Broker regulation explained

What does “regulated” actually mean for your money?

“Regulated” is not a quality rating. It does not mean a broker is good, or cheap, or likely to make you money. It means one thing: a named public authority has given a named legal company permission to do a named list of activities, and can take that permission away.

What changes for you is narrow and specific. Four things, in plain terms:

• Your deposit is kept apart from the firm's own cash. UK client money rules require client money to be paid into a client bank account rather than the firm's own account. In Australia, reforms that commenced on 4 April 2018 removed the exception that had let licensees withdraw derivative retail client money and use it as their own working capital.
• You cannot end up owing the broker money. UK firms must guarantee that a retail client cannot lose more than the total funds in their CFD account — in force since 1 August 2019. Australia's order does the same from 29 March 2021.
• Leverage has a ceiling. UK, EU and Australian rules cap retail leverage between 30:1 and 2:1 depending on the asset.
• There is somewhere to complain that is not the broker's own support desk. The UK's Financial Ombudsman Service and Australia's AFCA are both free to consumers.

Notice what is not on that list: nothing about whether the broker's prices are fair, whether its platform is good, or whether you will make money. Regulation is a floor under the worst outcomes, not a verdict on the firm.

How do you check a broker's licence on the regulator's own register?

This is the most useful three minutes in this article. Do it before you deposit, not after.

1. Find the exact legal entity name and licence number — not the brand. It is in the client agreement, the terms and conditions, or the small print in the website footer. Brands are marketing. Entities are what you contract with.
2. Go to the regulator's own site, typed by hand. Not through a link on the broker's page. UK: the FCA's Financial Services Register or Firm Checker. Australia: ASIC Connect's professional registers. Cyprus and the EU: CySEC's register of Cyprus Investment Firms. United States: NFA BASIC.
3. Match three things, not one. The legal entity name, the licence or reference number, and the permissions. A firm can be authorised for one activity and not for the one it is selling you.
4. Compare the contact details on the register with the ones you were given. The FCA warns that “clone” firms copy a genuine firm's name, address and firm reference number, and may even claim the register's details are out of date. The FCA updates the register on average every 24 hours, so that claim is itself a warning sign.
5. Check the warning lists. The FCA publishes a Warning List of unauthorised firms and updates it daily.

Why can a broker be “FCA regulated” and still not be the firm you sign with?

This is the trap that catches most beginners, and it is not illegal, which is exactly why it is so common.

A large brokerage brand is usually a group of separate companies. One holds an FCA or ASIC licence and serves clients in that country. Another company in the same group, registered somewhere with lighter rules, is the entity that clients in most other countries actually contract with. Same website. Same logo. Same support chat. Different protections — and possibly none of the four listed above.

So the question is never “is this broker regulated?” It is: which company will appear on my client agreement, and is that company on a register I can check?

How to find out before you deposit:

• Take the account application as far as the client agreement, and read the counterparty name at the top of it.
• Search the terms and the risk disclosure for a line naming the entity that serves “clients resident in” your country.
• Check which entity each licence number in the footer belongs to, and whether your country falls inside that entity's scope.
• Ask support, in writing, which legal entity you would be contracting with. A firm that will not answer that in writing has answered it.

What do FCA, ASIC, CySEC and CFTC/NFA each give you?

Same industry, four different answers. Read this as “what happens to my money”, not as a ranking.

On a narrow screen, scroll the table sideways.

Leverage figures are the caps for a major currency pair. All four regimes step the cap down for other assets — UK, EU and Australian rules run from 30:1 to 2:1 depending on what you trade. Every cell is taken from the regulators' own publications, listed at the foot of this page. Checked September 2026.

Why does the United States protect retail forex clients differently?

Most beginners assume US rules must be the strictest. On leverage they are looser, and on client money they are built in a way that genuinely surprises people.

NFA rules prohibit a member from representing that retail forex funds deposited with it are “segregated” or given special protection under the bankruptcy laws. Instead, a Forex Dealer Member must hold assets at least equal to what it owes its retail forex customers, at qualifying institutions that report balances to NFA daily. That is a solvency requirement, not a ring-fence — and the rulebook deliberately avoids calling it segregation.

Two more US-specific rules worth knowing before you compare a US broker with a European one:

• Minimum security deposits are 2% of notional value for major currency groups and 5% for others — roughly 50:1 and 20:1. Where the two currencies in a pair carry different requirements, the higher one applies to the whole trade.
• A dealer may not carry offsetting positions in one customer account; positions are closed on a first-in, first-out basis.

And a point that doubles as a scam filter: only certain registered entities may lawfully act as counterparty to retail off-exchange forex in the United States. If an offshore broker offers to take you on as a US retail client, that offer is itself the red flag.

What if a broker is only licensed somewhere you have never heard of?

An offshore licence is not automatically fraud, and plenty of ordinary traders use offshore entities knowingly. But be honest about what you are getting: usually a company registration and a light-touch permission — with no compensation scheme, no independent ombudsman, and often no enforceable leverage cap or negative balance guarantee.

Three questions answer it:

1. If this firm becomes insolvent, who identifies my money and returns it — and under whose law?
2. If it refuses a withdrawal, who has the power to compel it?
3. If I have to sue, in which country, and what would that cost me?

If the answers are “nobody”, “nobody” and “a country I will never travel to”, then the licence is decoration. Decide with that in front of you, rather than discovering it during a withdrawal dispute.

What does regulation still not protect you from?

• Losing money on your own trades. Every authority named on this page wrote these rules because its own reviews found most retail accounts lose money.
• Cost. No regulator caps spreads, commissions or overnight swaps. Total cost is entirely on you to compare.
• Your own choices inside the cap. 30:1 is a ceiling, not a recommendation. Nothing stops you from using all of it.
• Gaps and slippage. Negative balance protection means you will not owe the firm money. It does not mean your stop filled where you wanted.

Regulation decides what happens to your money when things go wrong around the trade. What happens in the trade is position sizing and risk per trade — a different problem, and the one that decides whether you are still here in a year. Start with the beginner path, and see how we score brokers before you read anybody's ranking, including ours.

Frequently asked questions

Sources

• FCA — FCA confirms permanent restrictions on the sale of CFDs and CFD-like options to retail consumers (2019)
• FCA — PS19/18: Restricting contract for difference products sold to retail clients (2019)
• FCA Handbook — CASS 7.13 Segregation of client money
• FCA — Financial Services Register
• FCA — Clone firms and individuals (last updated 2025)
• FCA — Warning List of unauthorised firms
• FSCS — Investment compensation and protection (£85,000 limit)
• Financial Ombudsman Service (UK)
• ASIC — 22-082MR ASIC's CFD product intervention order extended for five years, to 23 May 2027 (2022)
• ASIC — 20-254MR ASIC product intervention order strengthens CFD protections (2020)
• ASIC — 18-089MR Updated guidance on client money; reforms commenced 4 April 2018
• ASIC — Professional registers search
• ASIC — Compensation Scheme of Last Resort: sub-sectors covered
• AFCA — Australian Financial Complaints Authority
• CySEC — Investor Compensation Fund
• CySEC — Register of Cypriot Investment Firms
• CySEC — Complaints
• ESMA — news and product intervention measures on CFDs (2018–2019)
• NFA — Forex Transactions: A Regulatory Guide (security deposits, offsetting positions, permitted counterparties, prohibited representations about segregation)
• NFA — Financial Requirements Section 12 (forex security deposits)
• NFA — BASIC (Background Affiliation Status Information Center)
• CFTC — Check registration and backgrounds before you trade

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