Your FX Broker has several financial licenses? Then, that can be a good thing and a bad thing for you.
International(or Global) FX brokers have several financial licenses, or at least it is the common thing in the industry.
For example, XM has following companies within the XM group.
- Trading Point Holdings Ltd in Cyprus
- Trading Point of Financial Instruments Pty Ltd in Australia
- Trading Point of Financial Instruments UK Ltd in UK
- Trading Point (Seychelles) Limited in Seychelles
HotForex brand has following companies with financial licenses.
- HF Markets (Europe) Ltd in Cyprus
- HF Markets Ltd in the Republic of Mauritius
- HF Markets (SV) Ltd in St. Vincent & the Grenadine
- HF Markets SA (PTY) Ltd in South Africa
*”Registration” isn’t “Regulation”. Thus we didn’t include any registrations of the brokers above.
Each company in different country is regulated and licensed by different regulatory authority, although the main service conditions may seem the same ostensibly and each company’s website looks almost exactly the same.
It isn’t broker’s bad intention to SCAM traders or work in bad faith. Online FX brokers are required to acquire necessarily licenses in order to provide services to residents in certain countries.
But there are very important thing all traders must know about these International FX Brokers.
Service Conditions maybe different
Don’t be confused that these companies within the same group are the same, but they are still different companies with different regulations and assets.
Each of them follow the different rules of these regulatory authorities too.
And this creates some differences of service conditions between them such as:
- Compensation Funds for investors
- Segregated accounts
- Supervision from the authority
- How orders are executed in the market
Your broker may flaunt their excellent “Compensation Funds” and other financial status though, you may be dealing with a company with a whole another story.
But how you know if there is a difference between them at all?
Well, you can only find out after reviewing the differences of rules of regulatory authorities and the Contents within legal documents of each companies under the same group.
How to check the Regulation by yourself?
To start with, there is a way to find out, under which regulation(and company) your accounts and funds are managed.
It is to check the website as below. (in case of XM)
As you can see when we open the official website of XM, from Europe, the website says it is operated by “Trading Point of Financial Instruments UK Ltd in UK” in both on the main page and legal documents.
In this case, if proceeded to open an account from here, the accounts will be under the UK FCA regulation.