Compare CFD Regulatory Licences
The CFD and FX industry is a heavily regulated industry and so it should be. The past has shown us that the industry has been riddled with ‘cowboy’ brokers who have ripped off clients, stated they are regulated when they are not and blatantly stolen client money.
Whilst it is fair to say that the industry has cleaned up its act, there are still some brokers that act inappropriately from time-to-time. All traders need to be wary of such dodgy brokers and to only trade with regulated brokers.
Let’s take a look at the different types of licences and learn which ones are the safest.
Are Some CFD Regulatory Licences Better Than Others?
When looking for a new broker to trade with, regulation is one of the most important factors to consider.
In fact, one of the first questions you should ask is: “Is the broker regulated and with who?“.
But are some regulatory licences better than others? Yes, and below we have separated licences into three distinct categories:
- Tier-1: these are the hardest licences to obtain and any broker that holds one (or more) of these licences should be considered very trustworthy. For instance, an ASIC-regulated broker is better to use than one from Belize.
- Tier 2: these licences are ok to hold and are deemed mid-level trustworthy. Ideally, your broker would hold some of these alongside at least Tier-1 licence.
- Tier 3: these licences are low-level trustworthy and you need to be careful when trading with a broker that only holds one of these licences and no others.
Tiered Licence Comparison:
Tier-1 Regulatory Licences (High Trust):
- Australia: Australian Securities & Investment Commission (ASIC)
- Hong Kong: Securities Futures Commission (SFC)
- Japan: Japanese Financial Services Authority (JFSA)
- Singapore: Monetary Authority of Singapore (MAS)
- Switzerland: Swiss Financial Market Supervisory Authority (FINMA)
- UK: Financial Conduct Authority (FCA)
Tier-2 Licences (Mid Level Trust):
- China: China Banking Regulatory Commission (CBRC)
- Cyprus: Cyprus Securities & Exchange Commission (CySEC)
- Ireland: Central Bank of Ireland (CBI)
- Israel: Israel Securities Authority (ISA)
- New Zealand: Financial Markets Authority (FMA)
- South Africa: Financial Services Board in South Africa (FSB)
- Thailand: Securities and Exchange Commission (Thailand)
- UAE: Dubai Financial Services Authority (DFSA)
Tier-3 Licences (Low Level Trust):
- Bahamas: Securities Commission of the Bahamas (SCB)
- Belize: International Financial Services Commission (IFSC)
- Bermuda: Bermuda Monetary Authority (BMA)
- BVI: BVI Financial Services Commission (FSC)
- Cayman Islands: Cayman Islands Monetary Authority (CIMA)
- Mauritius: Mauritius’ Financial Services Commission (FSC)
Tier-4 Unregulated Brokers (ZERO Trust)
Never ever trade with a broker that does not hold a CFD regulatory licence.
If you do, your money is at great risk and it is likely you will never see it again.