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Why You Should Only Trade Green Securities With A Regulated Broker

Shutterstock Licensed Photo - By Kanyapak Lim



Ethical investing is a big thing these days. The number of people that support sustainable and ethical investing is about to surge, largely due to the number of millennials interested in it. One survey by Morgan Stanley found that 86% of millennials are interested in these investments. Just two years earlier, only 19% of the general population expressed interest in sustainable investing.

However, there are some unique challenges with green investments. One is that people that buy these securities are more likely to fall for investment scams. This is why they should only buy through regulated brokers.

Why You Should Always Use a Regulated Broker to Purchase a Green Security

There is a lot of uncertainty surrounding green stock or equity trading, especially for beginners. However, that does not mean that your dream to become one of the biggest green investors in this market is an impossibility. The experienced traders can attest to the fact that for you to succeed in share trading today, you need to understand the stock market outlook for 2019. There is one more thing that you need to do: trade with a regulated broker.

1. Legitimacy

There is only one way that you can be sure that you are not working with a fraud. Note that green stock trading is accompanied with many risks. One risk that you could face in the market is falling victim to a scam. Working with a licensed broker eliminates concerns of a fraudster walking away with your hard earned money.

How serious of a concern is this? It is sadly bigger than we would want to think. The UK SFO recently started an investigation into a major green investment company.

2. Transparency

The Green Investment Bank has shown that there can be a lot of problems that go beyond fraud. Pure incompetence is also a problem among green investment companies. This is one of the problems that Australian green investors ran into, which has prompted the UK to learn and develop solutions of its own for sustainable investors.

Unscrupulous brokers can get creative when handling green securities and it is usually at the expense of the traders. What regulatory bodies do is ensure that transparency is upheld in all the transactions. A financial regulator’s job is to oversee the activities of the broker, ensuring that the tiniest of rules and regulations are adhered to the process.

As such, you as the trader is protected from manipulation of the trades by the brokers. It is also prevented through the regular audits that are carried out by the regulatory agencies to ensure that the brokers are conducting fair trade.

3. Compensation

A lot has been said about the uncertainty that comes with this kind of trade. There is a risk that comes with trading with high leverage and so on. There is also a more significant risk: what if your broker becomes insolvent? The worst case scenario would be that you would never be able to get the assets you invested back.

Do not wait for the worst to happen. Be safe and work with a regulated broker. You will find that the regulated brokers have compensation funds to give their traders in case something goes wrong. You should, however, look at the terms that the brokers come with. Some regulated brokers do not have the provisions for compensation.

4. Reputable trading platforms

The other benefit of trading with a regulated broker is that you will be trading using a popular platform. What is the fuss about selling on a popular platform? Quality is everything with green stock trading. Trading on a good platform brings you a step closer to success in trading.

5. Segregated accounts

Brokers under regulatory bodies are expected to have segregated accounts for the trader.

Green Investing is Risky Without a Regulated Broker

You need to choose your broker carefully as an investor. Never work with someone that isn’t regulated. Buying green investments is risky enough, so select your broker carefully.

Becca Stickler is a freelance writer with a focus on sustainability and eco-friendly living.


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