A broker's licence is the first thing most comparison tables list and the last thing most readers actually examine. Yet the three regulators that appear most often behind retail forex accounts — the United Kingdom's FCA, Cyprus's CySEC and Australia's ASIC — differ on points that change what happens to your money if something goes wrong.
On the rules that govern day-to-day trading they have converged almost completely. On the rules that govern failure they have not.
Where they agree and where they do not
- Leverage: all three cap retail majors at 30:1, with lower caps on other classes.
- Negative balance protection: mandatory for retail clients under all three.
- Compensation: substantially different limits, and Australia has no equivalent scheme.
- Complaints: a free statutory ombudsman in the UK and Australia, a different route in Cyprus.
Leverage and close-out
The European product intervention measures of 2018 set retail leverage at 30:1 on major currency pairs, 20:1 on minors, gold and major indices, 10:1 on other commodities and non-major indices, 5:1 on individual shares and 2:1 on cryptocurrencies. The UK retained equivalent rules after leaving the European Union, and Australia introduced its own version in March 2021 on substantially the same numbers.
All three also require close-out when account margin falls to 50% of the initial requirement, and all three ban binary options for retail clients and restrict bonus incentives. For a trader comparing accounts, the practical conclusion is that the trading conditions offered by a retail account under any of the three will look much the same. The differences lie elsewhere.
Compensation if the broker fails
This is where the three diverge sharply, and it is the difference most worth knowing.
The UK's Financial Services Compensation Scheme covers eligible claims up to £85,000 per person per firm where an authorised firm fails and cannot return client money. It is funded by industry levy and pays without litigation.
Cyprus operates an Investor Compensation Fund covering eligible claims up to €20,000 per client. The limit is materially lower, and the fund has historically been slower to pay out. It exists and it has paid, but a client with a substantial balance should size their expectations to the limit rather than to the existence of a scheme.
Australia has no comparable scheme for retail forex clients. Client money protection rests on segregation rules and on the broker's own solvency. If an Australian-licensed broker fails, recovery follows insolvency law rather than a compensation fund, which is a materially different position from the other two.
Compensation applies to the entity, not the brand
A broker group may hold licences in all three jurisdictions and place clients with whichever entity matches their residence. Compensation follows the entity that holds your account, named on your client agreement — not the licence displayed most prominently on the website.
Complaints and redress
The UK's Financial Ombudsman Service handles complaints against authorised firms free of charge for the consumer, and its decisions bind the firm if the consumer accepts them. Australia's equivalent, AFCA, operates on a similar model with binding determinations. Both give a retail client a route that does not require a lawyer.
Cyprus routes complaints through the Financial Ombudsman of the Republic of Cyprus, and clients report a less predictable process, particularly where the firm disputes the facts. CySEC itself supervises and sanctions firms but does not adjudicate individual client compensation claims.
The presence of a free, binding complaints route is worth more than most of the features that appear in broker comparisons, precisely because it is what you use when the relationship has broken down.
Supervision in practice
All three regulators publish enforcement actions, and reading them is more informative than reading the rules. The FCA publishes final notices with detailed findings. CySEC publishes decisions and settlements, which have been numerous, reflecting both the number of firms it supervises and an active enforcement posture in recent years. ASIC publishes actions and has pursued several large retail derivatives cases.
The volume of enforcement at a regulator is not straightforwardly a signal of poor supervision — it can equally indicate active supervision. What is informative is whether the firm you are considering appears in those notices, which takes a search of the regulator's own site rather than a broker review.
Checking a licence properly
- Find the entity name and licence number in the footer of the broker's site or in your client agreement.
- Search that number on the regulator's own public register, not a link from the broker.
- Confirm the permissions cover dealing in investments for retail clients.
- Check the register for any conditions, restrictions or supervisory notices.
- Confirm the trading name you are dealing with is listed against that entity.
- Search the regulator's warning list for the same name and for close variants.
How much weight to give the licence
A licence from any of the three tells you the firm is subject to capital requirements, client money segregation, reporting and supervision. That is meaningful and is the baseline any account should meet. It does not tell you the firm has good execution, competitive pricing or responsive support, and it does not guarantee solvency.
The useful framing is that regulation sets a floor, not a ranking. Once a broker clears the floor, the comparison moves on to cost, execution and conditions — where the differences between two equally licensed firms are far larger than the differences between the regulators themselves.
Common questions
Which of the three is strictest?
On day-to-day trading rules they are close to identical. On client protection after a failure the UK is clearly strongest, because of the £85,000 compensation scheme and a free binding ombudsman. Australia offers strong supervision but no compensation fund.
Does a CySEC licence mean a broker is second rate?
No. CySEC firms operate under the same European product rules and the same capital and segregation requirements. The material difference is the lower compensation limit, which matters in proportion to your balance.
Why do brokers hold several licences?
To serve clients in different regions lawfully. Clients are usually onboarded to the entity matching their residence, and the terms — leverage, protection, compensation — follow that entity rather than the group.
If my broker is licensed in Australia, is my money unprotected?
Not unprotected, but protected differently. Client money must be segregated and the firm is supervised, but there is no compensation scheme to make you whole if segregation fails or the firm becomes insolvent.
