A regulated forex broker is one that holds a licence from a financial supervisor you can look up yourself, on a public register, in under a minute. Everything else a broker claims about safety is marketing. This guide shows what regulation actually gives you, how to verify a licence rather than trust a badge, and the specific tricks used to look regulated without being regulated.
What regulation actually protects
Regulation is not a quality rating and it is not a guarantee you will make money. It is a set of enforceable obligations on the firm, and it is worth understanding exactly which ones you are buying.
Client money segregation. Your funds must be held in accounts separate from the firm’s own operating capital, so they are ring-fenced if the business fails. Leverage limits. Retail clients are capped by asset class, with major currency pairs at the top of the range and volatile assets such as crypto far lower. Negative balance protection. Losses cannot exceed the money in your account, so a gap through your stop does not leave you owing the broker. A complaints route. If the firm will not resolve a dispute, an independent body will hear it. Standardised risk disclosure. The firm must publish the percentage of its retail accounts that lose money.
What regulation does not do: it does not stop you losing money on a bad trade, it does not vet a broker’s spreads, and it does not make execution fast. Those are commercial questions you still have to judge separately.
How to verify a licence in under a minute
Do not look for a logo on the website footer. Logos are images and images can be copied. Go to the regulator’s own register and search there.
- Find the legal entity, not the brand. It is in the client agreement or the website’s legal notice, and it is often a different company from the trading name. This is the entity you will actually contract with.
- Search that exact entity name on the regulator’s register. The FCA Financial Services Register, the CySEC register of Cyprus investment firms, and the ESMA register of EU firms are all free and searchable by name or licence number.
- Check the permissions, not just the presence. A firm can be on a register for something other than dealing in investments. The entry lists what the firm is authorised to do.
- Check the status is current. Registers show lapsed, restricted and withdrawn authorisations. A licence that existed in 2019 tells you nothing about today.
- Match the reference number. If the site quotes a licence number, confirm it belongs to the same entity. Quoting a real number that belongs to a different company is a common tactic.
Where the licence is held matters more than that one exists
Two brokers can both be “regulated” and offer you very different protection, because the group may operate several entities and route you to whichever one your country of residence allows.
The practical consequence is that the leverage cap, the compensation scheme and the complaints body all follow the entity you signed with, not the brand on the homepage. Before funding an account, confirm which entity appears on your agreement and check that specific one. A group holding a well-known European licence may still onboard you through an offshore subsidiary with none of the same obligations.
Six ways firms look regulated without being regulated
These recur often enough that the FCA publishes consumer guidance on most of them.
- Clone firms. A copied website using a real firm’s name and licence number, with one changed detail such as the contact email or bank account.
- Registration mistaken for authorisation. Being incorporated as a company, or registered with a company registry, is not financial authorisation and grants none of the protections above.
- An unrelated group licence. A licence held by a sister company that does not cover the entity taking your deposit.
- Lapsed permissions. A real historical authorisation, quietly withdrawn, still advertised.
- Jurisdiction switching after signup. Marketing emphasises a European licence; the agreement names an entity somewhere else.
- Unverifiable claims. “Fully regulated” or “licensed and secure” with no named regulator and no reference number. A regulated firm always states both, because it must.
What to check after the licence
Once the licence is confirmed, the remaining questions are commercial. Compare the all-in cost of a round turn rather than the advertised spread, since a tight spread with a commission can cost more than a wider spread without one. Check overnight financing if you hold positions for more than a day, because it accrues nightly on the full notional value and can quietly exceed your entry cost. Confirm withdrawals return to an account in your own name and ask how long they take in practice. Finally, open a demo and trade the instruments and hours you actually intend to trade, watching how spreads behave around scheduled economic releases rather than in quiet conditions.
Where Volity sits
Volity routes execution through UBK Markets Ltd, regulated by CySEC under licence 186/12. Client funds are held in segregated accounts, and the retail protections described above, including leverage limits and negative balance protection, apply to accounts under that entity. You can confirm the licence yourself on the CySEC register rather than taking our word for it, which is the same standard this guide asks you to apply to any broker.
Frequently asked questions
Is a regulated broker always safe?
Safer, not safe. Regulation gives you segregated funds, leverage limits, negative balance protection and a complaints route. It does not protect you from your own trading losses, and it does not guarantee good pricing or execution. Those remain your judgement.
How do I know which regulator applies to me?
It follows the legal entity named in your client agreement, which is decided by your country of residence. Read the agreement before depositing and check that specific entity on its regulator’s register. The brand on the website may cover several entities with different permissions.
What if a broker is not on the register at all?
Treat that as decisive and do not deposit. Regulators also publish warning lists of firms operating without authorisation, and checking those alongside the main register takes another minute. An absent entry is not an administrative oversight.
Does a higher leverage offer mean a broker is unregulated?
Not necessarily, because caps differ by jurisdiction and by asset class. But leverage far above the limits set where you live is a strong signal that the entity you would contract with is authorised somewhere with lighter obligations. Check which entity is offering it.
Sources
This guide draws on the following public sources.
- FCA – the Financial Services Register, searchable by firm and reference number
- CySEC – public register of Cyprus investment firms and their permissions
- ESMA – register of EU investment firms and cross-border passporting
- FCA – guidance on clone firms and investment scams
- FCA – supervisory expectations for CFD providers
- FCA Handbook – COBS 22.5, restrictions on retail sale of CFDs
- FCA – PS19/18, permanent leverage and close-out rules for retail clients
- ESMA – EU-wide leverage caps and CFD restrictions for retail investors
- IOSCO – cross-border investor protection resources and regulator directory
- IOSCO – report on retail OTC leveraged products
