[Basics] [Basics] Regulated vs offshore brokers: checking a license

Apart from your trading decisions, who holds your money and under which rules decides how protected you are. This is general information, not legal or tax advice.

Not every overseas broker is risky

Large brokers are licensed and supervised by regulators in the UK, Australia, Cyprus and elsewhere. Those rules — client money segregation, capital requirements, regular audits, dispute handling — apply to the licensed entity.

Regulation tiers (rough)

• Strong: UK FCA, Australia ASIC, Cyprus CySEC (EU), Singapore MAS and similar. Segregated client funds and strict reporting
• Compensation schemes: UK FCA entities are covered by the FSCS up to £85,000 if the firm fails; CySEC entities by the Investor Compensation Fund up to €20,000
• Medium: South Africa FSCA, Dubai DFSA and similar
• Weak (offshore): Seychelles FSA, Mauritius FSC, Vanuatu, Belize and similar. Licensed, but supervision and compensation are weak
• Effectively none: St Vincent and the Grenadines (SVG). Its regulator states it does not supervise forex brokers — "registered in SVG" is just company registration

Check it in 5 minutes

1. Find the legal entity name and license number in the broker website footer, e.g. "XX Markets (UK) Ltd, FCA No. 000000"
2. Check which entity you are signing up with. Big brokers have several entities, and international clients are often placed with the offshore one. The entity named on the account-opening page or Client Agreement is what counts
3. Type the regulator's address yourself and search there. Don't use links the broker gives you
4. Make sure the name, address and website in the register match the site you use. Regulators often warn about look-alike clone firms
5. Check the regulator's warning list (e.g. the FCA Warning List) for the name

Regulator registers

• UK FCA: register.fca.org.uk
• Australia ASIC: Professional Register on ASIC Connect
• Cyprus CySEC: Regulated Entities on cysec.gov.cy
• Seychelles FSA: Regulated Entities on fsaseychelles.sc

Also check

• Negative balance protection: whether a sudden move can leave you owing money
• A test withdrawal: deposit a little, trade, and withdraw once
• Track record: 10+ years in business, a listed parent company

Red flags

• Unlicensed firms with names resembling real financial companies
• "Deposit to this personal account and we'll fund your trading account for you"
• Pressure to deposit more before you can withdraw

Taxes

• Tax treatment of trading profits depends on your country of residence and how you trade. Ask a local tax professional
• Save your statements (MT5 account history) and deposit/withdrawal records every year. They matter most if you ever need to explain your income

In short: even while you're just trying things with a small amount, know who holds your money and keep records from day one.