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best FCA regulated forex brokers

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Forex BrokerMax LeverageMin. DepositSpreadFull ReviewsTrade Now
1000:1$10From 0.1 PipsRead the full review
200:1$0From 0.1 pipsRead the full review
500:1$200From 0.0 PipsRead the full review
500:1$200From 0.0 PipsRead the full review
400:1$200From 2.0 PipsRead the full review
500:1$100From 0.5 PipsRead the full review

Introduction to Forex Regulation

Let’s face it: in today’s world, with a myriad of websites and brokers to choose from, looking for the right broker that suits your needs can be challenging and quite time consuming. When it comes to the regulation of forex and CFD brokers, it’s usually fairly easy to figure out which licenses these entities hold. But is it really a seal of approval and of significance if a broker is licensed and regulated with certain industry watchdogs?

For many novice traders who are looking to enter the world of online trading the answer is probably “yes”, and they believe that not holding one of those licenses means that the broker is operating illegally. However, this is not the case for the forex market, as it is an OTC (over-the-counter) market with no specific regulations overseeing it.

There are various regulators and industry watchdogs, but they only cover a specific jurisdiction and do not apply to the entire industry on a global scale. Regulations, unlike legislation, are not written by lawmakers but instead are crafted by bureaucrats based on their understanding of what the market needs in order to function with as little friction as possible. This means that regulations are never fixed and applicable to the whole forex market. Instead they are flexible and can change according to circumstances unlike legislation, which requires amendments before any changes can take effect.

FCA regulated brokers often enjoy a very positive reputation and there are a number of international heavyweight forex brokers that hold a license with the Financial Conduct Authority of the United Kingdom.

Who is the FCA, what is FCA regulation, and why are FCA regulated brokers often known for their reputation and "market integrity"?

Who and why FCA?

The Financial Conduct Authority (FCA) is the regulator for forex brokers that are located in the United Kingdom and it is the successor of the Financial Services Authority (FSA) which, until 2013, was Britain's sole regulator for all financial services providers. Many financial firms, hedge funds, CFD providers, and internationally operating brokers hold offices in metropolitan London. As one of the oldest and most respected regulators in the world, many forex brokers aim to acquire a license from the FCA.

Despite the fact that the FCA is an EU regulated body, the FCA is very active and sometimes stricter than other competent authorities in the EU, such as BaFin of Germany. Over the years, many well-known forex brokers have received large fines from the FCA for price manipulations and acting against their clients’ best interests.

The Financial Conduct Authority operates independently from the UK government, and the regulations of the FCA look after over 56,000 financial services firms.

As their official website states, their key objectives include:

  • The supervision and enhancement of financial markets in the UK.
  • Encouraging healthy competition within financial services in the interest of consumers.
  • Using enforcement and investigation to ensure compliance with regulations aimed at treating customers fairly.

The authority also works to protect consumers in a wide range of ways. It acts to ensure firms give their customers appropriate products and services and put their security and protection above the firms' own income or profits. It further monitors which individuals and firms are able to enter the financial markets, making sure they meet the relevant set standards before authorising them.

Supervision of how firms work is yet another aspect. It can stop those that don't meet the authority's standards from carrying out the activities it regulates. Interventions can be carried out if individuals or firms are not following the rules. In doing so, penalties can be imposed, or stops can be put on their trading activities. Securing redress for consumers is yet another option. Lastly, it means that consumers receive the information they need in the right way so that they can make the best decisions for themselves.

What are the benefits of using FCA licensed Forex brokers?

As mentioned before, forex traders looking to invest in forex trading or participate in financial markets shouldn’t confuse regulation with legislation when it comes to forex brokers and the financial services industry.

However, should a forex broker that is regulated by the FCA go bankrupt, the Financial Services Compensation Scheme (FSCS) will cover all retail clients up to the amount of £30,000 and 90% for the next £20,000 up to a maximum coverage of £50,000.

The FCA must also keep in line with EU MiFID II regulations and guidelines. This means that watchlists and regulated markets can change with notifications of new deadlines and outcomes from the EU framework. This can affect everything from short positions to commodity position limits.

All UK and European forex brokers have recently been limited by ESMA (the European Securities and Markets Authority) to offering a maximum leverage of 30:1 to all their retail customers. Further limitations on cryptocurrency trading and even bans on trading certain products, such as binary options trading, have also been enforced by ESMA. Though there are other jurisdictions that allow for higher or sometimes even unlimited maximum leverage settings and that have not yet banned any trading products, it can be beneficial for retail clients to keep their trading under better control with these ESMA and FCA enforced rules.

Forex traders should always be very cautious when using high leverage settings, and a 30:1 leverage on major currency pairs already increases one’s risk exposure quite drastically.

Apart from the FCA there are some other strong regulatory bodies out there with strict rules and decent consumer protection. These entities include the Cyprus Securities and Exchange Commission (CySEC) of Cyprus, the Australian Securities and Investments Commission (ASIC) of Australia, the National Futures Association (NFA) of the USA, and the Financial Services Board (FSA) of South Africa.

Who are the best FCA regulated brokers?

The best forex brokers are typically those that are registered with strong regulators and industry watchdogs such as the FCA (Financial Conduct Authority) of the UK. These firms take security and regulation serious enough and guarantee negative funds protection as per the FCA's regulatory framework. Brokers have to effectively take on market risk for any prospective client losses below the value of their account balance. Following the FCA's Capital Requirements Directive, brokers are required to maintain a specific capital level that is consistent with moderating their market risk exposure. The UK financial regulator has advised financial firms of the necessary provisions to meet enhanced capital requirements under the no-negative balance rules, which are set out by the ESMA.

ForexTime Limited (FXTM) is a leading CFD broker that is regulated by the Financial Conduct Authority (FCA), but is also licensed by the Financial Services Board (FSB) of South Africa and further registered with the Cyprus Securities and Exchange Commission (CySEC). They are a true ECN broker that allows trading Forex and CFDs on the popular trading platforms MT4 and MT5. The overall trading conditions are very decent with ForexTime, but forex traders should always be cautious when dealing with high risk products such as CFDs, forex, cryptocurrencies (such as Bitcoin ), etc. The minimum deposit requirements are very low at $/£ 5.00 and there is a large selection of deposit methods available.

Similar to FXTM, XTB, also known as X-Trade Brokers, is another regulated European broker with an excellent offering. Other than FXTM that doesn't allow to trade on the largest selection of assets, XTB offers plenty of trading opportunities in numerous markets. Their clients can select from more than 3,000 financial instruments, including FX, indices, CFDs, stocks, commodities, ETFs and five of the world's most popular cryptocurrencies as CFDs. XTB provides a choice between two different account options, which are equipped with various advantages and functions. Clients can choose between a Standard and Pro Depot and then use either the popular MetaTrader 4 platform or the in-house xStation 5 for trading. xStation 5 offers unique tools and traits and impresses with its user-friendly functionality. Furthermore, this in-house platform is characterized by speedy trading execution times of 85 milliseconds. Useful tools such as interactive and detailed charts and technical analysis functions, or extensive trading history are integrated here. There is no minimum requirement for deposits on either the Standard or Pro Account.

Other excellent brokers that hold licenses with the FCA are, for example, the social trading giant eToro, market maker IG, global giant City Index, the Aussie broker Pepperstone, and the well-known Plus500.

As always, investors should be extremely cautious before engaging in trading forex or CFDs, spread betting, and binary options trading and heed all relevant risk warnings that come with these practices.

Find The Best FCA licensed Forex Brokers for your needs

To help you find the Forex broker that is best suited to your needs, take a look at our comparison table and ranking of best FCA regulated Forex brokers above. If you require more in-depth information or are looking for more brokers to choose from, check out our detailed individual broker reviews and additional comparison tables.