In one sentence
Oversight by a major financial authority - such as the FCA, ASIC, CySEC or MAS - which imposes capital rules, client-money segregation and a complaints process.
A licence is not a guarantee of good execution or fair treatment. What it buys is recourse: a body that can fine the firm, rules about where your money sits, and in some jurisdictions a compensation scheme if the firm fails.
Many groups operate several entities and onboard overseas clients through the most lightly regulated one. The question is never "is this broker regulated" but "which entity holds my account, and by whom".
The mistake it causes: reading a tier-one licence in the footer and assuming it covers your account.
What a licence actually buys
Not good execution, and not a guarantee you will make money. What it buys is recourse: rules about where client money sits, a body that can fine or shut the firm, a complaints process, and in some jurisdictions a compensation scheme if the firm fails.
| Regulator | Jurisdiction | Retail leverage cap |
|---|
| FCA | UK | 1:30 |
| CySEC | Cyprus / EU | 1:30 |
| ASIC | Australia | 1:30 |
| MiCA | EU crypto | Varies |
| Offshore | Various | Often 1:1000+ |
The question is not whether, it is which entity
Most large brokers operate several entities under one brand. The tier-one licence in the website footer is frequently not the entity that onboards an overseas client. The difference decides whether you have negative balance protection, segregated funds and access to a compensation scheme.
Find the entity name on your own account documents, not on the homepage. It is the single most useful five minutes of research available before depositing.
Why high leverage signals the regulator, not the generosity
A broker offering 1:2000 has not found a loophole. It is operating where the caps do not apply, which almost always means the protections do not either. The leverage number is therefore a reliable proxy for which rulebook you are under.
What to do with this
- Identify the entity holding your account before funding.
- Check whether negative balance protection applies to that entity specifically.
- Treat a licence as a floor on conduct, never as a guarantee of outcome.
This term is explained in context in the primer
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Education only, not financial advice. Trading is high risk and most retail accounts lose money.
