FCA- (Financial Conduct Authority) regulated Forex brokers in the U.K. are a natural choice for traders in both the U.K. and in other countries, thanks to its advantageous trader protections and investor-centric focus. See our top rated FCA brokers:
Solid broker for scalping and hedging
Institutional-style trading opportunities for retail traders
Daily market research and Autochartist access
High level regulation in multiple jurisdictions
Impressive range of tradeable assets including vanilla options and gold options
- BlackBull Markets, Best ECN trading environment, with scalping and hedging.
- FP Markets, ECN trading with leverage up to 1:500..
- AvaTrade, Highly regulated, choice of fixed or floating spreads.
5.0/5 in this category
Best ECN trading environment, with scalping and hedging
BlackBull Markets was founded in 2014 in New Zealand. Like many antipodean Forex brokers, BlackBull Markets is an ECN broker, offering raw spreads and commissions. They are regulated in New Zealand by the Financial Services Providers Register (FSPR) and offer a maximum leverage on some Forex currency pairs as high as 500 to 1. In addition to their global headquarters in New Zealand, BlackBull Markets also has presences in the form of branch offices in New York and Malaysia. BlackBull Markets offers a relatively tight range of tradable assets: 27 Forex currency pairs and crosses, gold, silver, crude oil, natural gas, and 6 major equity indices. That should be sufficient for those traders with more focused strategies not requiring wide diversification.
BlackBull Markets Pros & Cons
ECN/NDD execution model with deep liquidity
Institution-grade pricing for retail traders via proprietary price aggregation
ZuluTrade and Myfxbook for social trading
Leverage of up to 1:500
5.0/5 in this category
ECN trading with leverage up to 1:500.
fpmarkets is an ASIC-regulated Australian brokerage which launched in 2005. For most traders, the unique selling point of this broker is in the extremely wide range of tradable assets offered, providing the opportunity to trade over ten thousand individual stocks and shares including publicly quoted Hong Kong and Australian companies. Ffpmarkets also offers 60 Forex pairs and crosses, 11 equity indices, the major commodities, and 5 cryptocurrencies including Bitcoin. fpmarkets offers an unusual hybrid ECN/STP execution model, meaning their clients can choose between ECN style of execution giving a very high level of speed, and a “straight through processing” execution style which allows for more “natural” spreads.
FP Markets Pros & Cons
Choice of trading platforms and auxiliary trading tools
Very competitive cost structure and excellent asset selection
Low minimum deposit requirement and leverage of up to 1:500
Well-regulated and trustworthy
4.5/5 in this category
Highly regulated, choice of fixed or floating spreads
AvaTrade is one of the largest Forex / CFD brokers and well-known for offering their clients a choice of fixed or floating spreads. They have a very high and strong level of regulation. AvaTrade is directly regulated in Ireland (and by extension, the European Union), Australia, Japan, South Africa, and the British Virgin Islands. Outside the European Union, Ava offers maximum leverage on Forex currency pairs as high as 400 to 1. AvaTrade offers trading in over 55 different Forex currency pairs, 17 commodities, 20 equity indices, 14 cryptocurrencies, plus 66 individual stocks and shares. 2 bonds and 6 ETFs are also on the menu.
High-quality educational offering via SharpTrader
Excellent choice of trading platforms catering to various trading needs
Broad asset selection and cross-asset diversification opportunities
Well-regulated and trusted broker with oversight from a central bank
The UK’s world-renowned financial sector is regulated and therefore designed to ensure a safe, innovative Forex and CFD trading experience is available to traders. This advantageous structure delivers access to insured accounts, complaint mechanisms, strict marketing rules, and some unique protections that are only available to clients of UK-regulated forex and CFD brokers:
- The FCA’s Financial Services Compensation Scheme (FSCS) covers investors for up to £85,000 in the event of a broker being liquidated.
- Tax free spread betting and other attractive financial instruments are permitted by the FCA.
- With freedom comes responsibility, and the FCA is extremely diligent when it comes to compliance and investigating noncompliant brokerages.
- The FCA’s willingness to fine and suspend brokers which violate their clients’ best interests helps promote a safe, innovative financial environment where traders can take risks on the market and not on their brokerages.
The FCA’s track record as a fair and efficient regulator means that the brokers which it regulates are likely to provide excellent service and behave ethically. Should they fail to live up to this standard, the FCA is on hand to assist.
While an FCA regulated forex broker is ideal for the majority of traders, the recent limitations on leverage caps mean that traders who are seriously engaged in highly leveraged trading may not benefit as much from using an FCA broker. Still, leverage offered is still more than adequate to support aggressive money management strategies. With ample investor protections, FSCS insurance, and an investor-centric approach to oversight, the FCA-regulated and authorized forex and CFD brokers present many valuable advantages for traders based both within and outside the U.K.
Forex and CFD brokers are not always known for automatically acting in clients’ best interests, especially when many brokers generate profit from client losses. Accordingly, the FCA’s strict regulations and investor protection mechanisms demand above-board dealings between clients and brokers, supporting a better environment for investors to thrive. This includes segregated accounts, differing capitalization requirements depending on execution models, and compensation schemes to ensure a better trader experience.
Financial industry regulations always seek to strike a balance between innovation, risk management, and client protections, and UK’s FCA is no different. The 2008 financial crisis highlighted the dangers of a poorly regulated market, and the years that followed have seen a greater focus on client protection. The UK financial markets have traditionally been leaders in this regard, with the FCA setting the standard for both trading freedom and client protection.
FCA regulated forex brokers offer a variety of protections, benefits, and other perks in comparison with brokers from other regions:
FSCS (Financial Services Compensation Scheme) - this offers protection covering up to £85,000 of capital deposits per person per broker in the event of broker liquidation. If the broker went insolvent before 1st April 2019, protection is extended to £50,000.
Regulation - the FCA is empowered by the UK government to register, monitor, and investigate brokerages that fall under its jurisdiction.
Reputation - FCA brokerages are well-monitored and operate within a system that rewards innovation and punishes dishonesty. With over £200 million in fines typically issued in a given year, this regulator certainly means business. Brokers found to have breached its code of conduct and regulations may also be suspended and have their products banned.
Infrastructure - the FCA has an extensive network of staff and financial monitoring technologies at its disposal. It works closely with the UK financial ombudsman service to resolve disputes.
Tax-free Spread-Betting (for UK / Irish resident clients) - whereas EU regulators often frown on spread-betting, the FCA allows it - provided that the brokerage deals transparently with clients. The tax-free spread betting option only applies to those clients resident in the UK and Ireland.
Choice of Brokers - as a major financial center, the United Kingdom is home to more than 91 FCA regulated forex and CFD trading firms. This choice of brokers ensures tight, competitive spreads and reasonable brokerage fees.
Limiting Leverage - the FCA once allowed almost unlimited leverage, but as of mid-2019 leverage was reduced to a maximum of 30:1 on Forex currency pairs. This may disappoint some traders, but it is certainly in line with global best practices. Professionals may access higher leverage if they are able to demonstrate their expertise and experience. Still, opting for that “professional” classification route does diminish certain investor protections.
Here are some questions that every customer should ask before opening an account.
Is the broker licensed and registered with the FCA?
Does the broker have established relationships with well-known banks and other institutions?
Are the broker’s spreads competitive when compared with the industry average?
What range of financial instruments and trading strategies does the broker permit?
How long has the broker been in business? Have they ever had liquidity issues that resulted in their clients experiencing late or refused withdrawals?
The answers to these questions should give customers a fair idea about the type of broker they are dealing with and how likely they are to have a positive experience dealing with them.
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The FCA is a relatively new body, having launched its operations in 2013, but its predecessor (the FSA) had been the UK’s main financial regulator for decades. While the Bank of England handles larger-scale policy, the FCA is responsible for monitoring the brokerage sector. Accordingly, Forex and CFD transactions will all fall under this organization’s authority with an FCA-licensed and regulated broker.
The recent UK exit from the European Union was anticipated in advance by the FCA, which has announced that it intends to maintain close working relationships with European financial regulators. This will ensure that standards and procedures in the UK and EU remain aligned, especially for non-UK investors seeking to take advantage of the FCA’s generous protections and strict oversight.
FCA regulated Forex brokers based in the UK and its overseas territories will continue to provide financial services aligned with E.U. regulations beyond the end of 2020 and most probably also going forward well beyond that date, despite Brexit.
As outlined above, the FCA has existed in its current form for several years - and for many decades before that as the FSA. The UK government’s decision to split the FCA from its other financial regulatory bodies was taken in the hope that a specialized regulator for financial brokerages would deliver a better-regulated market.
So far, the FCA is widely seen as having lived up to this expectation and in fact exceeded it in some areas.
The FCA carries out several important functions:
- Licensing and registering financial services companies
- Ensuring that brokerages comply with FCA regulations and investigating complaints from clients
- Censuring financial companies that are found to have violated the FCA’s rules and regulations.
- Engaging with the government, banking sector, financial services client organizations to ensure a functional and efficient financial sector.
Investor safety is crucial in any developed financial market, and the FCA oversees one of the world’s biggest. Britain’s strategic location and history of success in trade and finance has allowed it to become one of the top financial destinations on earth.
UK based brokers have working hours in common with Asia, Europe, Australia, Africa, and North and South America. This allows the more than 50,000 FCA registered financial services companies to serve clients across the globe.
FCA brokers are subject to the regulator’s FSCS (Financial Services Compensation Scheme) which guarantees up to £85,000 in coverage for client funds in the event a broker is liquidated. Brokers found to be in violation of the FCA regulations face several forms of repercussions, including warning notices, fines, suspension of trading license, and product bans - depending on the severity of the violation.
FCA regulated forex brokers must comply with the rules outlined below before they are authorized to sell their services to the public. All brokers are responsible for meeting these requirements and may lose their license if they fail to do so.
The broker must hold the minimum amount of capital as per their FCA license equivalent to £125,000 for straight-through processing (STP) models and £730,000 for market-makers.
The broker must keep client funds separate from its operating expenses at all times.
Reporting - the broker has to report their daily capital balance and submit monthly and quarterly financial documents to the FCA.
The broker must manage their business in line with best practices and demonstrate this to the FCA on request.
The broker must disclose the risk involved with each trading instrument to its clients and always act in the client’s best interest.
The broker must not offer any services that violate FCA regulations, including highly leveraged trades.
If the FCA suspects a brokerage of violating its regulations, it has the legal authority to investigate and impose fines on the broker - or revoke their license altogether.
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The FCA applies the Guidelines outlined previously as a supervisory benchmark. It supervises bigger firms using proactive methods and smaller firms using reactive methods. Sectors are also subject to stress test exercises to attempt to identify and disrupt any systematic risks which may exist.
The FCA is featured in the financial news on a regular basis due to the actions it takes against non-compliant brokers and the information it shares with the public for the sake of investor and consumer safety.
A recent example includes a broker added to the FCA’s scam list for “cloning” an FCA-authorized firm. 4fxroyal was caught imitating Royal Forex and copying some of the FCA registration details to defraud customers, landing the scam company in the FCA’s crosshairs. Now listed as a scam firm on the FCA website, prospective traders should always make extra effort to conduct thorough due diligence before registering and capitalizing accounts.
If a client believes that a broker has misled them or is not dealing with them in an ethical manner, they are welcome to report the incident to the FCA. The regulator is efficient and diligent at investigating potential violations by the companies it oversees.
All firms regulated by the FCA are divided into one of two categories. Before September 2015, the FCA used a system of four categories. Today, all regulated firms are divided into “fixed portfolio” or “flexible portfolio”.
Categorization determines the nature and level of supervision given by the FCA. Broadly speaking, the more risk to clients the FCA deems there to be, the more likely the firm is to be placed in the “fixed portfolio” category.
“Fixed portfolio” firms are assigned a named person at the FCA as their dedicated supervisor and receive active supervision led by that individual.
“Flexible portfolio” firms are supervised more generically.
Yes, the FCA is a prudential regulator of tens of thousands of firms – approximately half of all the firms it regulated as of 2020. The FCA conducts prudential regulation by testing whether a firm understands its risks and the systems it has put in place to protect against those risks. The FCA will also want a satisfactory answer regarding whether and how a firm can deal with a large and unexpected cost to its balance sheet.
There are three types of FCA intervention that may be made in order to protect traders.
If the FCA identifies a dangerous product or service being sold, it may intervene to rectify the situation without receiving any client complaint. It can intervene to amend the development of regulated firms’ products or services.
If the FCA failed to prevent a dangerous product or service from being rolled out to the market, it may intervene by demanding that the regulated firm cease offering the product or service and refund or make whole any clients who have transacted it.
If the FCA discovers that an obsolete product or service which is no longer being offered was dangerous and sold in breach of regulatory standards, it may intervene by forcing full refunds to some or all clients affected.
Trader resources typically consist of educational material and research. These resources are supplied by most FCA regulated Forex / CFD brokers.
Most brokers advertise the resources they provide on their website, sometimes not even restricting access to the resources to their clients who have deposited funds. In these cases, it is a simple task to make sure the FCA-regulated broker offers such resources, by simply downloading the resources and examining them. In the cases where access is restricted to clients, it is a good idea to contact the broker through their “contact us” page and ask them to detail what research or other resources are available to their clients. Some brokers charge a fee for research.
Funds you deposit with an FCA-regulated Forex broker are protected in two ways.
Firstly, it is not easy for any broker to secure FCA authorization. A broker must apply to the FCA, and meet several requirements focused on capitalization of the company and the care it takes to protect clients from the possible effects of any future attempted fraud or bankruptcy. Therefore, any Forex broker which is regulated by the FCA is a relatively safe broker with which to deposit your capital.
Secondly, depositors with any FCA-regulated Forex broker have the integrity of their deposits protected by the FCA under the terms of the Financial Services Compensation Scheme (FSCS).
The Financial Services Compensation Scheme (FSCS) protects every depositor with an FCA-regulated Forex broker, up to a maximum of £85,000 per depositor per broker, in the event of the broker’s insolvency. This means that if you deposit less than this amount with an FCA-regulated Forex broker, you can get the balance of your deposit refunded by the FSCS if the broker goes bankrupt without having to wait for the conclusion of the bankruptcy proceedings. If you have a balance greater than £85,000 at one broker, you are only protected by a maximum of £85,000. One way to ensure better protection if you have a sum greater than that to invest is to make sure you split it between different Forex brokers so you never have a balance greater than that at any one broker. This can ensure you are fully covered.
It is easy to determine the authenticity of any broker regarding FCA regulation. Firstly, any broker regulated by the FCA will almost certainly advertise this fact on their website, either on a dedicated page entitled regulation or in small print at the bottom of the major or possible all pages on their website. The text should include details of the regulation including a registration number. In order to verify this, you can check it by conducting a search of the FCA’s website, where the details of all FCA-regulated Forex brokers are recorded. If the broker in question is not listed there, they are making a false claim.
Brokers wishing to secure authorization by the FCA and secure FCA regulation are required by the FCA to undertake a five-step process in their application:
Define the systems and controls supporting their regulated activities and check they meet the FCA’s ‘threshold conditions’.
Demonstrate staff hold the key qualifications required by the FCA.
Define which staff will need ‘approved person’ status from the FCA in order for the firm to operate properly.
Prepare a business plan.
Complete an IT self-assessment questionnaire.
The FCA ensures a high level of regulation with strong regulatory oversight, and not only claims this, but its claims are widely seen to be true by industry analysts.
It is true that from time to time, brokers are fined for certain violations by regulators, and this can happen among FCA-regulated brokers just as it can happen anywhere else.
As such, it is almost unheard of for a real scam Forex broker to secure FCA regulation.
For example, in 2014, the FCA fined FXCM £4 million for withholding profits which should have been passed on to clients.
If you think Forex brokers have an especially bad reputation, consider the fact that the biggest fine ever issued by the FCA against any regulated firm was levied against Barclays, a publicly traded major global bank, to the tune of £284 million, for failing to control its Forex business.
Choosing an FCA regulated broker makes a lot of sense for traders who value reliability, transparency and the peace of mind that comes with a well-regulated financial sector.
What does FCA regulated mean?
If a firm is regulated by the FCA, it means that the FCA has authorized it in the name of the British state to conduct certain business, and that the FCA applies ongoing oversight to ensure that the firm follow appropriate practices.
How can I check if a company is FCA regulated?
The FCA maintains a public register of all regulated firms and persons on their website. You can visit the site and search to verify any claim.
Who needs FCA approval?
Investment firms carrying on certain activities in relation to financial instruments such as Forex brokers are required to be registered with FCA approval, and key personally are required to be authorized persons.
What is the main role of the FCA?
The main role of the FCA is to regulate the conduct of financial services and financial markets firms in the U.K. in addition to acting as the prudential supervisor of tens of thousands of other firms.