Finding a forex broker starts with one basic question: is the company really licensed in the place it says it is? A licence number on a website is a claim, not proof. The following article explains how to check that claim on the regulator's own public register before you deposit any money, and what to look for once you locate the entry.
Reasons to Verify the Regulation First
A authorisation from a major regulator can give real safeguards, such as segregated client funds and, in some jurisdictions, a compensation scheme. However, authorisations change: firms are sold, rebranded, sanctioned or lose their authorisation. Some companies only hold an offshore company registration, which is not a forex licence at all.
Which Safeguards a Strong Licence Usually Brings
Requirements differ by country, but leading regulators generally require brokers to keep client money in separate bank accounts, hold a minimum amount of capital, report to the regulator and follow conduct rules on marketing and leverage. In the UK, eligible clients of a failed firm may be covered by the Financial Services Compensation Scheme. In the European Union, investor compensation funds provide a lower level of cover. Many offshore jurisdictions offer none of this, which is why the same brand can give very different protection based FXSharp.com on which of its companies opens your account.
Brokers Covered on FXSharp
The companies below each have an editorial review on FXSharp. Most hold licences from recognised regulators, but several also serve clients through offshore entities with lighter protection. Check which company would actually open your account, and read the review prior to depositing.
- Pepperstone
- copyright
- Interactive Brokers
- Saxo Bank
- Charles Schwab
- Webull
- Admirals
- Axi
- Libertex
- RoboForex
- InstaForex
- PU Prime
- StoneX
- Mitrade
- ADSS
- TD365
- Spreadex
- ProRealTime
- GKFX
- AMP Global
How to Verify a Broker Yourself
Find the exact company name and licence number in the legal section of the broker's website or in its client agreement. Then, go to the regulator's site yourself, not through a link from the broker, and search its public register. Search by company name as well as by number, because some registers do not show licence numbers at all. Match the company name, licence status, licence type and, where listed, the approved website address.
Warning Signs to Look Out For
Be wary if the register shows a look-alike but different company name, a licence marked as revoked, suspended or surrendered, or a website address that is not the one you are using. Fraudsters often copy the name and licence number of a real company, so check the regulator's warning list for clone firms too. Pressure to deposit quickly, promises of guaranteed returns and requests to pay through unusual channels are further red flags, whatever the website claims about regulation.
Check Again Later On
A licence that was active when you opened an account may not stay that way. Brokers merge, sell their client books, move clients to another entity or lose their authorisation. Looking at the register again before a large deposit or a withdrawal costs nothing, and supervisors often publish announcements when a firm's status changes.
Overall, a few minutes on the register can save you from serious losses. Leveraged trading in forex and CFDs carries a high risk of losing money, and check first, then you invest.