Finding a forex broker starts with one simple 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 explains how to verify that claim on the regulator's own register before you send any money, and what to look for once you locate the entry.
Reasons to Check the Licence Before Anything Else
A authorisation from a major regulator can offer meaningful safeguards, such as segregated client funds and, in some countries, a compensation scheme. However, authorisations can change: firms are sold, rebranded, sanctioned or lose their authorisation. Other firms only hold an offshore company registration, which is not a forex licence at all.
Which Safeguards a Licence Typically Provides
Rules differ by country, but leading regulators usually 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 brand can give very different protection depending on which of its companies opens your account.
Companies Reviewed on FXSharp
The companies below have an editorial review on FXSharp. Most hold licences from major regulators, but several also serve clients through offshore entities with lighter protection. Find out which company would really 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 Check a Broker Yourself
Find the full company name and licence number in the footer of the broker's site 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 display licence numbers at all. Compare the company name, licence status, licence type and, where listed, the approved website address.
Warning Signs to Look Out For
Be careful if the register shows a look-alike but different company name, a licence on FXSharp 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 genuine 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 additional 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. Checking the register again before a large deposit or a withdrawal costs nothing, and regulators often publish announcements when a firm's status changes.
Overall, a couple of minutes on the register can save you from a costly mistake. Leveraged trading in forex and CFDs carries a high risk of losing money, and verify before you deposit.