What you will learn
- 1Find the broker's regulatory claim
- 2Note the regulator name
- 3Go to the regulator's public register
- 4Search for the broker
- 5Verify licence status is Active
- 6Check authorized activities
- 7Cross-check on BrokerCheck if US-based
Estimated reading time: 5 minutes
Checking whether a forex broker is genuinely regulated takes less than two minutes, yet most traders skip this step entirely. Unregulated brokers operate without oversight, which means there are no segregated client funds, no compensation schemes, and no recourse if something goes wrong. This tutorial shows you exactly how to verify any broker's licence using free public tools.
Step 1: Find the Broker's Regulatory Claim
Every regulated broker is required to display its licence information prominently. Scroll to the very bottom of the broker's website and look for a regulatory disclosure section. This typically appears as a paragraph of fine print that includes the broker's legal entity name, the regulator's name, and a reference or licence number.
Screenshot tip: The footer text often reads something like "XYZ Ltd is authorised and regulated by the Financial Conduct Authority (FCA), registration number 123456." Copy the registration number — you will need it in the next step.
If the broker does not display any regulatory information on its website, that is an immediate red flag. Walk away.
Step 2: Note the Regulator Name
Different regulators offer different levels of investor protection. Tier-1 regulators — the most trusted — include the FCA (UK), ASIC (Australia), BaFin (Germany), FINMA (Switzerland), and the SEC/CFTC (US). CySEC (Cyprus) is widely used by European brokers and is considered tier-2 but still reputable under MiFID II.
Be cautious of brokers regulated exclusively by offshore authorities such as the FSA in Saint Vincent, the IFSC in Belize, or the FSC in Mauritius. These jurisdictions have minimal capital requirements and limited enforcement capability.
A broker can hold multiple licences. A Pepperstone, for example, is regulated by the FCA, ASIC, CySEC, DFSA, and SCB. The more tier-1 licences a broker holds, the more oversight they operate under.
Step 3: Go to the Regulator's Public Register
Every major regulator maintains a free, publicly accessible online register. Here are the direct links for the most common regulators:
FCA (UK): the Financial Services Register at register.fca.org.uk. ASIC (Australia): the Professional Registers at connectonline.asic.gov.au. CySEC (Cyprus): the Regulated Entities section at cysec.gov.cy. BaFin (Germany): the Company Database at portal.mvp.bafin.de. NFA (US): the BASIC database at nfa.futures.org/basicnet.
Navigate to the relevant register for the regulator claimed by the broker.
Step 4: Search for the Broker
Enter the broker's name or registration number into the register's search field. Use the exact legal entity name from the broker's footer, not the brand name. For example, search "Pepperstone Group Limited" rather than just "Pepperstone."
If the broker appears in the results, click on their entry to view the full record. If no results appear, try searching by the licence number alone. If neither returns a result, the broker may not be genuinely regulated by that authority.
Screenshot tip: Copy the licence number exactly as it appears on the broker's website and paste it into the register search. Even a single digit difference means you are looking at a different entity — or a fabricated number.
Step 5: Verify Licence Status Is Active
The register entry will show the firm's current authorisation status. The exact wording varies by regulator, but you are looking for terms like "Authorised," "Active," "Registered," or "Licensed." Any of these confirm the broker is currently permitted to operate.
If the status says "Cancelled," "Revoked," "Suspended," or "Not Authorised," do not open an account. A cancelled licence means the regulator has withdrawn the broker's permission to operate, potentially for misconduct.
Also check the effective date. A brand-new licence (granted in the last few months) is not necessarily a problem, but a long track record — five or more years — is more reassuring.
Step 6: Check Authorized Activities
The register entry lists the specific activities the firm is authorised to perform. For a forex and CFD broker, you want to see permissions such as "dealing in investments as agent," "arranging deals in investments," or "dealing in contracts for differences."
If the firm is only authorised for "advising on investments" or "insurance mediation," it is not licensed to execute trades on your behalf. This distinction matters — some firms use a legitimate but unrelated licence to appear regulated for services they are not actually authorised to provide.
Screenshot tip: On the FCA register, expand the "Permissions" section to see every regulated activity. On ASIC, look for the "Authorised Representative" or "AFS Licence" details that specify the financial products covered.
Step 7: Cross-Check on BrokerCheck (US-Based)
If the broker claims to be regulated in the United States, additional checks are required. US-based forex brokers must be registered with the National Futures Association (NFA) and regulated by the Commodity Futures Trading Commission (CFTC).
Visit the NFA BASIC database at nfa.futures.org/basicnet and search for the broker's name. The entry will show their registration category, whether they are currently a member in good standing, and any disciplinary history. FINRA's BrokerCheck at brokercheck.finra.org provides similar information for securities-related activities.
Any broker claiming US regulation that does not appear in both the NFA and CFTC databases is either lying or confused — neither of which is acceptable when your money is involved.
Risk Disclaimer
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 65% and 82% of retail investor accounts lose money when trading CFDs with these providers. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. This tutorial is for informational purposes only and does not constitute financial advice.