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Forex Regulators & Regulation – global List for trading Safely

Forex regulators are a good thing & forex regulation is paramount for safety

Forex regulators and the regulation of the industry is 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 forex regulators in place governing the 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. Forex regulation is therefore essential and paramount for traders’ security. Be it from ‘boiler room’ type operations or even so called unregulated ‘brokers’ the risks are there if you do not go through one a broker monitored by a recognised forex regulator.

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.

Jump To Forex Regulators List By Country

So what do the financial and forex 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 license to the brokers to be able to promote and act in the region that they oversee. They are then tasked to monitor them to ensure that they are behaving as they should, abiding by the forex regulation set, and subsequently act accordingly to punish any that are found not to be towing the line. The forex regulators are in effect the referees.

One of the key responsibilities of forex regulators is to ensure that their members (or license holders) are operating in a fair, transparent and ethical manner towards users. ‘Treating customers fairly‘ is a core pillar of most financial regulators and the forex regulations and 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. The forex regulators are there to ensure that this criteria is met.

Changing regulatory landscapes and enhanced forex regulation adds more protection

More recently many forex regulators have sought to put additional measures in place to provide further protections to traders, with enhanced forex regulation impacting the trading available. 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.

A few recent examples of forex and CFD regulators withdrawing products completely to safeguard retail users include the restriction of Binary options trading in Europe, Crypto CFDs in the UK by the FCA, and CFD trading in the USA.

Jump To Forex Regulators List By Country

Check the forex regulator registry to be sure, it only takes a minute

Before trading with any broker, you should check their site for the forex regulators information (usually visible in the footer at the bottom of each page).You should take the regulator license number if you are in any doubt and you can cross check this against the official register. These registers of approved brokers and agencies is usually listed online. We have listed the registers below next to the forex regulators to make finding the proper area that bit easier for you.

If the name on the registry does not match up with the one the broker is said to be operating under, you need to take care that is not misappropriating another brokers’ license and double check the relevant reviews you can find from users to see what the feel is across the market.

Who 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 world of forex trading. We will highlight those are the ‘Tier 1’ forex regulators that we would deem stringent enough to ensure the strongest protection and enforcement of regulations.

Global Forex Regulators Infographic

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There are other regulators listed also that can provide more security of course than unregulated brokers, but they are located in jurisdictions that are less well developed from a forex regulation standpoint. We cover these below for added information and in case you are in any of these territories yourself but with less detail than the Tier 1 regulators.

ASIC Forex Regulation Australia – Australian Securities and Investment Commission (ASIC)

Maximum Leverage for retail forex traders = 1:30
Tier = 1
ASIC Register = https://asic.gov.au/online-services/search-asics-registers/

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

Up until recently, the leverage restrictions were significantly higher than that of the other major regulators such as FCA, JFSA and BaFIN, with up to 1:500 leverage offered. This was recently reduced in 2021 to bring ASIC forex regulation in line with other global regulators.

Regulators take this step to provide a higher level of consumer protection when it is felt that risk management needs accelerating. Maximum leverage for retail traders now stands at 1:30 for major forex pairs, and reduced down through various instruments to as little as 1:2 in some cases.

See The List of Best ASIC Regulated Brokers
Best Trading Platforms Australia

FCA Forex Regulation United Kingdom – Financial Conduct Authority (FCA)

Maximum Leverage for retail forex traders = 1:30, Professional 1:300
Tier = 1
FCA Register = https://register.fca.org.uk/

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. FCA forex regulation offers a strong stamp of approval in terms of legitimacy.

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, this makes an FCA regulated forex broker a good choice from a safety standpoint.

Before Brexit, the FCA, as part of the European Union were bound to the same overseer as the remainder of Europe in ESMA. Since the break in this regard, the forex regulations in the UK and especially CFD regulations in the UK have changed a little away from the EU. One such example is the case of Crypto CFD trading in the UK which has recently been pulled by the regulator as you will see below.

Note on crypto CFDS under FCA
Up until recently, CFD crypto trading was allowed by the FCA similarly to that of a large portion of Europe but this has now changed with restrictions coming into effect which ensure that as a UK resident, you cannot trade cryptocurrency CFDs with any regulated broker with leverage.

Some will be happy with this, whilst others will disagree, but regardless of feelings, this is now a 1:1 product across the jurisdiction. This step has been taken to account for the increasingly volatile trading range seen in cryptocurrency, and further enhancing retail consumer protection measures.

See our list of best FCA Regulated Brokers
10 Best UK trading platform

Forex Regulator Germany – Federal Financial Supervisory Authority (BaFin)

Maximum Leverage for retail forex traders = 1:30, Professional 1:300
Tier = 1
BaFin Register = https://portal.mvp.bafin.de/database/InstInfo/?locale=en_GB

The Federal Financial Supervisory Authority of Germany is another gold star Tier 1 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.

See our best forex broker Germany list

Cyprus Forex Regulation – Cyprus Securities and Exchange Commission (CySEC)

Maximum Leverage for retail forex traders = 1:30, Professional 1:300
Tier = 2
CySEC Register = https://www.cysec.gov.cy/en-GB/entities/investment-firms/

CySEC Regulation (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 than certain Tier 1 regulators 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. What was once seen a lesser forex regulation historically in Cyprus is now becoming more and more firm in its’ enforcement, as seen with an increased rate of fines being handed out in recent years.

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 = https://www.cftc.gov/LawRegulation/FederalRegister/index.htm

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.

Canada Forex Regulation – Investment Industry Regulatory Organization of Canada (IIROC), Canadian Securities Agency (CSA)

Maximum Leverage for retail forex traders = 1:50
Tier = 1
IIROC Register = https://www.iiroc.ca/investors/dealers-we-regulate

Forex regulation in Canada is a little more complex than in certain other jurisdictions mainly due to the volume of regulators that are here.

The IIROC in Canada now oversee more than 170 firms and 30,000+ individuals. This regulator has a strong approach towards marketing in Canada without appropriate licenses. Forex regulation in Canada as far as leverage concerned is in line with other major financial services hubs with a maximum of 1:50 for Canadian based trading.

Trusted Online Forex & CFD Brokers In Canada

Forex Regulation In Japan – Financial Services Authority (JFSA)

Maximum Leverage for retail forex traders = 1:25
Tier = 1
JFSA Register = https://www.fsa.go.jp/en/regulated/licensed/index.html

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 and as such you will not see as many International brokers on the JFSA register.

Forex regulation in Japan is quite specific to the local market, and if a broker does not have a strong local presence, they will not usually seek JFSA regulation.

Leverage restrictions are significantly tighter than some of the other major territories to account for the large retail trading audience. It is however commonplace to see bonuses and sign up offers in Japan that are not approved in Europe as there are no restrictions against this currently with the JFSA.

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

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

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 Malaysia forex 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). As a local resident, it is advisable that you use a broker with Malaysia forex regulation.

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

Forex Regulation In 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 = https://www.fsca.co.za/Fais/Search_FSP.htm

The Financial Sector Conduct Authority in South Africa is a the most established of the regulators on the African continent. South Africa forex regulation was previously under the sphere of the FSB but is now under the remit of the newly recently formed FSCA and PRA.

South Africa, and Africa in general as a Continent, 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.

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

List of best forex brokers South Africa

Singapore – Monetary Authority of Singapore (MAS)

Maximum Leverage for retail forex traders = 1:50
Tier = 2
MAS Register = https://eservices.mas.gov.sg/fid

St Vincent Forex Regulation – St Vincent & The Grenadines Forex Supervisory Agency (SVGFSA)

Maximum Leverage for retail trading – undeclared
Tier – 3

St Vincent Forex Regulation has been on the rise in recent years with many forex brokers that already possess Tier 1 regulation also seeking an offshore jurisdiction for International traders.

The fact that you can access considerably higher leverage when trading forex under a St Vincent Regulated forex broker has meant that brokers seeking a high leverage environment to satisfy user demand have added licenses such as SVGFSA.

Acquiring St Vincent Forex Regulation is also a lot less restrictive for newer brokers to the market that do not wish to simply ‘white label’ regulation from another company, or potentially wait a number of years for a Tier 1 regulator to complete the required processes.

Whilst there is nothing wrong with a lower tier of regulation, if you are from a Country that has a local regulator that is more widely reputed for governance then you may well prefer to go through that particular option instead.

Switzerland – Swiss Financial Markets Supervisory Agency (FINMA)

Maximum Leverage for retail forex traders = 1:200
Tier = 1
FINMA Register = https://www.finma.ch/en/authorisation/insurance-intermediaries/vermittlerportal/suche/

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

Maximum Leverage for retail forex traders = 1:500
Tier = 2
DFSA Register = https://www.dfsa.ae/Public-Register/Firm
CBUAE = https://www.centralbank.ae/en

Best online trading platforms UAE list

Forex Regulation In India Is Provided By The Securities & Exchange Board of India (SEBI)

Maximum Leverage for retail forex traders = 1:300
Tier = 3
SEBI Register

Forex regulation in India is provided by the SEBI and whilst there are various rules regarding how you can trade forex from India, it is not a legal requirement that you must do so with an SEBI regulated broker.

The rules for forex trading in India are mainly in relation to the types of currencies you are approved to trade with, and trading currency pairs that are not linked to the INR is not formally approved.

There are a growing number of International brokers that are creating dedicated offers and localised products for India based traders but at this time, there are still only a few International and locally regulated brands. OctaFX are one of those that has gone through the additional process of becoming SEBI regulated as you can see but there will likely be many more to come in future years.

Best Trading Apps In India