Forex Regulators – the different global options for safe trading

Forex regulators are a good thing

Forex regulators are definitely a good thing. As a general rule of thumb that applies to many different products, the more money that is at stake the greater chance you have of fraud and scams operating in those same markets. It is therefore vital to have regulators governing brokers and markets.

The forex market being one of the largest global markets with a daily trading volume over $5trillion, is a big potential target and not immune to impropriety. Be it from ‘boiler room’ type operations or even so called unregulated ‘brokers’ the risks are there.

Unfortunately, there have been many cases of brokers over the years who have been acting against their clients’ interests. The vast majority of those are coming from unregulated or lightly regulated operations.

It is a great first step to understand the different global forex regulators’ positions on certain topics so that you can ensure you have as many bases covered before choosing the right forex broker.

So what do the regulators do exactly?

Forex regulators are there to provide a base level of guidance, supervision and oversight to those involved within the forex industry to ensure that there is adequate protection to those who trade on the market.

Very simply, forex regulators are responsible for issuing a licence to the brokers to be able to promote and act in the region that they oversee and then to monitor them to ensure that they are behaving as they should and act accordingly to punish any that are found not to be. They are the referees.

The responsibility of forex regulators is to ensure that their members (or licence holders) are operating in a fair, transparent and ethical manner. ‘Treating customers fairly’ is a core pillar of most financial regulators and the forex market is no different.

Regulated brokers are also required to meet certain financial criteria relating to capital requirements that unregulated brokers are not, to ensure that at all times the broker has the capacity to return client funds in the case of insolvency.

Changing regulatory landscapes – more protection

More recently the regulators have sought to put additional measures in place to provide further protections to traders. These include restrictions on maximum leverage varying on the underlying instrument being traded, negative balance protection (to prevent traders from going into negative balances and owing the broker additional amounts outside of what has been funded to trade), and even complete product restrictions (such as the restriction of Binary options trading in Europe and CFD trading in the USA).

Before trading with any broker, you should check their site for regulation information (usually visible in the footer at the bottom of each page). If you are in any doubt you can cross check this number against the official regulators’ register which is online and can be found in the list of regulators below if you need help finding the proper area.

If the name on the registry does not match up with the one the broker is operating under, you need to take care that is not misappropriating another brokers’ licence.

What are the different global forex regulators and how do they differ?

There are a long list of regulators globally but not all are made equal in the forex world. We will highlight those are the ‘Tier 1’ regulators that we would deem stringent enough to ensure the strongest protection and enforcement.

There are other regulators listed also that can provide more security of course than unregulated brokers but are in jurisdictions that are less well developed. These are mentioned below for information but with less detail.

Australia – Australian Securities and Investment Commission (ASIC)

Maximum Leverage for retail forex traders = 1:500
Tier = 1
ASIC Register =

The Australian Securities and Investment Commission (ASIC) is a strong regulator with solid governance.

Although the current leverage restrictions are higher than that of the other major regulators such as FCA, JFSA and BaFIN, there are plans to reduce the current leverage to be more in line to protect the more novice retail traders from overextending.

That being said, at the time of writing you can still utilise higher leverage with an ASIC regulated forex broker without having to trade in the more murky offshore sphere.

See Our Top Australian Regulated Brokers

United Kingdom – Financial Conduct Authority (FCA)

Maximum Leverage for retail forex traders = 1:30, Professional 1:300
Tier = 1
FCA Register =

The Financial Conduct Authority are one of the most stringent and respected forex regulators and an FCA licence is well sought after for forex brokers and a strong stamp of approval in terms of legitimacy.

Before Brexit, the FCA as part of the European Union were bound to the same overseer as the remainder of Europe in ESMA.

London as a financial business metropolis has always been a prime location for any financial services enterprise due in part to the availability of expertise and a ready workforce at hand. Coupled with the established nature of the UK as a secure and well regulated Country in general makes an FCA regulated broker a good choice.

See our top FCA Regulated Brokers

Germany – Federal Financial Supervisory Authority (BaFin)

Maximum Leverage for retail forex traders = 1:30, Professional 1:300
Tier = 1
BaFin Register =

The Federal Financial Supervisory Authority of Germany is another gold star forex regulator. Coming from the largest economy in Europe and a cornerstone of the European financial markets means that anyone wishing to market to the German audience would be wise to try to seek a BaFin licence.

Owing to the difficulty of obtaining such a licence for any non local broker, most who are working with German based traders are more often than not regulated by other European forex regulators such as the FCA or CySEC and they passport into Germany and are ‘registered’ with BaFin rather than ‘regulated’ by them.

Cyprus – Cyprus Securities and Exchange Commission (CySEC)

Maximum Leverage for retail forex traders = 1:30, Professional 1:300
Tier = 1/2
CySEC Register =

The Cyprus Securities and Exchange Commission will be one of the most frequently seen forex regulators on any broker targeting European traders and not possessing one of the main Tier 1 regulations.

This is by virtue of the fact that it is an EU member (with aforementioned ‘passporting’ across the remainder of Europe being an option but within a less stringent regulatory framework that makes obtaining a licence here much less restrictive.

The infrastructure for forex brokers in Cyprus is now very well established and has been a great driver of commerce for the economy of this smaller island nation.

See our top CySEC regulated brokers

United States – Commodities Futures Trading Commission (CFTC), Securities and Exchange Commission (SEC)

Maximum Leverage for retail forex traders = 1:50
Tier = 1
CFTC Register =

The regulatory framework in the USA is very highly developed towards investor protection.

There are some very heavy minimum capital requirements compared to some of the other bigger regulators that make operating in the US a significant cash-flow drain. This is largely what prevents more forex brokers from operating on this side of the Atlantic.

Anyone who is resident in the USA will require a broker with local regulation. It is in breach of regulation for any other non US regulated broker to market to, or onboard US traders.

It should also be noted that CFDs are not authorised to be traded in the US under any circumstances.

Japan – Financial Services Authority (JFSA)

Maximum Leverage for retail forex traders = 1:25
Tier = 1
JFSA Register =

Japan has a very well developed forex industry, with a significant amount of active retail traders. JFSA regulated brokers are the only brokers approved to market and onboard Japanese traders.

Japanese regulation is quite specific to Japan and International brokers will not usually seek JFSA regulation unless they have a strong local presence.

Leverage restrictions are significantly tighter than some of the other major territories. It is however commonplace to see bonuses and sign up offers in Japan. There are no restrictions against this currently with the JFSA.

Malaysia – Labuan Financial Services Authority (LFSA) & Securities Commission Malaysia (SCM)

Maximum Leverage for retail forex traders = 1:1000
Tier 2
LFSA Register =
LFSA Warning List
SCM Register =

Whilst the Malaysia financial services market is well developed, the volume of forex brokers regulated by a local agency is quite limited.

Over the forthcoming years, we expect this to change. The Malaysian regulators will want to see any marketing being done in Malaysia to local residents coming from a broker authorised by one of the two agencies (and most commonly LFSA).

We have included above a link to the LFSA watchlist, which highlights those brokers targeting Malaysia residents without appropriate regulation, and potentially wider improprieties.

See our most trusted Malaysia broker guide

South Africa – Financial Sector Conduct Authority (FSCA), formerly the Financial Services Board (FSB)

Maximum Leverage for retail forex traders = 1:500
Tier = 2
FSCA Register =

The Financial Sector Conduct Authority in South Africa is a the most established of the regulators on the African continent.

South Africa, and Africa in general, is showing a surge in the interest surrounding forex and online trading. Therefore it is of paramount importance that the local regulator is up to speed.

Whist less restrictive than some of the more established European regulators, the FSCA are well regarded for governance and will give you a strong framework when required with forex brokers in South Africa.

Singapore – Monetary Authority of Singapore (MAS)

Maximum Leverage for retail forex traders = 1:50
Tier = 2
MAS Register =

Switzerland – Swiss Financial Markets Supervisory Agency (FINMA)

Maximum Leverage for retail forex traders = 1:200
Tier = 1
FINMA Register =

UAE – Dubai Financial Services Authority (DFSA), Central Bank of UAE (CBUAE)

Maximum Leverage for retail forex traders = 1:500
Tier = 2
DFSA Register =