What does FCA authorisation actually mean?
The Financial Conduct Authority (FCA) is the UK's financial regulator. A forex broker holding FCA authorisation must meet a strict set of requirements set out in the FCA Handbook, which implements MiFID II in the UK.
Authorisation is not the same as registration. An FCA-registered firm has far fewer obligations than one that is fully authorised. For forex and CFD trading, you want a broker that is fully authorised — check that the FCA Register shows "Authorised" status and that the firm's permissions include "dealing in investments as principal."
When a broker is FCA-authorised and serves retail clients in the forex or CFD space, it must:
- Segregate client funds from the firm's own money in separate bank accounts
- Apply negative balance protection — you cannot lose more than you deposit
- Cap leverage at 30:1 for major currency pairs for retail clients
- Provide a standardised risk warning showing the percentage of retail accounts that lose money
- Submit to FSCS membership, giving eligible clients compensation of up to £85,000 if the firm fails
- Follow FCA's fair treatment of customers principles (Consumer Duty, effective from July 2023)
- Report to the FCA on client fund positions and submit to periodic audits
Key distinction: authorised vs registered
Many scam brokers falsely claim to be "FCA regulated" when they are only listed on the FCA Register for an unrelated activity (such as being an appointed representative for insurance). Always verify that the broker is fully authorised for investment dealing and that the FCA reference number (FRN) matches the entity you are trading with — not a parent company or a different entity.
FCA vs CySEC: what EU traders need to know after Brexit
Before Brexit, FCA-regulated brokers could passport their licence into all EU member states under MiFID II's passporting rules. That ended on 31 December 2020. Today, a broker holding only an FCA licence can no longer legally solicit EU retail clients under EU law.
In practice, every major broker that wanted to continue serving EU clients after Brexit established a separate CySEC-regulated subsidiary. So when you open an account with a UK-headquartered broker as an EU resident, you are typically opening with the CySEC entity — not the FCA one. Your protections differ accordingly.
| Feature | FCA (UK) | CySEC (Cyprus/EU) |
|---|---|---|
| Regulatory framework | FCA Handbook (post-Brexit UK MiFID) | MiFID II (EU Directive) |
| Compensation scheme | FSCS — up to £85,000 | ICF — up to €20,000 |
| Negative balance protection | Mandatory (retail) | Mandatory (retail) |
| Max leverage (major FX, retail) | 30:1 | 30:1 |
| Segregated client funds | Required | Required |
| Passporting to EU | No (post-Brexit) | Yes (all EU states) |
| Marketing restrictions | Strict — no bonuses, no cold calling | Strict (ESMA guidelines) |
| Enforcement reputation | Strong | Improving |
| Licence verification | register.fca.org.uk | cysec.gov.cy/en-GB/entities |
Bottom line for EU traders: if your broker account is held with a CySEC-regulated entity (as is typical post-Brexit), your compensation cover is ICF up to €20,000 — not FSCS. If you are based in the UK, you may hold the FCA entity and benefit from FSCS. Always check the entity name in your account agreement to confirm which entity you hold.
What protections does FCA/CySEC regulation actually give you?
Segregated client funds
Both FCA and CySEC require your trading capital to be held in accounts separate from the broker's own operating funds. If the broker becomes insolvent, your money is ring-fenced and not used to pay creditors.
Negative balance protection
You cannot owe the broker more than you deposited. If a flash crash moves your position beyond your balance, the broker absorbs the excess loss. This is mandatory for retail clients under FCA and CySEC — you cannot opt out without upgrading to professional status.
Compensation scheme
FCA → FSCS up to £85,000 per eligible claimant. CySEC → ICF up to €20,000. These schemes activate only if the broker fails and cannot return your funds — they do not cover trading losses.
Leverage limits
Maximum 30:1 on major currency pairs for retail clients. Lower limits on minors, exotics, indices, and crypto. These limits apply automatically — you do not need to request them.
Best execution obligation
Brokers must take all sufficient steps to obtain the best possible result for client orders — considering price, costs, speed, and likelihood of execution. This is verified through annual best-execution reports brokers must publish.
No trading bonuses (EU retail)
ESMA rules prohibit brokers from offering deposit bonuses or trading incentives to EU retail clients. If a broker claims to be CySEC-regulated and offers a deposit bonus, that is a red flag and may indicate the entity you are dealing with is not the regulated one.
How to verify an FCA licence in four steps
Clone sites and scam brokers frequently impersonate regulated firms or claim a licence that belongs to a different entity. Always verify independently — do not rely on the broker's own website alone.
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Go to the FCA Register Visit register.fca.org.uk directly — type the URL manually. Do not follow a link from the broker's website.
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Search by FRN or firm name Enter the broker's FCA reference number (FRN) if you have it, or search by the legal entity name shown in the broker's terms and conditions. Check that "Status" shows Authorised, not just Registered or Appointed Representative.
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Check permissions In the firm's register entry, click "Permissions." Look for "Dealing in investments as principal" or "Arranging (bringing about) deals in investments" covering contracts for differences (CFDs) or spot forex. If these permissions are absent, the firm is not authorised for retail forex trading.
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Match the trading name to the entity The "Trading names" section shows all brand names the firm is permitted to use. Confirm that the website name matches one of the listed trading names. Scam brokers frequently use a real firm's FRN but a different trading name not covered by the licence.
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Check for warnings Search the FCA's Warning List at fca.org.uk/consumers/warning-list for the broker's name. The FCA maintains a list of firms operating without authorisation or that are clones of legitimate firms.
Verifying CySEC licences
For CySEC: go to cysec.gov.cy → Entities → Investment Firms (Cypriot). Search by the broker's licence number (format: XXX/YY). Check that status shows "Licensed" and that the authorised services include "Reception and transmission of orders" and "Execution of orders on behalf of clients."
FCA-regulated brokers EU traders can access in 2026
The following brokers operate both FCA and CySEC-regulated entities. EU residents will typically be onboarded via the CySEC entity. UK residents access the FCA entity. Both entities provide the core retail protections described above.
| Broker | FCA entity | EU entity (CySEC) | FSCS eligible (UK) | ICF eligible (EU) | Affiliate |
|---|---|---|---|---|---|
| Exness | Exness (UK) Ltd — FCA 730729 | Exness (CY) Ltd — CySEC 178/12 | Yes — up to £85,000 | Yes — up to €20,000 | Yes → Open |
| AvaTrade | Ava Capital Markets UK — FCA 572381 | Ava Capital Markets EU — CySEC 347/17 | Yes — up to £85,000 | Yes — up to €20,000 | Yes → Open |
| Pepperstone | Pepperstone Ltd — FCA 684312 | Pepperstone EU Ltd — CySEC 388/20 | Yes — up to £85,000 | Yes — up to €20,000 | No affiliate agreement |
| XM | Trading Point of Financial Instruments UK — FCA 705428 | Trading Point of Financial Instruments Ltd — CySEC 120/10 | Yes — up to £85,000 | Yes — up to €20,000 | No affiliate agreement |
| IC Markets | IC Markets (UK) Ltd — FCA 922410 | IC Markets (EU) Ltd — CySEC 362/18 | Yes — up to £85,000 | Yes — up to €20,000 | No affiliate agreement |
Note on entity verification: FRN numbers above are illustrative reference points. Always verify the current FRN on the FCA Register directly, as brokers occasionally restructure their UK entities. The CySEC numbers are current as of July 2026.
Red flags: how unregulated brokers mimic FCA approval
Unregulated brokers use several tactics to appear regulated. Knowing these helps you avoid them:
- Clone firm fraud: A scam broker uses the name, address, and FRN of a real FCA-authorised firm, but the website, bank accounts, and contact details belong to the fraudster. Always verify the FRN on the FCA Register and contact the broker through contact details listed there — not on the scam website.
- Appointed representative fraud: Some firms are FCA-registered as appointed representatives of an authorised firm (for a different activity). They claim this makes them "FCA regulated" for forex — it does not. The AR relationship covers only the specific activity they are registered for.
- Offshore entity with FCA branding: A group has a genuine FCA-regulated entity but directs EU traders to an offshore (unregulated) entity. Your account documents will name the entity — check it carefully before depositing.
- Pressure tactics around regulation: Legitimate FCA-regulated brokers do not cold-call, pressure you to deposit quickly, or claim your money is "safe" because they are regulated. The FCA licence says nothing about returns or trading performance.
What to do if a broker won't confirm their FRN
A legitimate FCA-regulated broker will always confirm their FCA reference number (FRN) on request and direct you to the FCA Register. If a broker refuses to confirm their FRN, provides a number that does not match their trading name on the Register, or directs you to a different verification source, do not deposit funds. Report the firm to the FCA at fca.org.uk/contact.
Our affiliate brokers — verified FCA and CySEC regulated
CompareFX holds affiliate agreements with Exness and AvaTrade. Both operate dual FCA/CySEC-regulated entities, have maintained active licences since before 2020, and offer full EU retail protections as described in this guide.