FP Markets safety

Whether a financial provider like FP Markets is safe and legit is an important and very legitimate question one can have. After all you trust FP Markets with your investment money and savings. It is also a very common question, we get this asked a number of times.

One thing worth bearing in mind: all the brokers that you find on BrokerChooser are regulated by at least one top-tier authority. So in this basic sense FP Markets is of course legit. Additionally, there are other factors you can take into account when you check the safety of FP Markets, e.g. if FP Markets is listed on any exchange, provide two-step login, disclose transparently its financial result, etc.

Here, we've collected and summarized the common questions on broker safety, enabling you to decide for yourself whether you consider FP Markets safe in your individual circumstances. We also compared FP Markets with two similar brokers.

Is FP Markets legit?
FP Markets FXTM Markets.com
Negative balance protection Yes Yes Yes
Banking background No No No
Broker listed on stock exchange No No No
Annual financial statements on website No No Yes
Mobile two-step authentication No No No
Broker ownership transparency No No Yes
Broker management transparency No Yes No
Broker is audited by the Big Four No No No

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FP Markets safety
Things always worth considering

When you assess a stock broker it's best to think through the following aspects:

  • What authority or authorities regulate the broker? In other words who can you turn to if something goes south?
  • Does it offer negative balance protection?
  • How much protection do you have?
  • For how long FP Markets has been in operation?
  • Is it publicly traded itself?
  • How transparent is it?
  • How much do they protect your account from unauthorized access?
  • What auditor audits the brokerage?

As you see there are a number of aspects above. But not all of them were created equal.

We think the most important feature is to be regulated by at least one trustworthy authority. With a CFD and forex broker, it's also a cardinal info whether the broker provides negative balance protection or not.

Comparing regulators

First and foremost, to gather a wider knowledge about one broker's safety, you should check the regulators of it. For this purpose, we sum up below the most important things to know about regulators and how to interpret them for your individual case.

FP Markets is regulated in the following countries and provide the following investor protection:

FP Markets regulation and investor protection
FP Markets
Country of regulation: Australia, Cyprus, St. Vincent and the Grenadines
Investor protection amount: No protection under ASIC, €20,000 under CySEC, No protection under Financial Services Authority (St. Vincent and the Grenadines)

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The investor protection amount and the regulator might differ based on which entity you belong to.

For the avoidance of doubt, it is

  1. By and large your home country (i.e. your residence, not your passport) that will determine under which regulator you'll fall, should there be more than one regulator.
  2. In some cases you might choose between regulators, and that being said, we recommend you choosing the higher-tier regulator, e.g. FCA over CySEC.

Don't forget that regulators are not created equal. Investor protection can also vary from authority to authority. There are top-tier regulators whose excellence lies within their features such as the presence of segregated accounts, the range of protection tools or the investor protection amount itself. Check out a few of the top-tiers in the table below. Most brokers reviewed by BC fall below one of the following four regulators:

Some regulators and their investor protection
FCA in the UK Financial Services Compensation Scheme (FSCS) covers £85,000 of each account's deposits.
SEC, FINRA in the US Securities Investor Protection Corporation (SIPC) covers up to $500,000, including a $250,000 limit for cash.
BaFIN in Germany €100,000 for cash, and €20,000 for securities.
ASIC in Australia No investor protection.

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As you could see above, FP Markets is supervised by the CySEC or Cyprus Securities and Exchange Commission. CySEC monitors the Cyprus Stock Exchange, registered brokers and companies, and the transactions taking place on the Stock Exchange.

CySEC also monitors licensed collective investment funds, registered investment service companies, companies that operate mutual funds and investment consultants. CySEC covers €20,000 or 90% of investor's claim (whichever is lower) per person per firm, in case of broker bankruptcy. They also introduced a negative balance protection. At FP Markets a non-Cypriot citizen is treated the same way as a Cypriot resident in case something goes wrong.

There are some brokers that provide additional insurance because they have private insurance (e.g.: eToro through Lloyd's, among the US brokers Charles Schwab and Ally have similar setups), which means that you have an extra safety net above the regulatory. It's worth checking it out when you're choosing your broker.

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FP Markets safety
Additional "nice to have" safety features

The subsequent bullet points are rather supplementary, “nice to have” features. Ticking them definitely adds to the safety and legitimacy of an online broker, but not having them is not necessarily a big red flag.

Banking background

FP Markets doesn't have a banking background, which is not crucial, but would mean another guarantee for safety. The reason is that even if it's not required by law that a struggling broker must be saved by its parent bank, in most cases you can count on this happening.

Broker listed on stock exchange

FP Markets is not listed on any stock exchange, hence it's harder to get detailed or any kind of direct information about its financial performance.

Why is being listed on the stock market useful? For two reasons:

  • Listed companies by and large have stringent reporting requirements
  • If something really goes wrong with the broker, you'll be able to tell it from the (rapidly falling) share price of the broker in most cases. In this unlikely scenario, you'll have time to move your funds and securities to another broker.

Annual financial statements on website

FP Markets doesn't publish annual financial statements. These are sort of financial reports, which generally contain information about a brokerage's income, profit and loss, retained earnings and cash flows. Not having these exposed to the public doesn't necessarily mean that a broker is not safe or legit, it's just a factor that we should take into account when choosing where to invest or trade.

Mobile two-step authentication

FP Markets doesn't provide two-step authentication when logging in, which is not so pleasing, since it might be easier for hackers to compromise clients' accounts.

Broker ownership transparency

Ownership structure of FP Markets is not public, it can't be checked on their website, which leaves some questions open about one's feeling of being up-to-date about the broker.

Broker management transparency

FP Markets has not made their management structure public, which can leave you with a sense of lack considering the broker's transparency and safety.

Broker is audited by the Big Four

FP Markets is not audited by one of the so-called Big Four auditors (KPMG, PWC, Deloitte, EY), which is not necessarily an issue, however it would guarantee another layer of safety.

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74-89% of retail CFD accounts lose money

FP Markets safety
Bottomline

Now that we have gone through the most frequent and - as we think - most important safety aspects of FP Markets, we hope that you feel armed enough with information for your future decision. In case you're still unsure, use our broker finder and meet the best online broker that suits your needs.

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Author of this article

Ádám Nasli

Author of this article

Ádám is a motivated finance expert with over two years of experience in banking and investment, and a professional degree in this field. He's eager to help people find the best investment provider for them, and to make the investment sector as transparent as possible.

Ádám Nasli

Broker Expert

Ádám is a motivated finance expert with over two years of experience in banking and investment, and a professional degree in this field. He's eager to help people find the best investment provider for them, and to make the investment sector as transparent as possible.

Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology

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