What a licence actually constrains
Regulation is often discussed as though it were a quality mark. It is not. A licence is a set of obligations on the entity that holds it: minimum capital, segregation of client money, conduct rules, reporting, and a complaints route that ends somewhere other than the broker's own inbox. What varies between authorities is how demanding those obligations are and how actively they are enforced — which is the entire basis of the tier-1 distinction.
Under FCA, CySEC or ASIC rules a retail client gets leverage capped at 30:1 on major pairs, mandatory negative balance protection and margin close-out at 50% of required margin. Under a Saint Vincent registration, none of those apply and none of them are promised. Both arrangements are legal. Only one of them means someone will act if the broker stops following its own terms.
Reading a licence list properly
- Count entities, not logos: one group can hold ten licences and serve you through the eleventh.
- Tier-1 authorities enforce capital and conduct rules; offshore registries mostly register.
- A compensation scheme is separate from a licence — ASIC regulation carries none.
- The register entry, not the website, is the authoritative record of what a firm may do.
Breadth versus depth
This ranking weights the number of supervising authorities first, and that choice deserves defending. A group licensed in ten jurisdictions has ten regulators able to ask questions, ten sets of capital requirements it must satisfy simultaneously, and ten ways to lose the ability to operate. It is harder to run a group like that badly than to run a single offshore entity badly, and the difference shows up in how such firms behave when a market breaks.
The counter-argument is that breadth can be theatre. A broker with an FCA licence covering a small UK client base and a Seychelles entity carrying everyone else has bought the reputational benefit of the first while operating mostly under the second. Exness is the honest example of this structure in the table — eight licences, of which the FCA and BaFin registrations apply to a narrow slice of its clients. The licence list is accurate; what it implies for a given client depends entirely on which entity opens the account.
Check the register before you fund, not after
Every authority here publishes a searchable register. Look up the exact legal entity named in your account agreement, confirm the permissions cover dealing in investments for retail clients, and note any conditions attached. A clone firm reuses a genuine licence number; the register is what exposes it.
What tier-1 supervision does not buy you
Supervision does not prevent failure. Regulated brokers have failed, and clients of failed regulated brokers have waited years for partial recovery. What supervision provides is a defined process when it happens: an administrator, a client-money pool identified in advance, a compensation scheme where one exists, and a regulator with the power to compel information. Compare that with an offshore failure, where the practical remedy is litigation in a jurisdiction chosen by the broker.
Nor does it prevent poor conduct between failures. Regulators act on patterns and complaints, generally after the fact. The strongest argument for a well-regulated broker is not that nothing will go wrong, but that when it does, the cost of the firm ignoring you is much higher.
Common questions about regulation
Which regulators count as tier-1?
We treat the FCA, ASIC, BaFin, FINMA, the CFTC and NFA, the SEC and FINRA, the JFSA, MAS, the SFC, CIRO and the Gulf authorities DFSA and FSRA as tier-1, on the basis of capital requirements, conduct rules and enforcement record.
Is an offshore broker automatically unsafe?
No, but the protections are voluntary rather than required, and the remedy if something goes wrong is much weaker. Several offshore brokers score well in our overall rating on conditions. Size the risk to the balance you intend to hold.
What does MiFID passporting mean for me?
An investment firm authorised in one EEA state can serve clients across the bloc under a common rulebook. It means the leverage caps, negative balance protection and close-out rules are the same whether the licence is Cypriot, German or Irish.
Can a broker lose its licence while I hold an account?
Yes, and it happens. The regulator normally requires an orderly wind-down and the return of client money, which is exactly the process an offshore registration does not provide.