Regulator

### What a regulator actually forces a broker to do Regulation is not a badge on a website, it is a rulebook the firm has to live inside. Under the FCA's permanent CFD rules (Policy Statement PS19/18, in force from 1 August 2019), a UK broker must cap retail leverage between 30:1 and 2:1 depending on the asset, close your positions out when your funds fall to 50% of the margin needed to hold them, guarantee you cannot lose more than the money in your account (negative balance protection), stop offering cash or other inducements to get you trading, and publish a standardised risk warning stating the percentage of its own retail client accounts that lose money. ESMA set the same shape across the EU from 1 August 2018: 30:1 on major currency pairs, 20:1 on minors, gold and major indices, 10:1 on commodities other than gold, 5:1 on individual shares, 2:1 on crypto. ASIC brought Australia into line with its product intervention order on 29 March 2021. Those limits were not plucked from the air. Making its case for the order, ASIC reported that over a five-week stretch in March and April 2020, the retail clients of a sample of 13 CFD issuers took a net loss of more than A$774 million, and more than 15,000 accounts fell into negative balance owing a total of A$10.9 million. ### What you actually get back if the firm fails - **FCA (UK)**: eligible investment claims are covered by the FSCS up to £85,000 per person, per firm. - **CySEC (Cyprus)**: the Investor Compensation Fund pays the lower of 90% of your covered claim and €20,000. - **NFA (US)**: a Forex Dealer Member must hold at least $20,000,000 in adjusted net capital, and only a narrow set of registered entities may act as counterparty to a retail forex trade at all. Notice what none of that covers: your losing trades. Segregation and compensation schemes exist for the case where the firm collapses or misuses client money, never for the case where you were simply wrong. ### How to check, in about two minutes In the UK, search the firm on the FCA's Financial Services Register, then compare the phone number and address on the register against the ones the firm gave you. In the US, look the firm up on NFA BASIC, the tool the CFTC points consumers to, and confirm it is registered and approved to do forex business. If it is not there, walk. The FCA warns specifically about **clone firms**: fraudsters copy a genuine authorised firm's name, address and even its Firm Reference Number, then give you their own contact details. That is why you verify outward from the register, not inward from the website. ### The mistake Reading "regulated" in a footer and stopping there. Large brokers run several legal entities, and the one that onboards you may be the offshore one while the tier-1 licence belongs to a sibling company. Find the entity named on your account agreement, then check that entity.