Is the Forex Platform Really Safe? How to Check Licenses to Avoid Scams

Why Are Licenses from Regulatory Authorities Important?

In Vietnam, current laws do not have clear regulations for individual forex trading. This means you are fully responsible for your trading decisions. But in developed countries, the situation is different. They have government-established agencies to manage and supervise Forex brokers—these organizations act as the “police” of the financial market.

Major regulatory agencies worldwide such as FCA (UK), ASIC (Australia), FINMA (Switzerland), NFA (USA) not only license Forex brokers but also continuously monitor them. To obtain a license from these agencies, Forex brokers must meet a series of standards: minimum capital (usually up to 20 million USD), transparent financial reporting, and customer protection regulations. In other words, how to check a Forex broker’s license is the best way to assess its credibility.

Main Roles of Regulatory Agencies - What Customers Need to Know

Verify the broker’s credibility

To obtain a license, a Forex broker must pass a rigorous vetting process. The regulatory authority will check: legality of trading procedures, customer protection measures, risk management, and anti-money laundering policies. Only when all conditions are met will the license be granted. That’s why major brokers like IG.com, OANDA, Pepperstone actively publish their licenses—because it’s a mark of trust.

Protect your funds

Another important benefit: regulatory agencies require Forex brokers to keep customer funds completely separate from company assets. Your money is deposited into a separate bank account, which cannot be used to cover the broker’s operating costs. If the broker goes bankrupt, your funds are still protected. For example, FCA protects up to 50,000 GBP per investor, ASIC protects 500,000 AUD.

The “Double-Edged Sword” Secret of Regulatory Licenses

However, there is a downside: the stricter the regulation, the more limited your trading options. For example, FCA limits maximum leverage to 1:30 (while many offshore brokers allow 1:500 or more). This is challenging for traders who need high leverage to trade Forex.

To resolve this conflict, most major Forex brokers use a “multiple license” strategy. They register for a Tier 1 license from strict agencies (FCA, ASIC), and operate subsidiaries under offshore licenses (Cayman, Mauritius) to offer higher leverage. Customers can choose the account type that suits their needs.

Comparison Table of Regulatory Levels - How to Check a Forex Broker’s License

Detailed Guide: How to Verify a Forex Broker’s License

Step 1: Get Basic Information from the Broker’s Website

Visit the official website of the Forex broker you are considering. Look for sections like “About Us” or “Regulatory Information.” Reputable brokers will clearly publish:

• Official company name
• License number (License Number)
• Regulatory authority name
• Direct link to the regulatory agency

Warning: If the broker does not publish this information or only vaguely states “regulated by…”, that’s a red flag.

Step 2: Access the Official Website of the Regulatory Agency

This is the most important step. You should not click links from the broker’s website; instead, search and access directly:

• ASIC (Australia): www.asic.gov.au → Search “Financial Firms Register”
• FCA (UK): www.fca.org.uk → Search “FCA Register”
• FINMA (Switzerland): www.finma.ch → Search “Search”
• NFA (USA): www.nfa.futures.org → Search “Background Affiliation Status Information System (BASIC)”
• CySEC (Cyprus): www.cysec.gov.cy → Search “Regulated Entities”

Step 3: Search for the Company Name or License Number

Enter the exact name of the Forex broker or license number in the search box. The results must match exactly:

• The company name must be exactly the same (not “similar”)
• The license number must match
• The status should be “Active” or “In Force”

Tip: Many fake brokers create websites that look identical to real ones, with only one character difference. For example, instead of “ThinkMarkets.com,” it might be “ThinkMarketss.com” or “ThinkMarkets.io.”

Step 4: Check License Details

After finding the license, review detailed information:

• Issue date and expiry date
• Scope of activities (FX Trading, Spot Trading, Derivatives, etc.)
• Number of customer complaints
• Any fines or warnings from the authority

Official agencies publish this history so customers can verify.

Warning Signs of Fake or Scam Forex Brokers

1. Website does not publish license or only vaguely states the agency name
2. Cannot find the broker on the regulatory agency’s website when searching
3. License number does not match between the broker’s website and the agency’s site
4. Requests customers to deposit funds before opening an account
5. Promises fixed profits (e.g., 10% per month)
6. No company data available online or on Google News
7. Extremely low or unusual trading fees
8. Lack of professional Vietnamese language support

Top Regulatory Agencies You Should Know

Tier 1 Agencies

• ASIC (Australia): Australian financial regulatory authority, established in 1998. Currently about 440 licensed Forex brokers. Minimum capital requirement of 1 million AUD.
• FCA (UK): Established in 1997, currently oversees about 350 Forex brokers. Customer protection up to 50,000 GBP.
• FINMA (Switzerland): Swiss financial market regulator. Very high capital and procedural requirements.
• NFA (USA): Licenses only 8 Forex trading firms across the US. Extremely strict requirements.

Tier 3 Offshore Agencies

• CIMA (Cayman): Low capital requirement (~100,000 USD), allows high leverage
• IFSC (Belize): Simple process, low annual costs
• VFSC (Vanuatu): Lowest requirements, often combined with Tier 1

How to Choose a Reputable Forex Broker - Summary

Step 1: The broker must have at least one Tier 1 license from FCA, ASIC, FINMA, or NFA.

Step 2: Verify the license yourself on the official website of the regulatory agency (do not use links from the broker).

Step 3: Check the broker’s reputation on Google, Reddit, Forex Vietnam forums.

Step 4: Review the broker’s history (how long?), financial status, customer complaints.

Step 5: If the broker only has offshore licenses without Tier 1, be very cautious or avoid altogether.

Knowing how to verify a Forex broker’s license is a crucial skill to protect your assets. Don’t rely solely on advertising claims—verify directly on official regulatory websites. That’s the only way to ensure safety.