Selecting a forex broker starts with one basic question: is the company really regulated where it says it is? A licence number on a website is a claim, not proof. The following article shows how to check that claim on the regulator's own register before you send any money, and what to look for once you locate the entry.
Why Verify the Regulation Before Anything Else
A authorisation from a strong regulator can offer meaningful protection, 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 licence. Some companies only hold an offshore company registration, which is not financial supervision at all.
Which Safeguards a Licence Usually Brings
Requirements differ by country, but major 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, so the same brand can offer very different protection based on which of its get more info companies opens your account.
Companies Covered on FXSharp
The companies below each have an independent review on FXSharp. Many hold licences from recognised regulators, but several also serve clients through offshore entities with weaker protection. Check which company would actually open your account, and read the review before 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 footer of the broker's website or in its client agreement. Then, go to the regulator's website 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. Compare the company name, licence status, licence type and, where listed, the approved website address.
Warning Signs 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 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 additional red flags, whatever the website claims about regulation.
Verify Once More 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 notices when a firm's status changes.
In short, a couple of minutes on the register may save you from serious losses. Trading in forex and CFDs carries a high risk of losing money, and check before you invest.