Archives

AML rules complement KYC. Brokers must monitor for unusual patterns (large round-number deposits from third parties, rapid withdrawals to different accounts) and file Suspicious Activity Reports.

Also called: Anti-Money Laundering

ASIC regulates financial services and corporate conduct in Australia. ASIC-regulated brokers must segregate client funds and hold AFSL (Australian Financial Services Licence).

Also called: Australian Securities and Investments Commission, AFSL

BaFin supervises banks, insurers, and securities firms in Germany. BaFin-regulated FX brokers operate under MiFID II rules and ESMA leverage caps; the country also requires negative balance protection for retail clients.

Also called: Federal Financial Supervisory Authority

The CFTC oversees the NFA and is the ultimate authority for retail FX in the US. Together with the Dodd-Frank Act post-2010, CFTC rules force any broker serving US retail to register, segregate funds, and abide by 50:1 max leverage.

Also called: Commodity Futures Trading Commission

CySEC licences let firms passport their services across all EU/EEA member states under MiFID II. CySEC brokers must segregate client funds and contribute to the Investor Compensation Fund (up to €20,000 per client).

Also called: Cyprus Securities and Exchange Commission

For retail FX, Dodd-Frank imposed 50:1 leverage caps, mandatory segregation, FIFO matching, and massive net-capital requirements that drove most foreign brokers out of the US market.

Also called: Dodd Frank

EMIR affects FX through reporting obligations (every derivative trade reported to a trade repository) and risk-mitigation requirements between counterparties. Mostly transparent to retail traders, but shapes how brokers process trades.

Also called: European Market Infrastructure Regulation

ESMA's intervention measures, made permanent by national regulators, also mandated negative balance protection and standardised risk warnings.

Also called: ESMA caps

The FCA regulates ~50,000 financial firms in the UK and is widely considered one of the strictest forex regulators globally. FCA-regulated brokers must hold client funds in segregated accounts and participate in the Financial Services Compensation Scheme (FSCS — up to £85,000 per…

Also called: Financial Conduct Authority

FINMA-licensed FX brokers operate under banking-grade capital and conduct requirements. Less common in retail FX (Swiss brokers tend to focus on HNW clients), but highly respected when present.

Also called: Swiss Financial Market Supervisory Authority

The FSC Mauritius licenses non-bank financial services including FX brokers. Less stringent than Tier-1 regulators but with formal segregation and disclosure requirements.

Also called: FSC

The FSCA replaced the FSB in 2018 and supervises FX brokers, asset managers, and other non-banking financial services in South Africa. Regulated brokers must segregate client funds.

Also called: Financial Sector Conduct Authority

Major schemes: FSCS (UK, £85k), ICF (Cyprus, €20k), Investor Protection Levy (Germany, €20k). US has no direct equivalent for retail FX (the NFA does not run a compensation scheme).

Also called: ICS, FSCS, ICF

KYC typically requires: government ID (passport / driver's licence), proof of address (utility bill, bank statement < 3 months old), and sometimes proof of source of funds for larger accounts.

Also called: Know Your Customer

MiFID II governs everything from best-execution requirements to transaction reporting and product governance across the EU/EEA. It's the regulatory backbone CySEC, BaFin, and other EU regulators enforce.

Also called: MiFID 2

Without NBP, a sudden gap (e.g. the 2015 CHF flash crash) can put your account thousands of dollars negative — a debt the broker can technically demand.

Also called: NBP

The NFA is the day-to-day regulator for US futures and retail FX brokers (which must also be registered with the CFTC). Membership is required for any firm offering retail FX in the US.

Also called: National Futures Association

Offshore licences let brokers serve clients globally with fewer restrictions (higher leverage, no NBP requirements). They aren't all scams — many reputable brokers maintain an offshore entity for international clients — but they don't offer the same protections as Tier-1.

Also called: offshore licence

Segregation means your deposits sit in trust accounts at top-tier banks, ring-fenced from broker creditors. If the broker goes bankrupt, segregated funds should be returnable.

Also called: segregation, client money rules

Tier-1 isn't an official label — it's industry shorthand for regulators with strong enforcement, mandatory segregation, and meaningful compensation schemes. Trading with a Tier-1-regulated entity is the single biggest risk-reduction step retail traders can take.