Is FXCM regulated by the FCA?

Are you planning to open a trading account with FXCM but you are uncertain if the firm is overseen by the Financial Conduct Authority (FCA)?

FXCM is regulated by multiple regulators including the FCA in the UK and ASIC in Australia. When possible, we suggest you select the most strictly regulated entity among these options, such as the one under the FCA, as it offers robust investor protection and oversight. Here’s a guide on the key regulatory requirements that the FCA-regulated entity of FXCM needs to meet.

Why we trust FCA regulation

Why we trust FCA regulation

Hikmatjon Tolibjonov

Investments • Safety • Stock Market

As an Investment Analyst at BrokerChooser, I find great joy in utilizing my analytical talents to offer data-driven insights that demystify the world of investments. My studies as a master's student in International Relations at Eötvös Loránd University have deepened my grasp of the global forces shaping financial markets. I am excited about the opportunity to employ my skills and expertise in empowering investors, providing them with the clarity and the assurance they deserve.

Learn about our methodology

Hikmatjon Tolibjonov

Investments • Safety • Stock Market

I have personally tested several brokers worldwide and have gained extensive knowledge about regulatory and licensing procedures. These are my hands-on insights into the regulatory status of FXCM’s business entity overseen by the FCA:

• The FCA requires that FXCM keep client funds in separate bank accounts and not use them to cover the broker's own expenses or debts.
• If your FCA-regulated broker goes bankrupt, your funds will be protected up to £85,000.
• The FCA imposed leverage limits on CFD trading and banned crypto CFDs to protect investors from excessive risk.
• To benefit from FCA protection, open FXCM account. For more options, check our list of the best online brokers and trading platforms in the UK

FCA protection, including access to the investor protection scheme, will only be available to you if you open an account with the broker's entity that falls under FCA regulation. For that you either need to reside in the UK or come from a country whose residents are accepted by the FCA-regulated entity.

The FCA provides a number of layers of safety for traders. A crucial one is the requirement for client money segregation. This is a requirement enforced by top-tier regulators and not something you can request from your broker.

Under FCA regulation, brokers must keep client funds in separate bank accounts, entirely distinct from the firm's own operating funds. This ensures that your money is not used to cover the broker's expenses, debts, or any other financial obligations. The main objective here is to ensure the broker doesn’t misuse or misappropriate client funds.

Besides, for leveraged trading accounts, brokers are required to provide negative balance protection. This means that you cannot lose more than your account balance. If your account balance becomes negative due to market movements while trading with leverage, the broker is required to absorb the losses.

If you have an account at an FCA-supervised brokerage firm and it goes bankrupt, the money and assets in your account will be protected by an investor protection scheme called the Financial Services Compensation Scheme (FSCS).

The FSCS currently covers your assets up to £85,000 per person per firm. As FXCM is regulated by the FCA, it is automatically a member of the FSCS. This means that you will be entitled to FSCS protection regardless of your citizenship or country of residence.

Remember you should check which entity of FXCM is authorized by the FCA and make sure you sign up with that entity to ensure you are fully covered by the FSCS protection.

Leverage can be a very attractive but also risky tool when it comes to trading. The FCA set limits on CFDs for retail traders to help manage the risks they take. Additionally, the FCA has banned crypto CFDs to protect investors from excessive risk and potential losses.

The FCA has the following leverage limits on CFDs for retail clients:

• 30:1 for major currency pairs (e.g., EUR/USD, GBP/USD)
• 20:1 for non-major currency pairs, gold, and major indices (e.g., FTSE 100, S&P 500)
• 10:1 for commodities other than gold and non-major equity indices
• 5:1 for individual equities and other reference values

Recently, I have personally spoken with a client who used an offshore broker to trade gold futures with a leverage ratio of 100:1, far exceeding the 20:1 limit set by the FCA. Initially, he invested $10,000. When gold prices shifted unfavorably by just 1%, his position magnified this movement to a 100% loss, wiping out his entire $10,000 investment. Had he adhered to the FCA's leverage limit, the same price movement would have resulted in a loss of only $2,000, and he could have preserved a significant portion of his capital.

As the above example shows, if you work with a well-regulated broker in a reputable jurisdiction, you will have a more stable and secure trading experience, even if your potential returns may be more modest. Ultimately, the peace of mind that comes with knowing your funds are safe and your broker is held to high regulatory standards is invaluable.

To explore more about the extensive offerings of FXCM, including all the costs and charges you will encounter, as well as the wide selection of available features, check out our in-depth review. Our evaluations are grounded in real experiences; as we open accounts and invest our own money to provide authentic and first-hand insights.

To protect your investments and benefit from FCA regulation, consider opening an account with FXCM. If you'd like to explore additional options, be sure to review our comprehensive list of the best online brokers in the UK.

Is FXCM legit?

FXCM is considered reliable as it has multiple top-tier regulation, including FCA in the UK and ASIC in Australia.

Why is FCA regulation important?

The FCA is widely considered as one of the top-tier regulators in the brokerage world. To obtain FCA authorization, each firm must demonstrate that they meet a range of stringent requirements. Failure to meet these requirements usually triggers timely and strict enforcement procedures and may result in the entity losing its license.

How can I verify if my broker is FCA regulated?

You should cross-check your broker's regulatory status on the FCA's official website. If your broker is regulated by several regulators, check which entity is authorized by the FCA and sign up with that entity. If you are not a UK citizen, this may not always be possible due to legal restrictions. Check out our comprehensive guide on how to verify FCA regulation.