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When it comes to online brokerage, most people have heard of Robinhood.
However, it is facing increasing levels of competition from Webull, a US-based startup founded in 2017 that also offers zero-fee and discount brokerage services.
Like Robinhood, Webull’s bargain-basement brokerage prices largely attract millennials, which is why it went with a mobile-first approach, eventually developing both desktop and web applications once it had firmly established itself in the industry.
With the proliferation of online trading courses, brokers, apps, and educators, many of which are scams, you might be wondering if you can trust Webull as a legitimate broker.
This article will explore Webull and help you determine if they are truly legitimate.
Regulation
There are two primary regulatory authorities in the U.S. that deal with securities – the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
The SEC is an independent agency of the United States federal government and it is tasked with regulating the securities industry and enforcing securities laws.
Securities-related companies in the U.S. are required to comply with the SEC and Webull is no exception – thankfully records show that Webull is registered with the SEC, signifying they intend to comply with all U.S. securities regulation.
FINRA is an independent regulator for all securities firms doing business in the U.S, overseeing over 4,000 brokerage firms with the aim of protecting the interests of the public.
Webull is registered with FINRA, signifying its intention to comply with the regulator, further strengthening the view that they are legitimate.
Insurance
As a broker, Webull is tasked with holding money on behalf of the public.
Customers are right to demand their money is safe and protected in the event Webull goes bankrupt or conducts some sort of illegal business.
This is why insurance is an important component of legitimacy, and Webull has delivered on this front by registering with the Securities Investor Protection Corporation (SIPC) and employing Apex Clearing.
The SIPC is a federally mandated, non-profit, and member-funded corporation that provides insurance for deposits held by brokers.
As a registered member of SIPC, Webull’s customer accounts are safely insured for up to $500,000 in value or up to $250,000 in cash.
In addition, Webull has employed Apex Clearing, which is one of the most popular companies for investment account management.
Apex Clearing provides additional insurance to the tune of $37 million per customer, ensuring customer deposits are well and truly safe.
Conclusion
The two most important questions when asking if a brokerage is legitimate is whether it adheres to regulation and whether it has insurance to protect customer funds.
Webull satisfies both requirements, being registered with both key regulators – the SEC and FINRA, as well as protecting customer deposits and accounts with membership and agreements with both the SIPC and Apex Clearing.
Based on this, Webull is definitely a legitimate company, and it is safe to use them as your online, low-fee broker.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
