Regulation decides what happens to your money if something goes wrong. It's boring until it's the most important thing in the world.
StrictTier 1FCA (UK) · ASIC (Australia) · CySEC (EU) · BaFin (Germany) · CFTC/NFA (US)
SolidTier 2DFSA (Dubai) · FSCA (South Africa) · CMA (Kenya)
LightOffshoreFSA (Seychelles) · FSC (Mauritius) · SCB (Bahamas) · FSRA (Saint Lucia)
What strong regulation gives you
- Segregated client funds: your money is kept apart from the broker's own.
- Capital requirements: the broker must hold a financial cushion.
- Compensation schemes in some countries (for example UK FSCS).
- Leverage caps and negative balance protection for retail clients.
Offshore isn't automatically bad
Offshore licences allow higher leverage and fewer restrictions, and many reputable brokers use them for international clients. But protection is lighter, so the broker's own reputation matters more.
Pro tip
Big brokers run several companies under one brand. Check which entity your account is actually with, then search the licence number on the regulator's own website.
Wick says
"Regulated in the Republic of Totally Real Islands" is not a licence. If you can't verify it on the regulator's site, walk away.
Key takeaways
- Tier-1 regulators offer the strongest protection.
- Offshore = more flexibility, less protection.
- Always verify the licence number yourself.