Brokers & Accounts · Beginner · 5 min

Reading regulation: SEC, FCA, ESMA, ASIC, CySEC and co.

You can check in an official register whether a provider is authorized, for which services, and whether the firm you talk to is really that firm.

Don't trust the badge

Almost every trading website shows a line like "regulated by a top-tier authority", often with a licence number and a row of logos. Some of these claims are true. Some are copied from a real firm. Some refer to a company that is not the one you would sign with.

Checking it yourself takes about five minutes. It is probably the most useful five minutes you can spend before sending money anywhere, and this lesson shows how.

Who checks the checkers

Every country has a financial regulator that authorizes and supervises investment firms. The ones you meet most often:

In the EU, a firm authorized in one member state can offer its services in the others after notifying its home regulator. This is called passporting. A firm licensed in Cyprus can serve clients in Germany, while its home regulator remains responsible.

Steps Four checks: find the provider's legal name, look it up in the regulator's register, compare the contact details, and search the warning lists. 1 Find legal name 2 Check the register 3 Match contact details 4 Check warning lists

A careful check has four steps:

  1. Find the legal name. It is usually in the website's footer or the client agreement, often different from the brand.
  2. Check the register. Search the regulator's own website, never a link the provider sends you. Look at status and permissions: is the firm allowed to offer the services it advertises?
  3. Match the contact details. A clone firm copies a real firm's name, address and reference number. The FCA warns that scammers even ask victims to check the register. Use only the phone numbers and web addresses listed there.
  4. Check warning lists. Regulators publish warnings about unauthorized firms, and IOSCO collects them in a portal called I-SCAN. A missing warning is no proof of legitimacy.

The details don't match

A fictional trader finds an online offer from an authorized UK firm, which we will call Firm A Ltd. The offer shows the correct company name and the correct reference number, and the register confirms that Firm A Ltd exists and is authorized.

Same name, same number, different contact details: the typical pattern of a clone. The trader calls the number in the register, not the one in the offer. The real firm confirms it has never heard of the offer. Had the trader paid, the money would have gone to strangers, and no compensation scheme would have covered it, because the real firm never held it.

Common mistakes

The takeaway

A licence claim on a website proves nothing. Check the official register, the legal entity and the contact details yourself.

Check yourself

Quick quiz

4 questions. Instant feedback, nothing is saved.

  1. 1Tap the step that exposes a clone firm.

    Tap the chart.

    Steps Chart for the question: Tap the step that exposes a clone firm. 1 Find legal name 2 Check the register 3 Match contact details 4 Check warning lists

    A clone copies a real firm's name and number. Only the contact details in the register show whether you are talking to the real firm.

  2. 2A firm authorized in Cyprus offers its services in Germany. How is this possible?

    Under MiFID II, an investment firm authorized in one member state can provide services across the EU after notifying its home regulator.

  3. 3A caller gives you a firm reference number that matches the register. Is that enough?

    The FCA warns that clone firms copy real reference numbers and even ask victims to check the register.

  4. 4A provider is not on any warning list. What does that tell you?

    IOSCO points out that the absence of a warning does not mean a firm is legitimate. Check the register of your own regulator.

of 4 correct.

Sources