The dawn of the internet has given birth to an extensive array of online trading brokerages and have made it possible to operate on a worldwide basis without borders. However, an online broker without borders is difficult to regulate under government regulation. Therefore, many of the online trading brokerages operating today remain unregulated by government regulatory authorities. This can severely impact their quality of service as well as their popularity and ability to grow and expand. However, these unregulated brokers can achieve regulation with PIPSEC if they meet the requirements.show more
PIPSEC is the acronym for (Private Investor Protection for Securities and Exchange Independent Registration for Financial Service Companies). This regulatory agency is an independent authority from any government and provides further regulation to both regulated and unregulated brokers from Switzerland, Italy, Germany, and Sweden. The PIPSEC maintains and provides a record of all the firms, individuals, and organizations they accredit for the review of anyone to see. The types of financial firms the PIPSEC accredit or register include investment firms, brokerages, financial advisors, asset managers, issuers of electronic money, debt collectors, and lending firms.
The PIPSEC has very few responsibilities because they are an independent non-government regulatory authority. Therefore, the main responsibilities they have granted themselves are:
The supervision and monitoring of firms they accredit and regulate.
The addressing of issues presented in their dispute resolution service.
The termination of regulated entities failing to comply with the
PIPSEC regulatory guidelines.
The licensing and regulating of compliant firms who reach out to them.
PIPSEC regulation protects traders and investors by ensuring the financial companies regulated by them employ the guidelines and best practices laid out by PIPSEC. They ensure this by supervising and monitoring the brokerage operations they regulate. As well, they provide a complaints registry where traders and investors can file formal complaints that the PIPSEC will investigate. Other than that, there is nothing else this regulatory authority does. Therefore, the PIPSEC is far less competent than a government regulatory agency, but still manages to provide some protection.
PIPSEC enforces numerous guidelines and obligations that financial entities must follow to remain regulated by this regulatory entity. For instance, PIPSEC registered companies must:
Maintain a minimum equity of $35,000 USD.
Ensure the competence, knowledge, skills, and training of their employees.
Be compliant with the international standards of the corporation.
Manage conflicts of interest and risk management.
Maintain high standards of financial, technological, and human resources.
Must have a dispute resolution service.