Forex Broker Regulation: FCA, CySEC, ASIC and Offshore Licences Compared
What the tiers of regulation actually differ on, which compensation schemes exist, and why one brand can operate under five licences at once.
A licence is neither a quality mark nor a guarantee of profit. It answers one question: what happens to your money if the broker runs into trouble.
The tiers
Tier one. FCA (UK), ASIC (Australia), plus the Japanese and Swiss regulators. High capital requirements, mandatory segregation of client funds, audits, leverage caps and a compensation scheme.
Tier two. CySEC (Cyprus) and other EU regulators operating under MiFID II. Broadly the same rules, compensation up to €20,000, and a licence valid across the EU.
Tier three. FSCA (South Africa), FSC (Mauritius), SCB (Bahamas), CMA (UAE). Regulation exists but requirements are lighter and leverage runs to 1:500 and beyond.
The detail most people miss
A large brokerage group is usually several companies. The same brand may serve a European client through its Cyprus entity and an Asian client through its Mauritius one. Leverage, negative balance protection and compensation cover will differ accordingly.
Checking is easy: open the client agreement and find which company and which licence you are contracting with, then look that licence number up in the regulator's public register.
What a licence does and does not give you
It gives: segregated funds, mandatory reporting, a complaints procedure, and compensation on insolvency in the top two tiers.
It does not give: guaranteed fills at your price, protection from your own losses, or insurance against market risk.
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Frequently asked questions
Which licence is the strictest?
The FCA in the UK and ASIC in Australia. Both demand high capital, client fund segregation, regular reporting and retail leverage caps.
What is a compensation scheme?
A payout mechanism if the broker fails. In the UK, FSCS covers up to £85,000; in Cyprus, ICF covers up to €20,000. Offshore licences typically have no scheme at all.
Why do brokers hold several licences?
The group registers separate legal entities in different jurisdictions. Your rights depend not on the brand but on which entity your contract is with — stated in the client agreement.
- Min. deposit
- $100
- Spread
- from 1.2 pips
- Commission
- $3.5 per lot per side
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- Min. deposit
- $50
- Spread
- from 1.0 pip (Standard STP)
- Commission
- $3 per lot per side (Raw ECN)
CFDs are complex instruments with a high risk of losing money
- Min. deposit
- $100
- Spread
- from 1.1 pips (Standard STP)
- Commission
- $3 per lot per side (Raw ECN)
CFDs are complex instruments with a high risk of losing money