC was integral in bringing to justice a number of institutions in the wake of the 2008 financial crisis. The agency helped return billions of dollars to investors.
In fact, by the end, 204 bodies and individuals were charged and $4 billion in penalties were given out. Goldman Sachs faced the largest Wall Street penalty for monetary relief, coming in at a staggering $550 million.
The SEC has also come down on brokers over the years. More recently, however, it has ICOs in the crosshairs. In particular, enforcement action has been taken over marketing practices. For example, in 2017, the SEC brought an abrupt halt to the Munchee ICO.
Criticisms of the SEC
The majority of SEC criticism in recent years has been in regard to:
- Failing to require companies to publicly admit guilt
- Settling with large banks and institutions, instead of pursuing a trial
- Not using press releases to name and shame those in enforcement actions
- Handing out relatively minor sanctions, despite significant regulatory powers
- Imprisoning just one Wall Street executive for crimes related to the 2008 crisis
- Handing out waivers enabling protection from the collateral consequences of enforcement actions
Final Thoughts
There is no doubt SEC regulations play a key role in protecting consumers from fraudulent and misleading day trading brokers, among other financial institutions. Their enforcement activity is aggressive, despite some criticism. Public perception of the SEC is improving and they remain reputable in comparison to other bodies elsewhere in the world.
So before you pursue registration with a brokerage, check on the official SEC website that they are licensed on a regulated brokers list.