Regulation: Why the License Matters
A license is not paperwork — it is the only structural thing standing between your deposit and the broker's insolvency.
What a regulator actually does
Top-tier regulators force brokers to segregate client money, hold minimum capital, submit audited reports, and follow conduct rules. Many run compensation funds that pay out if the broker fails. Offshore regimes may require little of this.
Tier-1 vs offshore
FCA, ASIC, CySEC (EEA), BaFin, FINMA, NFA/CFTC and MAS are the recognised tier-1 set. Offshore licences (Seychelles, Mauritius, SVG, Vanuatu, BVI) are valid but lighter-touch — higher leverage, less recourse. Neither is 'bad'; they suit different risk profiles.
How to verify
Find the license number on the broker's site, then search it on the regulator's official register. Confirm the entity name matches the one you would contract with — the offshore arm is a different company.
Passporting and eligibility
ESMA rules cap EU retail leverage at 1:30; US retail at 1:50. A broker may serve you only through a specific entity. Always check that your country is accepted before depositing.
Related glossary terms
New to the jargon here? These plain-English definitions will help.
