Choosing a forex broker begins with one basic question: is the company actually regulated where it says it is? A licence number on a broker's site is a claim, not evidence. The following article explains how to verify that claim on the regulator's own public register before you deposit any money, and what to look for once you find the entry.

Reasons to Verify the Regulation First

A licence from a strong regulator can 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. Other companies only hold an offshore company registration, which is not financial supervision at all.

Which Safeguards 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 smaller level of cover. Many offshore jurisdictions offer none of this, which is why the same brand can give very different protection based on which of its companies opens your account.

Brokers Reviewed on FXSharp

The brokers and platforms below each have an editorial review on FXSharp. Many hold licences from major regulators, but several also onboard clients through offshore entities with lighter protection. Find out which company would actually 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

Steps to Check a Licence on Your Own

Find the exact company name and licence number in check here 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. 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 similar 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 look at the regulator's warning list for clone firms too. 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.

Verify Once More Over Time

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 regulator's register can save you from serious losses. Leveraged trading in forex and CFDs carries a high risk of losing money, and verify first, then you deposit.