Broker and Platform Due Diligence
This lesson describes the criteria by which a broker and trading platform should be assessed: regulatory status, total cost of trading, execution, funding terms and client support.
Risk note: educational content only. This article is not financial advice, investment advice, or a recommendation to buy or sell any instrument. Trading leveraged products can result in losses greater than expected, and each reader should understand the risks before trading.
The broker through which a trader accesses the market is a component of the trader's risk rather than merely a channel to it. A contract for difference is an agreement between the client and the broker, so the broker's regulatory standing, financial conduct and operational reliability affect the outcome of every position. A sound strategy executed through an unsuitable firm can still produce an unsatisfactory result. This lesson sets out the elements of due diligence that should be completed before an account is funded: verification of regulation, assessment of the total cost of trading, evaluation of execution and platform quality, and examination of the terms governing deposits, withdrawals and support.
Regulatory authorisation
A regulated broker operates under a licence issued by a financial services regulator and is subject to rules governing the handling of client money, financial reporting and conduct towards clients. Onys Kapital Ltd is a Securities Dealer Licensee regulated by the Financial Services Authority of Seychelles under licence number SD128. The existence of a licence indicates that the firm is subject to supervision and to the obligations that accompany it.
A licence number should be verified on the regulator's own public register rather than accepted from the firm's website or promotional material. This applies to every broker, including Onys Kapital. The register confirms that the licence exists, that it is current, and that the entity named on the licence is the entity with which the client is contracting. A discrepancy in any of these details is sufficient reason to withhold funds.
The total cost of trading
An advertised spread typically represents the tightest spread available on the most liquid instrument during the most liquid period. The relevant figure for a trader is the typical spread on the instruments actually traded, during the hours actually traded, together with any commission and, for positions held past rollover, overnight financing. These three elements together constitute the total cost of trading, and it is this total that should be compared between firms.
Onys Kapital offers a Standard account with spreads from 1.7 pips and a minimum deposit of USD 1,000, and a Pro account with spreads from 0.8 pips and a minimum deposit of USD 5,000. Both provide leverage of up to 1:1000 and market execution, and a swap-free account is available. The appropriate comparison is the estimated cost of a representative month of the trader's own activity under each set of terms, using the current figures on the trading conditions page, rather than a comparison of headline spreads.
Execution and platform quality
Execution quality refers to the speed and reliability with which orders are filled and the transparency with which the firm discloses its order-handling procedure. Market execution, under which an order is filled at the prevailing market price, is the standard for a CFD broker. Clear disclosure of how orders are handled, including the treatment of orders during periods of low liquidity, is a further indicator of a firm's conduct.
The platform should be assessed on its behaviour under stress rather than on its appearance. Onys Kapital provides MetaTrader 5 on desktop, web, iOS and Android, with a minimum trade size of 0.01 lot. MetaTrader 5 is widely adopted, stable under load, and available on every common device, and skills developed on it are transferable. A demo account with USD 10,000 in virtual funds allows the platform to be tested on live prices before any deposit is made.
- Verification of the licence on the regulator's register and confirmation that the licensed entity is the contracting entity.
- Segregation of client money from the firm's own funds.
- Estimated total cost of a representative month of trading.
- Withdrawal methods, processing timescales and fees.
- Availability of support during the hours in which the trader is active.
Funding, withdrawal and support terms
The terms governing deposits and withdrawals should be read in full before any funds are transferred. The relevant details are the available methods, the processing timescales, any fees, and the standard requirement that funds are returned by the same method through which they were deposited. Verification requirements for withdrawals should also be understood in advance, so that a request is not delayed by documentation that could have been supplied at account opening.
The accessibility of client support should be tested before funding rather than after. Operational problems tend to arise at inconvenient times, including outside normal office hours, and a firm that is difficult to contact before an account is funded is unlikely to be easier to contact afterwards. The availability of support during the trader's active hours and the channels through which it can be reached are therefore part of the assessment.
Applying the assessment
The elements described above are combined into a single judgement about whether the firm is suitable for the trader's intended activity. No single element is decisive in isolation; a firm with a verifiable licence but opaque costs, or with tight spreads but unreliable execution, presents a risk that the favourable element does not offset. The assessment should be documented, so that it can be revisited if the firm's terms or the trader's requirements change.
Because the broker forms part of the trader's risk, it is also appropriate to treat the relationship as one that is reviewed periodically rather than settled once. Changes to trading conditions, regulatory status or platform availability are relevant to the trader's process and should be incorporated into the periodic review described in the lesson on the professional trading routine.