Loading
Related Articles
Related Articles
TrustFinance
Sep 24, 2026
9 min read
0
Almost every forex broker will have a "Regulated by..." logo displayed at the bottom of their website. Some even display four or five simultaneously: FCA, ASIC, CySEC, FSCA, lined up to appear highly credible.
However, these four types of licenses do not offer equal protection. Some include a compensation fund for client money if the broker goes bankrupt, while others offer none. Some limit leverage to 30 times, while others allow each broker to set their own. No one explains this directly because brokers themselves prefer not to highlight the weaknesses of their own licenses.
A regulator is a supervisory authority that issues licenses for brokers to operate legally in a particular country. It mandates minimum registered capital, requires client funds to be segregated from company accounts, and in many cases, provides mechanisms to protect a portion of client funds if a broker goes bankrupt or cannot return money.
A common misconception is thinking that "having a regulator" means "equal safety for all." The truth is, each regulator has vastly different standards for minimum capital, compensation limits, and enforcement of rules. Knowing where the broker you use is licensed is as important as knowing whether they have a license at all.
| Regulator | Country/Jurisdiction | Compensation limit if broker goes bankrupt | Retail leverage cap (major currency pairs) | Dispute resolution mechanism |
|---|---|---|---|---|
| FCA | United Kingdom | Up to £85,000 per person per firm via FSCS fund | 30:1 | Financial Ombudsman Service |
| ASIC | Australia | No specific compensation fund; payments made via dispute resolution rulings instead | 30:1 | AFCA can order direct compensation up to AUD 631,500 per case (as of January 2024) |
| CySEC | Cyprus (European Union) | Up to €20,000 per person via ICF fund | 30:1 | ICF + complaint procedures under MiFID II rules |
| FSCA | South Africa | No official investor compensation fund | No fixed single cap; sources vary, must check directly with broker | Supervision and administrative penalties; no separate dispute resolution body like AFCA or Ombudsman |
The FCA is considered one of the most highly regarded regulators in the global financial industry. Its licensing conditions are stringent, covering minimum registered capital, company director history, and ongoing financial audits.
What clearly distinguishes the FCA from the other three is the Financial Services Compensation Scheme (FSCS). If an FCA-regulated broker goes bankrupt and cannot return client funds, the FSCS will pay compensation up to £85,000 per person per firm. This is the highest compensation limit among the four regulators compared in this article. Additionally, there is the Financial Ombudsman Service as a separate channel for complaints in case of disputes with a broker that have not yet reached bankruptcy.
ASIC requires brokers to hold an Australian Financial Services (AFS) license with tangible net assets (NTA) commensurate with their business size. Since 2021, it has enforced a 30:1 leverage cap for major currency pairs, similar to the FCA, through a Product Intervention Order effective until 2027.
A key difference is that ASIC does not have a dedicated compensation fund like the UK's FSCS. Its primary protection mechanism is the Australian Financial Complaints Authority (AFCA), a dispute resolution body that can order brokers to pay direct compensation up to AUD 631,500 per case (increased from January 2024). However, this order is a dispute resolution ruling compelling the company to pay, not a fund that pays on behalf of the company if it genuinely goes bankrupt and has no money left to pay. This is a structural difference often overlooked by many.
CySEC is the regulator chosen by the largest number of forex brokers globally because its process is faster and costs are lower than the FCA, while still operating under the EU's MiFID II framework. This grants "passporting" status, allowing services to be offered across the European Union without needing to apply for separate licenses in each country.
Brokers holding a CySEC license must be members of the Investor Compensation Fund (ICF), which pays compensation up to €20,000 per person, or 90% of the claimed amount, whichever is lower. This figure is significantly lower than the FCA's FSCS. The 30:1 leverage cap for major currency pairs is also enforced, similar to the FCA and ASIC, as it stems from the same ESMA regulations.
The FSCA is the most distinct regulator among the three because South Africa does not yet have an official investor compensation fund system. If an FSCA-regulated broker goes bankrupt, there is no central fund like the FSCS or ICF to reimburse clients. What the FSCA can do is supervise brokers to segregate client funds, regularly audit their financial status, and has the power to impose fines or revoke licenses if misconduct is found.
Another point to be aware of is leverage. Information regarding the FSCA's leverage cap is not as clear-cut as with the FCA, ASIC, and CySEC. Some sources claim a 30:1 cap, while others state that the FSCA does not enforce a single fixed cap and allows each broker to determine their own. This is why some FSCA-regulated brokers offer significantly higher leverage than what FCA/ASIC/CySEC allow. At this point, you must check the actual terms directly with each broker and should not assume it is the same as the first three regulators.
The most crucial point for traders in Thailand is that all four of these authorities regulate activities occurring solely within their own jurisdictions. The FCA protects activities under UK law, ASIC under Australian law, CySEC under Cypriot and EU law, and FSCA under South African law. None of these four authorities have the power or duty to regulate activities conducted from Thailand.
In other words, even if the broker you use genuinely holds an FCA license, the protection you receive still relies on the complaint procedures and compensation funds of the United Kingdom, not directly on any Thai authority. This is because Thailand itself does not yet have any regulatory body that issues licenses for retail forex businesses. This is why knowing where a broker is truly licensed and understanding how to verify that license's status yourself is more important than trusting logos displayed on a website. You can read detailed verification steps at How to Check a Forex Broker's License: Verify Yourself in 5 Minutes
If measured by compensation limits when a broker goes bankrupt, the FCA offers the highest protection at £85,000 through the FSCS fund, followed by CySEC at €20,000 through the ICF fund. ASIC has no specific compensation fund but has AFCA to order direct compensation in case of disputes, and the FSCA has no investor compensation fund at all.
If measured by the strictness of the licensing process and ongoing supervision, the FCA and ASIC are among the most stringent. CySEC is less strict but still operates under the European Union framework. The FSCA has looser standards than all three, both in terms of compensation funds and leverage caps.
However, regardless of which licensed broker you choose, the unchanging fact is that none of these four regulators directly oversee activities conducted from Thailand. Therefore, verifying that a license is genuine and still valid is more important than simply seeing how many regulators a broker claims to have.
Important Note: Forex trading is not yet licensed or regulated by any authority in Thailand. The Bank of Thailand has no policy to issue licenses for retail Forex businesses (Reference: Thai PBS), and the SEC itself confirms that the Forex business is not under the SEC's supervision but rather under foreign exchange control laws (Reference: The Standard).
This article is provided for general knowledge only, not as personal investment advice, and offers no guarantee of returns. Traders should conduct further research and assess risks independently before making any decisions.
Which regulator is the best?
There is no single definitive answer; it depends on what you prioritize. If you focus on the highest compensation limit when a broker goes bankrupt, the FCA's FSCS fund offers the highest amount among these four. If you prioritize the strictness of ongoing regulatory processes, the FCA and ASIC are quite similar. CySEC and FSCA have looser standards in different aspects.
Can a broker have multiple licenses simultaneously?
Yes, and it's common for large brokers serving multiple regions. A parent company might hold an FCA license, while its subsidiaries in other regions hold separate CySEC or FSCA licenses. The crucial point is to check which legal entity your actual account is under, as protection will be based solely on that entity's license, not the entire parent group's.
What if a broker has no license from any of these four?
It doesn't always mean the broker is illegal, as there are other regulators not covered in this article, such as Dubai's DFSA or Seychelles' FSA. However, it means you need to investigate more thoroughly whether the claimed license comes from a genuine regulatory authority or is merely a general company registration without financial oversight powers.
How do I check the license of the broker I'm using?
Search for the broker's legal entity name directly on the public search system of that authority, such as the FCA Register or ASIC Connect, rather than solely relying on logos or claims on the broker's website. Detailed steps with links to the actual search systems for each authority can be found at How to Check a Forex Broker's License: Verify Yourself in 5 Minutes and a comprehensive broker credibility checklist at Is Your Forex Broker Trustworthy? 7 Steps Before Depositing Funds
Beyond licensing, the leverage conditions offered by a broker are another point whose mechanism should be understood before actual use. Read more at What is Leverage and How to Use It Without Blowing Your Account
TrustFinance
TrustFinance helps financial companies build credibility and traders make safer choices through verified profiles, authentic reviews, and research-driven insights.
