Choosing a forex broker starts with one basic question: is the company really regulated 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 send any money, and what to look for once you locate the entry.
Why Check the Licence Before Anything Else
A authorisation from a major regulator may offer meaningful safeguards, such as client money held separately and, in some jurisdictions, a compensation scheme. However, authorisations can change: companies are sold, rebranded, sanctioned or lose their authorisation. Some firms only hold an offshore company registration, which is not a forex licence at all.
What Safeguards a 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 smaller level of cover. Many offshore jurisdictions offer none of this, which is why the same see the review brand can give very different protection based on which of its companies opens your account.
Brokers Covered on FXSharp
The companies below each have an editorial review on FXSharp. Many hold licences from major regulators, but several also serve clients through offshore entities with lighter protection. Check which company would really open your account, and read the review prior to opening an account.
- 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
Steps to Verify a Broker Yourself
Find the full company name and licence number in the legal section of the broker's website or in its client agreement. Next, go to the regulator's site yourself, not through a link from the broker, and search its public register. Look up 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.
Red Flags to Watch 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 look at the regulator's warning list for clone firms as well. Pressure to deposit quickly, promises of guaranteed returns and requests to pay through unusual channels are further warning signs, whatever the website claims about regulation.
Check Once More Over Time
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. Checking the register again before a large deposit or a withdrawal costs nothing, and supervisors often publish announcements when a firm's status changes.
In short, a few minutes on the regulator's register may save you from serious losses. Trading in forex and CFDs carries a high risk of losing money, so check before you deposit.