How to verify an investment broker’s license (Forex/CFD)
Despite the fact that legal regulations around the world are constantly evolving (e.g. the latest MiFID II directive) , investment frauds, otherwise known as scams, remain a real nightmare for the industry. Brokers operating without a license embezzle huge amounts of capital from novice investors every year. So if you are just starting your adventure with investing in financial markets, or you have come across an interesting offer from a broker, but you are not sure whether they have the appropriate authorization, you can verify them with one of the regulators in a few steps.
Below, we’ll walk you through the process to help you complete this verification yourself.
- Ask for your license number.
Every regulated broker should clearly disclose their license on their website. If they don’t, or you can’t find this information, simply ask the broker’s staff about their license. You should receive information about which regulator granted the license (usually the country of registration of the company) and its number. - Find the appropriate regulator page.
Remember that a PDF file with license information alone doesn’t mean a company has one. Fraudsters often fake such licenses. Therefore, it’s worth verifying it yourself on the appropriate regulator’s website. So, visit the website of the regulator from which the broker is supposed to hold the license. Below is a list of the most popular regulators:- FCA (UK) – https://register.fca.org.uk/s/
- CySEC (Cyprus) – https://www.cysec.gov.cy/en-GB/entities/investment-firms/cypriot/
- KNF (Poland) – h ttps://www.knf.gov.pl/podmioty/wyszukiwarka_podmiotow
- ASIC (Australia) – https://connectonline.asic.gov.au/RegistrySearch/faces/landing/SearchRegisters.jspx?_adf.ctrl-state=90rt0tue_4
- List of other European regulators : https://www.esma.europa.eu/investment-firms
- Search for your broker in the regulator’s database.
We will describe the licensing review process using the FCA as an example, but it is very similar for most regulators.
First of all, we look for regulated entities on the search engine website, where we enter the name of the company we want to check or its license number .
As you can see in the example above, we saw a licensed company and immediately received information about another company that was operating illegally and impersonating the regulated one. - Make sure you are talking to the same company.
It is worth making sure that the company we intend to invest with is indeed licensed, so we go into the details of the licensed company to check things such as the website address.
- If any of the details don’t match, it’s possible scammers are trying to impersonate a licensed broker! This should be a warning sign that you shouldn’t invest through that entity.
As you can see in the example above, we saw a licensed company and immediately received information about another company that was operating illegally and impersonating the regulated one.
If you already know how to check the regulations of a given broker, we invite you to check our broker list .
