Broker groups and regulators: one brand, several regulated companies

How a broker group is built

Usually, a broker group is made up of a parent company with several operating companies beneath it. Each operating company holds a licence in one country and accepts clients from a set of countries. They share a name and website, and they usually share a trading platform. A group might run a UK company under the FCA, a Cyprus company under CySEC, an Australian company under ASIC and a global company based in the Bahamas or the Seychelles.

Each of those companies operates under the regulation of a government body. Public regulators include the Seychelles Financial Services Authority, the Securities Commission of The Bahamas and the Bermuda Monetary Authority. Every regulator keeps a published list of the companies it licenses (FSA list, SCB list, BMA list). What changes from one regulator to the next is the set of rules for retail clients, not whether the company is regulated.

Can someone in the EU open an account with a global company?

Some people living in the EU try opening an account with a group’s global company instead of its EU company. Under EU law, a firm outside the EU without EU authorisation may serve an EU client if that person approaches it on their own exclusive initiative (MiFID II, Article 42). The choice to approach a global company has to be yours.

Groups differ in how they handle this, and you can see how in their own sign-up forms and contracts. Find out by going to the broker’s own sign-up portal and seeing whether it will register you under its global company’s licence. The broker comparison lists the brokers this site covers and their companies.

A global company applies its own regulator’s rules and uses its own contract. So its leverage and protection are its own, not the EU ones (why some EU traders choose a global company).

ESMA, CySEC and the other EU regulators

ESMA is the EU’s markets authority, but it doesn’t issue broker licences. In 2018 it brought in CFD restrictions for retail clients across the EU. Those restrictions covered leverage caps, a margin close-out rule, negative balance protection, a ban on incentives and a standard risk warning (ESMA Decision (EU) 2018/796). Since 2019 those same restrictions have been applied as national rules by each member state’s own regulator (ESMA).

Cyprus is an EU member state, and CySEC is its regulator. CySEC applies the EU’s CFD restrictions as its own rules (CySEC PS-04-2019). A company licensed by CySEC gives retail clients the same 30:1 on major currency pairs as one licensed by BaFin in Germany. The UK has left the EU. The FCA has its own rules, and on leverage they match the EU’s (FCA PS19/18). When this site says a rule applies if the company that opens your account is regulated in the EU, a CySEC company counts.

How to check which company opens your account

Your client agreement shows the company’s legal name, and you’ll usually find it at the bottom of the sign-up page. Check that name against the list published by its regulator (choosing a provider). Don’t open the account if the name on your agreement differs from the one on that list.

If the sign-up form moves you to a different company from the one you chose, that company’s terms apply. Read that company’s agreement, not the one you saw first.