Mapped: Which Foreign Exchange Regulators Can You Trust?

Which Foreign Exchange Regulators Can You Trust?

Global trading volumes in foreign exchange (forex) markets reached $7.5 trillion per day in April 2022. Notably, this was 30 times greater than daily global GDP. With so much money at stake, it’s important that investors know which regulators they can trust.

In this graphic from ForexBrokers.com, we look at the trustworthiness of forex regulators around the world.

The Trust Tiers of Forex Regulators

ForexBrokers.com sorts regulatory jurisdictions into five trust tiers:

1. Highly Trusted
2. Trusted
3. Average Risk
4. High Risk
5. Do Not Trust

Tier 1 regulators have the most strict and efficient regulations in place. They also typically carry out periodic audits to ensure that brokers are meeting compliance obligations. On the other hand, lower-tier jurisdictions have less stringent regulations—or no regulations whatsoever. They may also not respond to or resolve complaints quickly.

Below, we show how more than 100 regulatory jurisdictions around the world stack up.

Mature markets tend to have tighter regulations. For instance, the U.S. is one of 39 jurisdictions on this list that ForexBrokers.com rates as highly trusted. 

The country has implemented a number of regulations to provide a more stable and secure trading environment. In 2010, the Commodity Futures Trading Commission mandated that forex brokers must keep at least $20 million in regulatory capital and lowered the amount of leverage (borrowed funds) brokers could legally offer.

Conversely, regulators in the lowest “Do Not Trust” tier are primarily located in the Caribbean. Many of these small island nations do not have a fully developed infrastructure to regulate financial markets. 

While some countries such as Mauritius and Seychelles are developing a regulatory framework, others such as the Marshall Islands or St. Vincent and the Grenadines have virtually nonexistent rules. However, brokers can still register entities in these tier 5 jurisdictions without any properly established client protections.

Finding a Broker for Forex Trading

To trade currencies, you’ll want to find a forex broker that is licensed by secure, reputable regulators. ForexBrokers.com analyzed 62 companies and found that brokers use some regulators much more often than others.

Here are the 10 regulatory jurisdictions that have licensed the most brokers.

It’s most common for brokers to be licensed by a country within the EU or EEA, which is a highly trusted jurisdiction. However, many brokers get a license from Seychelles, which is rated as a high risk regulator.

A broker can be licensed in a number of different regulatory jurisdictions. It’s also worth noting that if a forex broker accepts customers from your country, it does not necessarily mean they are licensed in your country.

To help investors find brokers they can trust, ForexBrokers.com has developed a proprietary Trust Score. The score produces an individual numerical rating for each broker based on a variety of factors, including the number and quality of regulatory licenses the broker holds.

Explore Trust Scores from ForexBrokers.com to find reliable regulators and brokers.

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