Finding a forex broker begins with one simple question: is the company really licensed in the place it says it is? A licence number on a broker's site is a claim, not proof. The following guide explains 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 Check the Licence Before Anything Else
A licence from a major regulator may give real protection, such as segregated client funds and, in some jurisdictions, a compensation scheme. However, authorisations change: firms are sold, rebranded, sanctioned or lose their licence. Some companies only hold an offshore company registration, which is not financial supervision at all.
What Protection a Licence Usually Brings
Requirements differ by country, but major 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 lower level of cover. Most offshore jurisdictions offer none of this, which is why the same brand can offer very different protection based on which of its companies opens your account.
Brokers Reviewed on FXSharp
The brokers and platforms below have an editorial review on FXSharp. Many hold licences from major regulators, while several also serve clients through offshore entities with weaker 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
How to Verify a Broker on Your Own
Look up 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 website directly, 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. Match the company name, licence status, licence type and, if listed, the approved website address.
Red Flags 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 get more info to pay through unusual channels are further warning signs, whatever the website claims about regulation.
Verify 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 few minutes on the register may spare you from a costly mistake. Leveraged trading in forex and CFDs carries a high risk of losing money, so check first, then you deposit.