Short answer: A forex broker license is only as good as the regulator that issued it and the entity you actually sign up with. Tier 1 regulators (FCA, ASIC, FINMA and others) enforce capital, client-money and complaint rules; offshore licences (Seychelles, Mauritius, Vanuatu and similar) offer much less, and a company registration is not a licence at all.
This guide sets out the tiers we use on /how-we-rank/, what each one protects in practice, how to check a licence number yourself, and examples from the 66 brokers in our data. Of those 66, 36 hold at least one Tier 1 licence, 20 top out at Tier 2, one at Tier 3, seven are offshore-only and two have no licence we could match to a tier.
The four tiers we use, and what each scores
| Tier | Regulators (examples) | Safety score in our formula |
|---|---|---|
| Tier 1 | FCA (UK), ASIC (Australia), FINMA (Switzerland), BaFin (Germany), NFA/CFTC (US), MAS (Singapore), JFSA (Japan), CIRO (Canada), SEBI (India) | 10 |
| Tier 2 | CySEC and other EU regulators, DFSA and FSRA (UAE), SCA (UAE), FSCA (South Africa), FMA (New Zealand), SFC (Hong Kong) | 7.5 |
| Tier 3 | CMA (Kenya), JSC (Jordan) and similar | 5 |
| Offshore | FSC Mauritius, FSA Seychelles, SVG FSA, VFSC (Vanuatu), FSC BVI, IFSC Belize, SCB Bahamas, Labuan FSA, Mwali/Comoros | 3 |
| None found | No licence we could confirm | 0, and the whole score is capped at 5.0 |
Safety is 25% of the Verdict Score. We score a broker on the strongest licence it holds. But the licence that protects you is the one held by the entity that opens your account.
That gap is where most traders get caught out. More below.
What each tier protects in practice
Tier 1
- Capital requirements big enough that the broker can absorb losses and wind down in an orderly way.
- Client money segregation with regular audits. In the UK this sits under the FCA's client money rules.
- Retail leverage limits. The UK and Australia cap major FX pairs at 1:30 for retail clients. So when a brand with a Tier 1 licence advertises 1:5000 (IC Markets and ThinkMarkets both do), that leverage comes from an offshore entity, not the Tier 1 one.
- Negative balance protection for retail clients in the UK and Australia. You can't lose more than you deposited.
- Complaint routes with teeth. The UK has the Financial Ombudsman Service; Australia has AFCA.
- Compensation. UK clients of a failed FCA firm can claim from the FSCS, up to £85,000 per person for investment claims.
Tier 2
- Real supervision, capital rules and segregation. Enforcement and transparency vary from one regulator to the next.
- CySEC firms follow EU rules (1:30 retail leverage cap on major FX, negative balance protection) and belong to the Investor Compensation Fund, which covers up to €20,000 per eligible client.
- FSCA, DFSA, FSRA, SCA and FMA supervise conduct and capital, but their rules on leverage, compensation and complaints differ. Check the specific regulator.
Tier 3
A licence and a supervisor exist, with smaller teams and lighter capital rules. Recourse is possible. It's slower and less predictable, especially if you're a foreign client.
Offshore
- Usually a licence with low capital requirements, light reporting and no compensation scheme.
- These are the entities that allow 1:1000, 1:2000 or unlimited leverage, and the bonuses onshore regulators ban.
- If something goes wrong, you're left with the broker's own complaints process, any external dispute body it belongs to, and public pressure.
- Some jurisdictions only register companies. St. Vincent and the Grenadines' FSA has said publicly that it doesn't license or supervise forex brokers. A "registered in SVG" or "Saint Lucia company" line is not a forex licence.
Offshore isn't automatically unsafe. Xellion Markets, Hantec Markets and NordFX are offshore-only in our data and carry no negative complaint flags. It just means you're relying on the broker's behaviour rather than the rules.
Which company you sign with matters more than the brand
Most global brokers run several companies under one name. The FCA-licensed company serves UK clients. The offshore company serves almost everyone else.
From our data:
- Exness lists FCA and CySEC licences, which makes its best tier T1. Its footer says it doesn't serve residents of the UK or Europe, though, so international clients land on its offshore entities (FSA Seychelles, FSC Mauritius, FSC BVI and others).
- Fusion Markets holds ASIC (T1) alongside VFSC and FSA Seychelles (offshore).
- Vantage holds FSCA (T2) with FSC Mauritius and VFSC.
- Windsor Brokers has CMA Kenya and JSC Jordan as its strongest licences (T3, and the only Tier 3 broker we list), plus FSA Seychelles and FSC BVI.
- FXOpen holds an FCA licence. It also lists a Nevis company registration, which isn't a financial regulator.
- Libertex lists CySEC plus an SVG company registration with no financial regulator named.
Brokers whose strongest licence in our data is offshore: Xellion Markets (FSC Mauritius), Hantec Markets (FSC Mauritius), NordFX, Valetax, PU Prime, Alpari (Mwali/MISA) and RoboForex (FSC Belize). PU Prime and RoboForex both carry a "withdrawals refused" flag.
At the other end, Pepperstone (FCA, ASIC, BaFin, plus CySEC and DFSA), Saxo (FINMA, FCA, MAS, JFSA) and Interactive Brokers (SEC/CFTC, FCA, ASIC, MAS, SEBI and others) hold Tier 1 licences across several countries. Interactive Brokers still carries "poor support" and "withdrawals refused" flags. A strong licence and a smooth withdrawal are separate questions.
The rule: before you deposit, find the company name on your account agreement and check that company, not the brand.
How to check a licence number on a register
- Find the details on the broker's site. The footer and legal documents should give a company name, a licence or reference number, and the regulator. No number at all is a warning sign.
- Go to the regulator's own website. Type the address yourself or search the regulator's name. Don't follow a link from the broker or from a message someone sent you.
- Use the official register. The FCA Financial Services Register, ASIC's professional register, CySEC's list of regulated entities, the NFA's BASIC search, the FSCA FSP search, or the published licensee lists of FSA Seychelles and FSC Mauritius.
- Match every detail. Company name, licence number, registered address and, where shown, approved website domains must all match. Clone firms copy a real firm's name and number but use a different website, phone or email.
- Check status and permissions. "Authorised" isn't the same as "lapsed", "cancelled" or "registered only". The permissions should cover dealing in CFDs or derivatives for retail clients.
- Check the regulator's warning list. Most regulators publish lists of unauthorised firms and known clones.
- Confirm your entity. The client agreement names the company you're contracting with. That's the licence that applies to you.
Every broker page on BrokersVerdict lists the regulators we found and links to the sources. Licences change, so confirm on the regulator's own register before you deposit.
A Tier 1 licence won't guarantee your withdrawal
A strong licence cuts the risk of losing your money if the broker fails. It doesn't promise a smooth withdrawal on an ordinary Tuesday.
Our data shows several Tier 1 brokers with a "withdrawals refused" flag from recent reviews: HFM, Tickmill, XM, OANDA and eToro among them. Tickmill and XM are flagged for it in India too. Meanwhile some offshore-only brokers carry no such flag.
That's why safety is 25% of our score and payout is 35%. Read both. If a withdrawal is already stuck, see forex broker not allowing withdrawal.
Checklist before you deposit
- Strongest licence held by the brand
- Licence held by the entity that will open your account
- Licence number matches the official register, website domain included
- Status is authorised, with the right permissions
- Not on the regulator's warning list
- Complaint flags on the broker page
- A small test withdrawal before a large deposit
Browse brokers by tier and score on /rankings/, or by country on pages such as best forex brokers in the UK and best forex brokers in South Africa.
FAQ
What is the best forex broker license?
A Tier 1 licence from a regulator such as the FCA, ASIC, FINMA or the CFTC/NFA, held by the entity you actually open your account with. That gets you capital rules, client money segregation, retail leverage limits and a formal complaints route.
Is CySEC a good licence?
CySEC is an EU regulator. Its firms follow EU rules on leverage and negative balance protection and belong to an investor compensation fund covering up to €20,000 per eligible client. We rate it Tier 2.
Are offshore forex brokers illegal?
Not as such. They're licensed where they're based, but they may not be allowed to market to residents of your country, and local rules vary. Offshore licences give you much less protection if things go wrong.
What's the difference between a licence and a registration?
A licence means a financial regulator authorised the firm for specific activities and supervises it. A registration often just means a company exists there. Several brokers in our data list company registrations (Nevis, Saint Lucia, SVG) that aren't financial licences.
How do I know which entity I'm with?
Your client agreement names the company. You can also check the regulator named on your account opening documents, or ask support in writing.
Does a Tier 1 licence mean my withdrawals are safe?
It improves your protection and gives you a complaints route. It doesn't rule out disputes. Check each broker's complaint flags and withdrawal time page as well.
CFDs are leveraged products; most retail accounts lose money.