There is no question as to the necessity of trading with regulated Forex brokers. However, choosing the best regulated Forex broker can be a difficult task. A regulatory authority assures the economic strength of the broker its compliance with the law. It proves that a Forex broker will treat its client in a fair way. Without regulation, traders are left without any assurance about the safety of their funds. So before taking the decision of which regulated Forex broker to trade with, have a look into their regulation and if they offer services to your country of residence. Brokers with more than one supervisory body should be considered above brokers with only one. What is more, the strength of the regulatory authority should be considered as a key factor when choosing the best regulated Forex broker. Below is a regulated Forex brokers list for you to choose from.

Some of the brokers on the list below are regulated by more than one financial agency. As an example: XM is regulated by the CySEC, FCA, and the ASIC. The reason why XM abides by the regulations of various jurisdictions is so that they would not be limited from any client who is a resident from a certain area, and it allows an extra layer of protection for existing and new clients. Another component to its multiple regulations is due to its headquarters located in Belize, Australia, and Cyprus; this gives them more credibility by doing so.

Regulated Forex Brokers List

 

Broker
Description
Trade Now
Octafx
OctaFX
Regulation: CySec
Min. Deposit: $/€/£ 5
Leverage: 1:500
Spreads: Low as 0.4 pips

Review


IC Markets
IC Markets
Regulation: ASIC
Min. Deposit: $/€/£ 200
Leverage: 1:500
Spreads: Low as 0.0 pips

Review


XM
XM
Regulation: CySEC,FCA,ASIC
Min. Deposit: $/€/£ 5
Leverage: 1:500
Spreads: Low as 0.1 pips

Review
Globex360
GlobeX360
Regulation: FSCA
Min. Deposit: No min Deposit
Leverage: 1:500
Spreads: Low as 1.6 pips

Review
XTB
XTB
Regulation: FCA
Min. Deposit: $/€/£ 250
Leverage: 1:30
Spreads: Low as 0.1 pips

Review


IQOption
IQOption


Regulation: CySec
Min. Deposit: $/€/£ 10
Leverage: 1:1000
Spreads: Floating from 1 pip

Review


OlympTrade
OlympTrade
Regulation: IFC
Min. Deposit: $/€/£ 10
Leverage: 1:500
Spreads: Low as 0.0 pips

Review
Etoro
Etoro
Regulation: CySEC,FCA,ASIC
Min. Deposit: $/€/£ 200
Leverage: 1:30
Spreads: Variable

Review

Avatrade
Avatrade
Regulation: ASIC,JFSA,FSCA
Min. Deposit: $/€/£ 250
Leverage: 1:400
Spreads: Floating from 1 pip

Review


 

 

Why Choose To Trade With A Regulated Forex Broker?

Considering that the Forex market is decentralized and unregulated, you might wonder why you should only choose to trade with regulated Forex brokers. Regulations exist in a market to ensure that the parties involved conduct their business in a fair and ethical manner. By regulating FX brokers, banks, institutional investors and support industries, traders and investors can feel safe and have the confidence to invest in the Forex market. This way growth and stability is nurtured across the industry.

A Forex broker must be registered and licensed by the regulatory body that is in charge of regulating Forex trading and speculative, high leveraged products in the country that they want to operate in. Apart from the need to be licensed, regulated Forex brokers are also required to submit regular audits in order to ensure that they meet the regulatory requirements and comply with industry standard. For example, most Forex regulatory bodies will require that the broker holds sufficient liquid capital is able to execute and complete the Forex contracts initiated by their clients. In addition, the broker must also be able to return all its clients’ money in the event it becomes insolvent.

By trading with a regulated FX broker, there is the safety element that is what allures most clients. The safety element is very crucial for traders because many of them worry about financial risks, or hackers that intercept the online assets and take them for themselves. With regulated FX brokers, there is no need for that fear since there are many various forms of preventive measures that are taken to avoid any negative exposure.

What is a FX Regulation?

The foreign exchange market or Forex market for short, is the largest example of a free market at work. The daily turnover is approximately more than 4 trillion dollars worth of transactions. However, despite the amount of money that flows through the Forex market, it is an OTC (Over the Counter) market and is unregulated in most parts of the world. The Forex market is decentralized and there is no central exchange that is specially geared towards the handling of Forex transactions. Even with the decentralized and unregulated nature of the Forex market, trading on an institutional basis poses no problems due to the fact that the parties involved trust each other.

Nevertheless, as Forex trading becomes more accessible and popular among retail traders, it also becomes more prone to fraud. In order to counter fraudulent activities in the Forex markets, many countries have set legislation in place to regulate Forex trading activities. This is done by requiring Forex brokers to be regulated by regulatory agencies such as the UK’s Financial Conduct Authority (FCA) and the National Futures Association in the US (NFA). Within their respective reach, these regulatory agencies act as the watchdog for traders dealing with Forex brokers operating under their jurisdictions and geography.

Major Regulatory Bodies

Forex regulation differs from country to country, since there are different regulations and . Each regulatory body, has its own specific regulatory requirements and its area/geography of jurisdictions. Enforcement policies also vary from region to region. In major financial centers such as London and New York, the regulatory agencies are considered to be more strict in enforcing regulatory requirements, due to the need to protect the reputation and integrity of the financial industry for that region. However, that is not always the case. As the industry attracts more interest, the need for more strict measures and regulation becomes prominent across the globe.

As an example: the Australian Securities and Investment Commission have tightened their reins on the current issues that are emerging with the expanding financial markets in Australia. Therefore, many FX brokers have found it hard to keep up with the tight demands that are being asked by the ASIC. One of the unfortunate brokers would be Westpac, who are under investigation by the Australian watchdog.

Below are some of the major regulatory bodies which every Forex trader should be aware of:

  1. Australia: Australian Securities and Investment Commission (ASIC)
  2. Canada:
    • British Columbia Securities Commission
    • Ontario Securities Commission
    • Investment Industry Regulatory Organization of Canada (IIROC)
  1. Cyprus: Cyprus Securities Exchange Commission (CySEC)
  2. Denmark: Danish FSA
  3. France: Banque de France Autorité de Contrôle Prudentiel (ACP)
  4. Germany: Bundeszentrale für Finanzdienstleistungsaufsicht (Bafin)
  5. Hong Kong: SAR: Securities and Futures Commission
  6. Indonesia: Badan Pengawas Perdagangan Berjangka Komoditi
  7. Italy: Commissione Nazionale per le Società e la Borsa
  8. Japan:
    • Financial Services Agency,
    • Japan Investor Protection Fund
    • The Financial Futures Association of Japan
    • Japan Securities Dealers Association
    • Kanto Local Finance Bureau
  1. Russia: The Commission on Regulation of Financial Markets Participants Relationships
  2. Singapore:
    • Licensed clearing member of the Singapore Exchange
    • Monetary Authority of Singapore
  1. Spain: Comisión Nacional del Mercado de Valores
  2. Sweden: Swedish Financial Supervisory Authority (Finansinspektionen)
  3. Switzerland:
    • Groupement Suisse des Conseils en Gestion Indépendants
    • Polyreg
    • Association Romande des intermediares financiers
    • Swiss Federal Department of Finance
    • Organisme d’autorégulation fondé par le GSCGI
    • Commission fédérale des banques
    • Swiss Financial Market Supervisory Authority (FINMA)
  1. Turkey: Capital Markets Board of Turkey (CMB)
  2. United Arab Emirates: Dubai Multi Commodities Centre
  3. United Kingdom: Financial Conduct Authority (FCA)
  4.  United States:
    • Financial Industry Regulatory Authority, Inc.
    • New York Stock Exchange
    • Office of the Comptroller of the Currency
    • Securities and Exchanges Commission
    • Commodities and Futures Trading Commission
    • National Futures Association

It should be noted that member countries in the European Union (EU) share a common regulatory framework under the Markets in Financial Instruments Directive (MiFID) passed by the European Parliament. The objective of the directive was to harmonize the regulation of financial services providers operating within the European Economic Area (EEA). This means an EEA authorized Forex broker will be able to “passport” its services legally to another member state through the authorization obtained from its home country. For example, a CySEC regulated Forex broker is permitted to operate in the UK by “pass-porting” its CySEC license to the UK’s Financial Conduct Authority.

Since the EU are all relevant and connected with one another, through economy and other industries, it only makes sense that they would be under the same jurisdiction for financial regulation. The MiFID facilitates for FX brokers to be regulated under one common jurisdiction and be able to operate in more than one state in Europe. By doing so, there are no border limitations and the European Economic Area is considered to be an open area for traders.

How Can Regulations Protect You?

Regulations play a huge role in protecting investors interest as they traverse through financial service providers such as Forex brokers, and prompt them to act in a fair, ethical and compliant manner.

  • A major requirement of every regulator is the segregation of funds of clients funds. Forex Brokers must maintain segregated accounts for their clients’ fund and their own operational funds in order to prevent possible abuse by the broker. Moreover, should a broker become bankrupt, its creditors are not allowed to tap into the broker’s clients fund as settlement of the broker’s debt.
  • Another important regulatory requirement imposed by the regulatory bodies, is the requirement that Forex brokers warn their potential clients of the high risk involved in Forex trading and high leveraged products. This rule was put in place to forewarn traders that they face a possibility of losing all their investments due to the risks involved.
  • Based on the above requirement, brokers must categorize their clients either retail investors or professional/institutional investors. This is due to the fact that professional investors are regarded as experienced traders with great awareness of the risks involved in trading Forex. As such, brokers have to make additional efforts to educate their retail clients of the nature of risks involved with Forex trading.
  • Another way which regulations protect retail traders is the leverage which Forex brokers are permitted to offer to their clients. Forex brokers in the U.S are only permitted by the NFA to offer their clients a maximum of 1:50 leverage ratio. Forex Brokers in the EU need to test their clients with the use of general assessment tests, in order to specify how much leverage they can use.
  • Furthermore, regulators provide a level of protection to the investors by guaranteeing a certain amount of compensation, should the broker become insolvent. For instance CySEC provides compensation to the tune of 20,000 EUR for deposits lost.

 Regulatory Requirements from Regulated Brokers

As mentioned earlier, the regulatory requirements for Forex brokers vary from region to region. Although the specific details of the regulatory requirements may vary from region to region, there are some commonalities observed across all regulatory agencies:

  • Brokers are required to maintain sufficient liquidity to meet all contractual obligations.
  • Brokers are required to maintain segregated accounts; this means that the broker must not merge the client’s accounts with corporate funds and that they must remain separate at all times.
  • Brokers are required to submit regular audits to verify their compliance on their capital adequacy ratio.
  • Leverage ratios are capped to a certain limit.

These requirements and necessities are a form of insurance for clients who are working with regulated Forex brokers, that their private information and assets are safe.

 Conclusion on Regulated Forex Brokers

There is no doubt that investors can benefit from trading with a regulated broker, as opposed to trading with an unregulated broker. To help investors verify the regulatory status of a broker, most regulatory agencies maintain an online database which investors can access in order to verify whether a broker is truly regulated by the specific agency. This database is another form of precaution, so traders can guarantee that the brokers they are looking into are in fact, regulated. We have researched deeply into the very best regulated Forex brokers in the market and can save you the trouble of searching for yourself. There is a list above that consist of the best regulated Forex brokers , with a view to their reliability, technology, service standards and ancillary products.

With regulated FX brokers, it is easier to join and trade with them. Research will be required, but the regulatory agencies that they are aligned with give them a credible and reputable image to traders all over the world. this does not mean that there are no risks when it comes to regulated FX brokers, but the risks are remarkably less than those of un-regulated FX brokers. Most websites and broker reviews, including this one, recommend for traders of both experienced and novice skills, to work with regulated FX brokers. They are considered much safer and they do not contain the fear of major financial exposure, or risk, unlike unregulated FX brokers.