Choosing a forex broker starts with one simple question: is the company really licensed where it more info says it is? A licence number on a broker's site is a claim, not evidence. The following article explains how to check that claim on the regulator's own register before you deposit any money, and what to look for once you locate the entry.
Why Verify the Licence Before Anything Else
A authorisation from a major regulator can offer meaningful protection, such as segregated client funds and, in some countries, a compensation scheme. However, authorisations change: firms are sold, rebranded, sanctioned or lose their licence. Other companies only hold an offshore company registration, which is not a forex licence at all.
What Protection a Licence Typically Brings
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 offer a lower level of cover. Most offshore jurisdictions offer none of this, so the same brand can give very different protection depending on which of its companies opens your account.
Companies Covered on FXSharp
The brokers and platforms below each have an editorial 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 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
Steps to Check a Broker on Your Own
Find the exact company name and licence number in the legal section 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 show licence numbers at all. Compare the company name, licence status, licence type and, if listed, the approved website address.
Warning Signs to Watch For
Be careful 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 genuine company, so check 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. Looking at the register again before a large deposit or a withdrawal costs nothing, and supervisors often publish announcements when a firm's status changes.
Overall, a couple of minutes on the register may spare you from serious losses. Leveraged trading in forex and CFDs carries a high risk of losing money, so verify before you invest.