CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74–89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
A regulated broker is legally required to protect your money. An unregulated one is not. The problem is that almost every broker claims to be regulated — so the only thing that matters is whether you can verify it yourself. This checklist shows you exactly how, in about five minutes, before you deposit a single euro.
Why this matters
Regulation is what forces a broker to keep your funds in a segregated account, hold minimum capital, submit to audits, and give retail clients negative balance protection. When a broker is unregulated, none of these protections exist — and recovering funds becomes very difficult. Verifying the licence is the single highest-value check a trader can do.
The 6-step verification checklist
1
Find the licence number on the broker's site
Scroll to the footer of the broker's website. A genuinely regulated broker states its regulator and licence (or registration) number there, usually alongside the operating company name — for example "Authorised and regulated by CySEC, licence number 000/00". If you cannot find any licence number anywhere on the site, that alone is a serious warning sign. Note the exact number and the exact company name; you will need both.
2
Verify the number on the regulator's own register
This is the step that actually matters. Do not trust a badge or logo on the broker's site — anyone can copy an image. Go directly to the regulator's official public register and search the licence number or company name yourself. The record should show the same company name, an "authorised" or "active" status, and the services the firm is permitted to offer. If the number returns nothing, or the name does not match, stop here.
| Regulator |
Country |
Official register to search |
MiFID II |
| CySEC | Cyprus | cysec.gov.cy → Regulated Entities | Yes |
| BaFin | Germany | bafin.de/EN → Company database | Yes |
| AMF | France | regafi.fr | Yes |
| CONSOB | Italy | consob.it → Registers | Yes |
| FCA | United Kingdom | register.fca.org.uk | Post-Brexit — see note* |
*After Brexit, an FCA licence alone does not passport into the EU. An FCA-regulated broker serving EU clients usually does so through a separate EU-licensed entity. Confirm which entity is opening your account (step 4).
3
Confirm the register status is "active"
A licence can be suspended, withdrawn, or restricted. The register entry will show the current status and the date it was last updated. Look for "authorised" or "active" — not "withdrawn", "suspended", or "in default". Also check the permitted activities: the firm should be authorised to provide investment services such as dealing in or executing orders, not merely registered for something unrelated.
4
Match the entity to your account
Large brokers operate several legal entities under one brand. One may be EU-regulated (CySEC, BaFin) while another is offshore (Seychelles, Saint Vincent and the Grenadines, or similar). During sign-up, the broker discloses which entity you are being onboarded with — often in the client agreement or a dropdown asking for your country. The EU entity gives you MiFID II protections and ESMA leverage caps of 30:1 on major pairs. An offshore entity may advertise higher leverage but strips away those protections. Always confirm you are with the regulated EU entity.
5
Read the compliance documents
Before depositing, open the broker's key legal documents — usually linked in the footer: the client agreement, the risk disclosure, the order execution policy, and the investor compensation scheme statement. A regulated EU broker will reference an investor compensation fund (in Cyprus, the ICF, which can cover eligible claims up to a set limit). If these documents are missing, vague, or do not mention any compensation scheme, treat it as a red flag.
6
Cross-check for regulator warnings
Regulators publish public warning lists naming firms operating without authorisation or cloning legitimate brokers. ESMA maintains links to national warning lists, and each regulator (CySEC, BaFin, AMF) publishes its own. Search the broker's name on these warning lists. Also search "[broker name] clone" — fraudsters frequently copy a regulated firm's name and licence details on a lookalike website. Confirm the web address you are on matches the one on the official register.
Red flags that should stop you immediately
Do not deposit if you see any of these
- No licence number anywhere on the website
- A licence number that returns no result on the regulator's official register
- The company name on the register does not match the brand you are signing up with
- A register status of "withdrawn", "suspended", or "in default"
- The broker only offers an offshore entity to EU residents while marketing very high leverage
- The firm appears on a regulator's public warning or clone list
- No client agreement, risk disclosure, or investor compensation statement available
The 2-minute version
Short on time? Do this: copy the licence number from the broker's footer → open the regulator's official register → paste the number → confirm the company name, "active" status, and matching web address. If all four line up, the broker is verifiably regulated. If any one fails, do not deposit.
What regulation does not guarantee
Verifying a licence confirms a broker is legitimate and supervised. It does not guarantee you will make money, and it does not make trading safe. Retail forex and CFD trading carries a high risk of loss regardless of how well-regulated the broker is. Regulation protects the structure around your funds; it does not protect you from market losses. Treat this checklist as a minimum safety floor, not a green light to trade.
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