Forex Brokers that are Regulated

Richard Montana | November 14, 2022

One of the first things that I look for when reviewing a forex broker is regulation. I think this is one of the most important things to consider when you are choosing a forex broker who you will be entrusting with your funds. Regulated forex brokers can provide you with certain protections that an unregulated broker cannot. If things were to go wrong when using an unregulated forex broker, you will probably have nowhere to turn and be left out of pocket. However, you can trade with peace of mind when using a regulated forex broker as they must follow strict rules and regulations that have been implemented to protect traders and investors. If the worse was to happen, you might be able to make a claim.

What is a regulated forex broker?

A regulated forex broker is a company that is licensed to provide financial products and services to clients. As the forex market is the largest and most liquid market on the planet, it can bring certain challenges regarding market regulation. This is especially difficult considering the market is trading 24/7 with brokers located all over the world.

There is no centralized body governing the currency trading market. Instead, there are several governmental and independent bodies that supervise forex trading and the safety of traders around the world. Some of these include, but are not limited to:

  • Australia: Australian Securities and Investment Commission (ASIC)
  • Canada: Investment Industry Regulatory Organisation of Canada (IIROC)
  • Hong Kong: Securities & Futures Commission (SFC)
  • Japan: Financial Services Agency (JFSA)
  • Singapore: Monetary Authority of Singapore (MAS)
  • South Africa: Financial Sector Conduct Authority (FSCA)
  • United Kingdom: Financial Conduct Authority (FCA)
  • United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)

There are many countries who have put strict online forex broker regulations in place to ensure those brokerage firms domiciled within their legal jurisdiction meet official criteria so individuals can trade and invest safely through them. Although you might think the forex market is unregulated, regulations do exist to protect retail forex traders.

The global supervisory bodies regulate forex by setting standards which all brokers under their jurisdiction must comply with. These standards include being registered and licensed with the regulatory body, undergoing regular audits, communicating certain changes of service to their clients, and more.

How to check if a forex broker is regulated?

If a forex broker is regulated, you will find a license number that is usually located towards the footer of their website. You can use the relevant regulatory authority register to lookup the license to make sure that it is valid and up to date. It has been known for some unscrupulous brokers to copy the licenses of others or use fake licenses. The registrar should include detailed of the broker name, address and contact details. You can cross verify these with those on the brokers website.

You will notice that forex brokers can be regulated in different jurisdictions from where they operate. For example, you may see a UK based FCA regulated forex broker that also provides service to clients in Europe with a CySEC regulated entity. I think it is always ideal to try and find a broker that is regulated where you are located. E.g. Australian traders will probably want to look at ASIC regulated forex brokers.

Unregulated vs regulated forex brokers

There are pros and cons to both unregulated and regulated forex brokers. The obvious advantage is that a regulation can provide you with protection and ensures that the broker must follow strict rules and procedures. They should therefore be operating in an honest and transparent manner. If the broker was to go bust, you might be entitled to recover your funds.

On the other hand, regulated brokers cannot provide certain trading products and services that unregulated brokers can. For instance, may find that high leverage and crypto trading are not available through many regulated forex brokers. Therefore, it is safe to say unregulated brokers provide greater freedom and flexibility in terms of what they can offer traders.

I think it is worth mentioning that just because a forex broker is not regulated, this does not immediately mean that they are running a scam. There are good unregulated forex brokers out there, but there is a higher chance of them being dodgy if they are not regulated.

Who are the best regulated forex brokers?

Thankfully, there are many regulated forex brokers to choose from. To put things into perspective, we have reviewed thousands of regulated brokers. Whilst that does make it seem overwhelming when it comes to choosing the best forex broker for you, there are some additional things to consider.

You will need to know which regulatory agency the broker is registered with and whether the jurisdiction that the regulatory agency oversees covers the country where you live. You might want to take a look at the currency pairs you can trade, other trading instruments, platforms, apps, tools, education, funding options, forex account types, spreads, fees and customer support.

You can see a selection of our best regulated forex brokers below. These brokers have been around for years and are well respected within the online trading industry.

Broker
Rating
Regulated
Min. Deposit
Founded
Max. Leverage
1.
AvaTrade Review

ADGM FRSA, ASIC, BVIFSC, CBI, FFAJ, FSCA, IIROC, JFSA

$100

2006

1:400

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
2.
IG Review

ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA

$250

1974

1:200

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
3.
Pepperstone Review

ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB

$200

2010

1:400

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
4.
IC Markets Review

ASIC, CySEC, FSA, SCB

$200

2007

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
5.
Forex.com Review

ASIC, CIMA, CFTC, FCA, FSA, IIROC, JFSA, NFA, SFC

$100

2001

1:50

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
6.
XM Group Review

ASIC, CySEC, DFSA, IFSC

$5

2009

1:888

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
7.
Markets.com Review

ASIC, BVIFSC, CySEC, FCA, FSCA

$/£/€100

2008

1:300

79.90% of retail investor accounts lose money when trading CFDs with this provider.
8.
XTB Review

CySEC, DFSA, FCA, FSCA, IFSC

$1

2004

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
9.
Plus500 Review

ASIC, CySEC, FCA, FSA, FSCA, FMA, ISA, MAS

$100

2008

1:30

79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
10.
CMC Markets Review

ASIC, FCA, FMA, IIROC, MAS

$1

1989

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.

Advantages of trading with a regulated forex broker

  • Must follow strict rules and procedures
  • Provide traders with transparency
  • Operate in an open and honest manner
  • Trade with peace of mind
  • Protection in place should something go wrong

Disadvantages of trading with a regulated forex broker

  • Restrictive trading products and services
  • Not all forex brokers are regulated
  • Even regulated forex brokers can have problems

Conclusion: should I trade with a regulated forex broker?

Yes, in my humble opinion I would always prefer to use a regulated forex broker where possible. The purpose of regulation is to protect you from undisclosed financial risk, abusive practices like price and order manipulation, and fraud.

Granted, you may not get access to the same trading products and services that an unregulated broker can offer, but I think safety should be of paramount importance.

You will find there are more and more offshore forex brokers which can be a compromise. Whilst these forex brokers are often regulated, offshore regulation may not be as strict as some of the top-tier regulators.

Just make sure that you do your own due diligence and ensure that the forex brokers which you are considering can meet all of your requirements and provide you with the confidence that you need so that you can focus on your trading.

About the Author

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Richard Montana
Richard has many years of experience in broker research, testing, analysis and reviews. He knows what to look for through years of trading himself with different brokers and listening to the feedback of others.

Review Methodology

For all of our broker reviews, we research, validate, analyse and compare what we deem to be the most important factors to consider when choosing a broker. This includes pros, cons and an overall rating based on our findings. We aim to help you find the best broker according to your own needs. You can read more about our review process.


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