Forex Regulations

One of the most important criteria for traders when choosing a Forex broker is the regulatory status of the broker and under which regulatory body the broker is regulated. Unregulated Forex / CFD brokerages are risky places for traders to deposit funds, and traders who do so are likely to find they have no effective remedy to counter losses caused by dishonesty or incompetence.

In the listing below, we outline the major regulatory bodies by country which are most relevant to Forex / CFD brokerages and summarize the major points of regulatory law applicable.

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Forex brokers usually launch with regulation in only a single country. Obtaining such regulatory approval is usually not an easy achievement, especially in jurisdictions with stricter regulation. New brokerages typically start with regulation in a single country and will then seek to gain regulatory licenses in other countries where they wish to operate. Typically, it makes things easier for Forex brokers to obtain some kind of regulatory certification even in countries where they are not physically based, if they wish to actively market their services there.

Some of the more recognized Forex regulators globally are the FCA in the United Kingdom, CySec in Cyprus and the NFA in the United States. In addition to Forex regulation from bodies established by national governments, some brokers find it important to acquire memberships from professional and cross-border entities. Forex brokers operating in the European Union will need to comply with the Markets in Financial Instruments Directive (MiFID), a European Union-wide regulation ensuring harmonized regulation for investment services across the 30 member states of the European Economic Area.

If a Forex broker is regulated, the name of the relevant Forex regulator should be transparently listed somewhere on the broker’s website. If it is not, the website should tell you an address for the head office of the brokerage and from this you can tell that it should hopefully be regulated in this country. If the website does not give you at least this, it is a strong sign that this broker is not regulated – for obvious reasons, brokers which are completely unregulated do not usually advertise that fact. If you have a country from which the broker operates, you can find the relevant regulatory body and you should be able to search their website to find whether this broker is within their published list of regulated Forex brokers.

Listed below are the financial regulatory bodies for each country by alphabetic order, as well as the maximum leverage that may be offered by a Forex / CFD broker operating from there to its own residents, which occasionally differs from that which may be offered to residents of foreign countries.

Australia:
Australian Securities and Investment Commission

Maximum Forex Leverage: 1:500

Australia is a very popular offshore venue for Forex / CFD traders, due to its mixture of very high maximum leverage, solid but flexible regulatory framework, and large number of ECN brokers. What prevents many brokers from seeking ASIC regulation is the far geographic distance that makes it difficult for brokers to operate in Australia.

Forex Brokers in Australia

Forex Regulation in Australia

Canada:
Investment Industry Regulatory Organization of Canada (IIROC)
British Columbia Securities Commission
Ontario Securities Commission

Maximum Forex Leverage: 1:50

Canada is not a popular venue for non-resident Forex traders due to its tough regulatory regime and very small number of Forex brokers. More details about Canada’s regulation can be found here.

Forex Brokers in Canada

Forex Regulation in Canada

Cyprus:
Cyprus Securities and Exchange Commission

Maximum Forex Leverage: 1:30

The Republic of Cyprus is a very popular offshore venue for Forex / CFD traders, due to its mixture of E.U. membership, very flexible regulatory framework, and very large number of brokerage houses plus full supporting infrastructure.

Denmark:
Danish FSA

Maximum Forex Leverage: 1:30

Denmark is not an especially strong venue for Forex and CFD trading but has always been the financial services hub of the Scandinavian nations. It does have one big name brokerage in Saxo Bank.

European Monetary Union:
Markets in Financial Instruments Directive

Maximum Forex Leverage: 1:30

France:
Banque de France
Autorité des Marchés Financiers
Autorité de Contrôle Prudentiel (ACP)

Maximum Forex Leverage: 1:30

France is not a strong venue for Forex and CFD trading, with most French traders preferring to use offshore brokerages.

Germany:
Federal Financial Supervisory Authority

Maximum Forex Leverage: 1:30

Germany is not a strong venue for Forex and CFD trading, with most French traders preferring to use offshore brokerages.

Hong Kong SAR:
Securities and Futures Commission

Maximum Forex Leverage: 1:500

Hong Kong is a very popular offshore financial center, especially for the Asian market, and is home to many Forex / CFD brokerages due to its combination of light regulation and good supportive infrastructure, while it remains a popular choice of venue for both domestic and offshore Forex traders.

India:
Reserve Bank of India

Maximum Forex Leverage: Zero

Forex trading is only legal for Indian residents if the base currency is Indian Rupees and the counterparty currency USD, EUR, JPY or GBP. Therefore, the domestic retail Forex industry in India is practically non-existent.

Indonesia:
Badan Pengawas Perdagangan Berjangka Komoditi

Maximum Forex Leverage: 1:200

Indonesia has a growing domestic Forex / CFD brokerage industry which has begun to recover from its initial scandals generated during its early, relatively unregulated days. However, many Indonesian resident traders still tend to seek offshore brokers, and Indonesian brokers have few offshore clients.

Italy:
Commissione Nazionale per le Società e la Borsa

Maximum Forex Leverage: 1:30

Forex and CFD trading remain popular in Italy although the relatively weak Italian economy has stunted the natural growth of the industry. Italian traders generally prefer Italian and Swiss brokerage houses.

Japan:
Financial Services Agency
Japan Investor Protection Fund
The Financial Futures Association of Japan
Japan Securities Dealers Association
Kanto Local Finance Bureau

Maximum Forex Leverage: 1:25

Forex trading has been very popular in Japan for a long time, but the market remains almost impenetrable to foreign brokers. It is a highly and tightly regulated market.

Macau:
Monetary Authority of Macau

Maximum Forex Leverage: No explicit maximum

Macau does have several brokers which get some offshore business from within Asia. Regulation is better but reputation suffers from earlier scandals plus Macau’s reputation as a gamblers’ haven.

Malaysia:
Bank Negara Malaysia

Maximum Forex Leverage: Zero leverage

It is illegal for a Malaysian resident to trade Forex except at a regulated Malaysian bank or other similar financial institution. However, foreign investment is legal, so the law may in practice be at least a little grey, and many Forex brokers do serve Malaysian traders. Many Malaysians do hold accounts with offshore brokers, but Malaysian brokers do not attract offshore clients.

Forex Trading in Malaysia

Russia:
The Commission on Regulation of Financial Markets Participants Relationships

Maximum Forex Leverage: 1:50

Russia has a few brokers of note and has provided some of the most talented individuals who helped found the online trading industry in the 1990s. Unfortunately, due to a combination of scandals and financial overreach, the reputation of Russian brokers suffered, and Russia attracts much less of an offshore market than it used to.

Singapore:
Singapore Exchange
Monetary Authority of Singapore

Maximum Forex Leverage: 1:50

Singapore has an attractive combination of strong but reasonable regulation and a well-established reputation as a solid offshore financial center. Forex trading is very popular in Singapore, especially automated trading, and Singaporean brokers attract a considerable offshore market too.

Forex Brokers in Singapore

South Africa:
Financial Services Conduct Authority

Maximum Forex Leverage: 1:30

Forex has suffered from a very negative reputation in South Africa as it has been used as a cover in a few Ponzi schemes and other frauds, although these scams really had nothing essential to do with the Forex industry. The Financial Services Conduct Authority is getting more involved as a regulator and there are a number of respected brokerage houses in South Africa, as well as an increasingly entrepreneurial population looking for a profitable hobby. There is room for the industry to expand, but geographical and other factors mean that South Africa is likely to only become an offshore trading hub for other southern African nations.

Forex Brokers in South Africa

Forex Trading in South Africa

Spain:
Comisión Nacional del Mercado de Valores

Maximum Forex Leverage: 1:30

Forex trading is not very popular in Spain, nor is there much of a domestic Forex industry there. Many Spanish traders look to trade with Swiss Forex / CFD brokers.

Sweden:
Swedish Financial Supervisory Authority (Finansinspektionen)

Maximum Forex Leverage: 1:30

Forex trading is not very popular in Sweden, nor is there much of a domestic Forex industry there. Many Swedish traders look to trade either through Swedish banks, but here we are talking primarily about higher net worth individuals, or perhaps Saxo Bank in Denmark.

Switzerland:
Swiss Financial Market Supervisory Authority (FINMA)
Groupement Suisse des Conseils en Gestion Indépendants
Polyreg
Association Romande des Intermediares Financiers
Swiss Federal Department of Finance
Organisme d'autorégulation des Gerants de Patrimoine

Maximum Forex Leverage: 1:200

Switzerland is arguably the world’s oldest financial center, and with some pioneering Forex brokerages plus some interesting cutting-edge trading technology, Swiss Forex brokers have been extremely popular both domestically and for offshore traders, who have quite a lot of choice.

Turkey:
Capital Markets Board of Turkey (CMB)

Maximum Forex Leverage: 1:10

Turkey had a small but growing Forex industry which unfortunately fell into political disfavor due to the chronic devaluation of the Turkish Lira. Maximum leverage is low, minimum deposit requirements are extremely high, and Turkish residents are not legally allowed to trade Forex with brokers outside Turkey. There are a few Forex brokers remaining in Turkey, but effectively nobody residing outside Turkey is using them.

United Arab Emirates:
Central Bank of the United Arab Emirates
Dubai Financial Services Authority

Maximum Forex Leverage: 1:500

When people speak of Forex in the U.A.E. they usually mean Dubai, and for good reason: it has become the offshore financial hub of the Gulf. Regulation is light, taxes almost non-existent, and the industry booms for both residents and non-residents. Dubai is the premier Forex venue for the Arabic-speaking world and a little but beyond too.

Forex Brokers in Dubai

United Kingdom:
Financial Conduct Authority

Maximum Forex Leverage: 1:30

The capital of the United Kingdom, London is one of the worlds oldest and most renowned offshore financial services centers and that of course has always included Forex and CFD brokerages. In fact, London is the world’s Forex capital and that has always been reflected by the strong regulatory touch and deep technical expertise of the U.K.’s Forex industry which has always attracted more offshore than onshore clients. Forex and CFD trading are very popular in the U.K. and this is partly due to the fact that profits generated can be completely free for U.K. residents if operations are conducted as spread betting. London will always have a special place in the global Forex industry and remains a very attractive venue to traders.

Forex Brokers in the UK

United States:
Commodities and Futures Trading Commission
FINRA
New York Stock Exchange
Office of the Comptroller of the Currency
Commodities and Futures Trading Commission
Securities and Exchanges Commission

Maximum Forex Leverage: 1:50

The United States is not a favored venue for offshore Forex traders, and U.S. traders have few domestic options from traditional Forex / CFD brokers. The U.S. market has always been dominated by futures brokers and remains so today, who of course allow trading in Forex futures but with much higher minimum trade sizes. Contrary to popular belief, U.S. resident traders may use offshore Forex brokers, but most offshore brokers do not wish to take U.S. persons as clients due to onerous reporting requirements the U.S. effectively imposes worldwide.

Forex Brokers in the U.S.A