Regulation in the Forex (Foreign Exchange) market refers to the oversight by authoritative bodies to ensure fair, transparent trading practices, and to protect investors in the foreign exchange market.

These bodies can be national, such as the Financial Conduct Authority (FCA) in the UK, supranational, like the European Securities and Markets Authority (ESMA) in the European Union, or even encompass external dispute resolution (EDR) schemes that address conflicts between brokers and their clients.

Forex regulatory bodies are often categorized into three tiers based on their stringency, global influence, and the robustness of their regulatory framework.

These entities work by setting standards and regulations that Forex brokers must adhere to. This includes requirements for transparency, financial reporting, capital adequacy, and client protection measures like segregated client accounts and participation in compensation schemes.

For Forex brokers, compliance with these regulations is mandatory to operate in jurisdictions governed by these bodies. These requirements are designed to protect investors, maintain market integrity, and ensure that brokers operate with fairness and in the best interest of their clients.

Table of Content

What is a Forex regulatory body?

A Forex regulatory body is an organization that oversees the foreign exchange market, ensuring that transactions are conducted legally and ethically. These bodies set rules, standards, and guidelines for Forex trading and brokers, aiming to protect retail Forex traders and promote fair and transparent market practices.

Forex regulatory bodies vary by country, each with its own set of regulations and degree of oversight. They are responsible for licensing Forex brokers, monitoring their operations, and ensuring compliance with financial laws.

These regulators also play a role in protecting investors from fraud and malpractice in Forex trading. In the event of disputes or irregularities, they provide a framework for resolution and, if necessary, enforce penalties.

What are the different types of Forex regulations?

Regulators in the Forex market are of three types:

  • Supranational
  • National
  • EDR (External Dispute Resolution)

What is a supranational regulation?

A supranational regulation refers to a form of legal regulation or rule-setting that is established and enforced by a body or entity that operates above the level of individual nation-states.

This kind of regulation typically applies across multiple countries, especially within a specific region or among a group of nations that have agreed to adhere to the regulations set forth by the supranational authority.

The European Securities and Markets Authority (ESMA) is a prime example of an entity that establishes supranational regulations. ESMA is an independent EU Authority that contributes to safeguarding the stability of the European Union’s financial system.

What is a national regulation?

National regulation refers to a set of rules, standards, or laws that are established and enforced by a specific country’s government or regulatory agencies. These regulations are designed to govern various aspects of social, economic, and political life within that country’s borders. Unlike supranational regulations, national regulations are tailored to the specific needs, legal frameworks, and policy goals of individual countries.

For instance, the Financial Conduct Authority (FCA) in the United Kingdom, the Cyprus Securities and Exchange Commission (CySEC), and the Australian Securities and Investments Commission (ASIC) are examples of national regulatory bodies.

What is an EDR regulation?

An EDR (External Dispute Resolution) regulation refers to rules and procedures set up by an independent organization to resolve disputes between parties, typically in the financial services sector, without the need for court intervention.

These regulations govern how an independent body or organization handles complaints from consumers about financial service providers. EDR schemes are usually faster, less formal, and more cost-effective than going through the court system. They aim to provide fair, accessible, and efficient mechanisms for resolving disputes outside traditional legal frameworks.

Financial Commission (Finacom) is an example of an organization that facilitates EDR. It operates as an independent self-regulatory organization and external dispute resolution (EDR) body, specifically for the online foreign exchange (Forex) industry.

Finacom provides traders and brokers in the Forex industry with a platform to resolve disputes and issues. By adhering to Finacom’s standards and procedures, member companies commit to upholding certain levels of transparency and fairness, while customers receive a mechanism to address and resolve complaints.

What is an offshore regulation?

Offshore regulation refers to the regulatory framework established by authorities in jurisdictions that are typically considered outside the major financial centres. These jurisdictions, often known as “offshore financial centres,” offer regulatory environments that may differ significantly from those in larger, more established markets.

Offshore regulations often provide more relaxed rules, lower tax rates, and greater privacy for investors and financial service providers. While this can attract legitimate businesses seeking competitive advantages, it also raises concerns about weaker oversight and the potential for financial malpractice.

In the realm of currency trading, the Bahamas Monetary Authority (BMA) in the Bahamas and the International Financial Services Commission (IFSC) in Belize are two famous regulatory bodies that oversee financial services in their respective jurisdictions.

Are some regulatory bodies in Forex more important than others?

Regulatory bodies in the financial world are often categorized into three different tiers based on their stringency, oversight, and global recognition.


These tiers reflect the level of trust and credibility associated with the regulatory standards enforced by these bodies:

  • Tier 1 Regulatory Bodies: Considered the most trustworthy, these regulators enforce the strictest rules and oversight standards, ensuring a high level of investor protection and financial stability. They are recognized globally for their rigorous enforcement and comprehensive regulatory frameworks. Examples include the European Securities and Markets Authority (ESMA), the UK’s Financial Conduct Authority (FCA), and the Australian Securities and Investments Commission (ASIC).
  • Tier 2 Regulatory Bodies: These are still reputable but may have slightly less stringent regulatory standards compared to Tier 1. They offer a good balance of investor protection and flexibility for the financial institutions. Examples include the Cyprus Securities and Exchange Commission (CySEC) and the Monetary Authority of Singapore (MAS).
  • Tier 3 Regulatory Bodies: These regulators are often found in jurisdictions with more lenient financial regulations. While they do provide a regulatory framework, the level of investor protection and oversight is not as robust as in Tier 1 and Tier 2. Examples might include regulatory bodies in smaller countries or tax havens such as the BMA in Bermuda.

How does a Forex regulatory body work?

A Forex regulatory body primarily engages in several key activities to oversee and regulate the foreign exchange market. These activities include setting standards and guidelines for market conduct, monitoring and supervising Forex brokers and other market participants, and enforcing compliance with the regulatory framework.

This involves regular audits, reviewing financial reports, and ensuring that brokers maintain adequate capital reserves to protect investors. The body also plays a crucial role in investor protection, which includes establishing rules for fair trading practices and handling complaints and disputes between investors and brokers.

On a global scale, these regulatory bodies often cooperate to enhance the effectiveness and consistency of Forex market regulation. This cooperation can take various forms, such as sharing information, harmonizing regulatory standards, and joint efforts in tackling cross-border financial crimes.

What are the main activities of a Forex regulatory body?

The main activities of a Forex regulatory body are centred around overseeing and regulating the foreign exchange (Forex) market to ensure fair, transparent, and ethical trading practices.

These activities generally include:

  • Licensing and Supervision: Regulatory bodies issue licenses to Forex brokers, ensuring that they meet specific standards and criteria before they can offer services to traders. They also supervise these brokers to ensure ongoing compliance with regulatory requirements.
  • Setting Standards and Rules: Forex regulators establish rules and standards that govern the operation of Forex brokers. This includes setting requirements for financial reporting, client fund segregation, leverage limits, risk management practices, and marketing activities.
  • Consumer Protection: Protecting investors and traders is a key priority. Regulators work to prevent fraud, manipulation, and abusive practices in the Forex market. They also ensure that brokers provide clear and accurate information to their clients and handle customer complaints effectively.
  • Market Monitoring and Surveillance: Regulators monitor trading activities to detect and prevent illegal practices like insider trading, market manipulation, and other forms of financial fraud. This involves analyzing trading patterns and data to identify suspicious activities.
  • Enforcement and Disciplinary Actions: When regulatory violations occur, Forex regulators have the authority to enforce rules and regulations. This can involve imposing fines, suspending licenses, or taking legal action against offenders.
  • Educating and Informing the Public: Many Forex regulatory bodies also take active roles in educating traders and the public about the Forex market, the risks involved in trading, and how to recognize and avoid scams and unethical brokers.
  • International Cooperation: Forex markets are global, so regulators often collaborate with their counterparts in other countries to ensure cross-border compliance and to tackle issues that transcend national boundaries.

Is there a global regulatory body for the Forex market?

There are no global regulatory bodies for Forex trading due to the decentralized and international nature of the foreign exchange market.

The Forex market, being a global marketplace for trading currencies, does not operate in a single jurisdiction but spans various countries and time zones. This international scope makes it challenging to establish a single, global authority to oversee and regulate the market uniformly.

How do Forex regulatory bodies operate and interact on a global scale?

Forex regulatory bodies often collaborate with each other despite the absence of a single, global entity overseeing the Forex market. Through various forms of cooperation, regulatory bodies work together to enhance oversight, share information, and maintain a certain level of uniformity in regulatory practices across different regions.

One common form of collaboration is through information sharing agreements. These agreements allow regulatory bodies to exchange crucial information about market activities, regulatory compliance, and potential misconduct by market participants. This information sharing is vital in monitoring cross-border transactions and in combating illegal activities like money laundering, fraud, and market manipulation.

What are the requirements for Forex brokers to be regulated?

To be regulated, Forex brokers must meet several key requirements that ensure their financial stability, legal compliance, and ethical business practices. These requirements include:

  • Money Requirement: Registering with a regulatory body often involves significant costs. Brokers must pay fees for the licensing process, which can be substantial, depending on the jurisdiction and the specific regulatory body.
  • Liquidity Requirement: Regulators typically require brokers to maintain a certain level of liquid assets in their balance sheets. This liquidity is crucial to ensure that the broker can meet its financial obligations to clients, especially in times of market stress.
  • Respecting International Laws: Brokers must adhere to international laws and standards, particularly those related to anti-money laundering (AML) and know your customer (KYC) regulations. These laws are designed to prevent financial crimes and ensure the integrity of financial transactions.
  • Respecting Local Laws: In addition to international standards, brokers must comply with all relevant local laws and regulations in the jurisdictions where they operate. This includes adhering to rules set by the local Forex regulatory authorities.
  • Behaviour: Ethical treatment of customers is a fundamental requirement. Brokers are expected to treat their clients fairly and with transparency, providing accurate information about their services and the risks involved in trading Forex.
  • Compliance: Ongoing compliance with the rules and regulations set by the regulatory bodies is essential. This includes regular reporting, undergoing audits, and adhering to operational and financial standards set by the regulators.

What happens if a Forex broker does not comply with regulations?

If a Forex broker does not comply with regulations, it usually faces significant consequences. The specific repercussions can vary depending on the nature of the violation and the regulatory body involved, but generally include the following:

  • Fines and Penalties: Non-compliant brokers can be subjected to substantial fines and penalties. These financial sanctions are imposed to penalize non-compliance and deter similar behaviour in the future.
  • Suspension or Revocation of License: A serious or repeated breach of regulations can lead to the suspension or revocation of the broker’s license to operate. This action effectively prevents the broker from legally offering Forex trading services.
  • Legal Action: In cases of severe violations, such as fraud or embezzlement, legal action may be taken against the broker. This can include criminal charges against the company or its executives.
  • Intervention in Operations: Regulators may require changes in a broker’s operations to address compliance issues. This can involve altering business practices, implementing new procedures, or making organizational changes.

Is it mandatory for a Forex broker to be regulated?

Whether it is mandatory for a Forex broker to be regulated depends on the country in which it operates. In countries with strong Forex regulations, such as those in the European Union, Australia, the USA, and the UK, obtaining regulatory approval is mandatory for Forex brokers.

In contrast, in countries where Forex regulation is less stringent or even non-existent, it is not mandatory for brokers to be regulated. In such environments, brokers may operate without the same level of oversight or consumer protection measures. This can pose higher risks for traders, as there may be less recourse in the event of disputes or malpractice.

Given these differences, it is always advisable for traders to choose between regulated Forex brokers, regardless of their location.

What’s the difference between being regulated and being licensed in Forex?

In the Forex market, the terms “regulated” and “licensed” are often used interchangeably, but they represent slightly different aspects of a broker’s legal and operational status.

When a Forex broker is regulated, it means that the broker has undergone the comprehensive registration process with a regulatory authority in a particular jurisdiction.

On the other hand, being licensed typically refers to the broker holding a license from one country and then seeking to operate in another jurisdiction. In this scenario, the host country may grant the broker a license to operate within its territory, provided the broker respects local laws and regulations.

A prime example of this is seen with ESMA (European Securities and Markets Authority) countries in the European Union. If a Forex broker is licensed in one EU member state, it can offer its services in other EU countries under the “passporting” rights, provided it adheres to both the regulations of its home country and the local regulations of the countries it operates in.

Can a trader use an unregulated Forex broker?

It is generally legal for traders to use unregulated Forex brokers; however, doing so carries significant risks.

Unregulated Forex brokers are not subject to the same standards of oversight, transparency, and customer protection that regulated brokers are. This lack of regulation means that traders have fewer assurances regarding the safety of their funds, the integrity of trading practices, and the reliability of the trading platform.

What are the main Forex regulatory bodies?

Below is a list of the major regulatory bodies overseeing the Forex market and Forex trading:

Name TIER Area Foundation Head Office Website
Commodity Futures Trading Commission (CFTC) 1 United States 1974 Washington CFTC Website
National Futures Association (NFA) 1 United States 1982 Chicago NFA Website
Financial Conduct Authority (FCA) 1 United Kingdom 2013 London FCA Website
European Securities and Markets Authority (ESMA) 2 European Union 2011 Paris ESMA Website
Cyprus Securities and Exchange Commission (CySEC) 2 Cyprus 2001 Nicosia CySEC Website
Australian Securities and Investments Commission (ASIC) 1 Australia 1991 Sydney ASIC Website
Canadian Investment Regulatory Organization (CIRO) 2 Canada 2023 Toronto CIRO Website
Financial Services Agency (FSA) 1 Japan 2001 Tokyo FSA Website
Swiss Financial Market Supervisory Authority (FINMA) 1 Switzerland 2009 Bern FINMA Website
Monetary Authority of Singapore (MAS) 2 Singapore 1971 Singapore MAS Website
Securities and Futures Commission (SFC) 1 Hong Kong 1989 Hong Kong SFC Website

Why should one opt for a regulated Forex broker?

Choosing a regulated Forex broker is better than an unregulated one because it ensures higher standards of safety, transparency, and accountability. Regulated brokers are subject to strict oversight, providing better protection for your investments and more reliable trading conditions.

Regulated Forex brokers must have specific security features for traders, specifically:

  • Negative Balance Protection
  • Money Insurance
  • Segregated Bank Accounts
  • Transparency

What specific protections do regulated Forex brokers offer to traders?

Regulated Forex brokers offer several key protections to Forex traders, enhancing the safety and integrity of their trading experience:

  • Negative Balance Protection: This ensures that traders cannot lose more money than they have deposited in their trading accounts. For example, if a trader has $1,000 in their account and a sudden market move creates a loss greater than that amount, negative balance protection would prevent the account from going into a negative balance, safeguarding the trader from owing additional money.
  • Money Insurance: Some regulatory bodies require brokers to participate in compensation schemes that insure client funds up to a certain amount. For instance, under the Financial Services Compensation Scheme (FSCS) in the UK, a trader’s funds are protected up to £85,000, offering a safety net in case the broker faces financial difficulties or insolvency.
  • Segregated Bank Accounts: Regulated brokers must keep their clients’ funds in segregated bank accounts, separate from the company’s operating funds. This separation ensures that client funds are not used for the broker’s business activities and are readily available for withdrawal. In the event of the broker’s financial problems, these client funds remain protected.
  • Transparency: Regulated brokers are required to provide clear and accurate information about their trading practices, fees, and the risks associated with Forex trading. This transparency helps traders make informed decisions and understand the terms of their trading activities.

What are the best-regulated Forex brokers?

There are many regulated Forex brokers on the market. Most have at least Tier 1 regulation and usually offshore. Major regulated Forex brokers include:

IG Markets:

  • FCA (195355)
  • ASIC (220440)
  • FMA (FSP18923)
  • FSCA (41393)
  • NFA (509630)
  • MAS (200510021K)
  • DFSA (F001780)
  • JFSA (255)
  • BMA Bermuda (54814)


  • FCA (684312)
  • ASIC (414530)
  • DFSA (F004356)
  • CySEC (398429)
  • SCB (SIA-F217)
  • CMA (128)


  • CySEC (n. HE20058)
  • FCA (n. 583263)
  • ASIC (n. 491139)
  • FinCEN (n. 31000204884179)
  • FSAS (n. SD076)

How can a trader determine if a broker is regulated?

To verify if a Forex broker is regulated, there are three main steps to follow:

  1. Visit the broker’s official website and scroll to the footer. Every broker is required to display the company information, and this is usually found on the footer of their website.
  2. Take note of the broker’s regulatory number and business name of the broker
  3. Visit the official website of the relevant regulatory body, check their register of regulated entities, and confirm if the information matches.

The process is quite simple, however it may vary slightly depending on the regulatory body. For more information, here you can find an article that will explain in detail how to check the regulation of a Forex broker.

How can a trader contact a Forex regulatory body?

To contact a regulatory body, you should go to the contact page, usually labelled as “contact us”, on their official website. Finding them is straightforward, as they are usually prominently displayed in the header. The contact forms typically require a name, an email, and a description of the issue for you to be contacted.

Below, you can find the direct links to the Contact section of the FCA, NFA, and ASIC.

How can a trader file a complaint or report a broker?

If a trader needs to file a complaint or report a broker, the first step is to gather and organize all relevant evidence. This includes screenshots of transactions, trade history, email correspondences, chat conversations with the broker, account statements, and any other documents that can substantiate the claim. This evidence is crucial for building a strong case and clearly presenting the issue at hand.

Once the evidence is compiled, the trader should then contact the regulatory body that oversees the broker. Most regulatory bodies have specific procedures for filing complaints, which are usually outlined on their websites.

The complaint should be detailed, including a clear explanation of the issue, how the broker has violated trading terms or regulations, and the impact on the trader. The trader should also include all gathered evidence to support their claim.

How should a trader stay updated about regulatory bodies?

To stay updated about regulatory bodies, traders should proactively follow these organizations online. Most regulatory bodies, such as the FCA, ASIC, or ESMA, have websites and online platforms where they regularly post updates, regulatory changes, and news relevant to Forex trading. Subscribing to newsletters, following their social media accounts, or regularly checking their official websites are effective ways for traders to stay informed about the latest regulatory developments.

However, it’s also important to note that brokers themselves have a responsibility to keep their clients informed about any regulatory changes that may affect their trading activities. Reputable and regulated brokers typically communicate important regulatory updates to their clients through emails, notices on their trading platforms, or updates on their own websites.

filippo ucchino

About The Author

Filippo Ucchino
Co-Founder - CEO - Broker Expert
Filippo is the co-founder and CEO of He has 15 years of experience in the financial sector and forex in particular. He started his career as a forex trader in 2005 and then became interested in the whole fintech and crypto sector.
Over this time, he has developed an almost scientific approach to the analysis of brokers, their services, and offerings. In addition, he is an expert in Compliance and Security Policies for consumers protection in this sector.
With InvestinGoal, Filippo’s goal is to bring as much clarity as possible to help users navigate the world of online trading, forex, and cryptocurrencies.

Trading CFDs, FX, and cryptocurrencies involves a high degree of risk. All providers have a percentage of retail investor accounts that lose money when trading CFDs with their company. You should consider whether you can afford to take the high risk of losing your money and whether you understand how CFDs, FX, and cryptocurrencies work. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. Your capital is at risk. The present page is intended for teaching purposes only. It shall not be intended as operational advice for investments, nor as an invitation to public savings raising. Any real or simulated result shall represent no warranty as to possible future performances. The speculative activity in forex market, as well as in other markets, implies considerable economic risks; anyone who carries out speculative activity does it on its own responsibility.
ADVERTISER DISCLOSURE: InvestinGoal is completely free to use for all. Though we may receive a commission from brokers we feature, this does not impact the results of our reviews or rankings which are conducted with complete independence and objectivity, following our own impartial methodology. Help us continue to provide the best free broker reviews by opening your account with our links. Please read our Advertiser Disclosure to learn more.
2FC Financial Srl
Via Filippo Argelati, 10,
Milan, Italy

VAT No. IT10004450960
Copyright © 2024 – All rights reserved. / Privacy and Cookie Policy / Basic Terms of Use / Risk Warning / Sitemap