Sponsored By
de | cn | ru

Market News

What are the risks of trading with offshore forex brokers?

Offshore destinations are famous for its light touch regulation, if any. They are attractive locations to forex and binary options brokers, as it is relatively easy and cost-effective for startups to register and run a brokerage business. Besides, offshore zones are generally known for their lax regulation and non-existent corporate taxes.

One of the most popular offshore jurisdictions are Belize, Mauritius, Saint Vincent and the Grenadines, Marshall Islands, British Virgin Islands, Cayman Islands, the Seychelles, Dominica and Vanuatu.


Forex brokers registered in some of these offshore zones have to satisfy some prerequisites, such as capital adequacy to demonstrate their good financial standing:


$500,000 - Belize;
$100,000 - Cayman Islands;
$28,000 (MUR 1 000 000) - Mauritius;
$2000 - Vanuatu;

By comparison, brokers regulated by UK’s FCA and by Cyprus’ CySEC are required to maintain net tangible assets amounting to minimum EUR 730 000 and keep the client funds in segregated accounts.



Trading with offshore brokers is extremely risky. Many of these brokers are scam companies seeking to cut financial and regulatory corners. Unlike with the FCA and other EU financial watchdogs*, regulatory bodies in offshore zones place little emphasis on compliance-checking, reporting and supervision and, more importantly, companies are not required to report individual transactions. This means that an offshore broker can simply delete your profitable trade or deny withdrawal, and you can do nothing to get your money back.



We are not suggesting that all brokers regulated offshore indulge in fraudulent practices, however we advise traders to be extremely cautious when dealing with such. Clients of offshore brokers basically have no protection in case something goes wrong - none of these companies is obliged to arrange a compensation scheme in the event of insolvency.

That is why it is highly advisable that traders avoid offshore brokers and invest with brokers supervised by proper regulators, such as UK’s Financial Conduct Authority (FCA). All clients of FCA-regulated brokers are protected by the Financial Services Compensation Scheme up to £50,000 per person, in case the company goes bankrupt. All CySEC-licensed brokers, on the other hand, are members of the Investor Compensation Fund, which is able to pay compensation up to €20,000, If the company is in default.

*MiFID I introduced a harmonised transaction reporting regime across the EU in 2007. MiFID II (which will come into effect in 2018) broadens the scope of instruments subject to reporting and expands the current objective of detection and investigation of potential market abuse into monitoring of the fair and orderly functioning of markets.


TAGS: offshore  offshore broker  offshore forex broker  risk 
Broker Country Regulation Platform Min Deposit Review
Cyprus CySec, FCA MT4, MT5, Web $5 Review Website
Cyprus, Australia CySec, ASIC MT4, Web,
Mobile app
$100 Review Website
UK, Cyprus, Hong Kong FCA, CySEC, SFC MT4, Web,
$100 Review Website
UK, Cyprus, Australia FCA, CySec, ASIC MT4, MT5 $5 Review Website
UK, Australia FCA, ASIC MT4, Trading
$50 Review Website
UK, Cyprus, UAE, South Africa FCA, CySEC, DFSA, FSB MT4, MT5, FxPro
$100 Review Website
Cyprus CySEC MT4, MT5, Web $1 Review Website
Belize IFSC MT4, MT5 $100 Review Website
Australia ASIC MT4, MT5,
$200 Review Website
Seychelles FinaCom MT4, Web $10 Review Website

More Forex Market News

Italy’s CONSOB warns of 4 offshore forex brokers, 1 trading bot

Mar 23 2018 14:53:40

Italy’s financial markets and services regulator CONSOB has issued a warning against four unregulated offshore forex brokers and one trading robot and has ordered them to cease the infringement of the Italian law. Read more

UK’s FCA warns of forex broker BECFD

Mar 23 2018 12:35:56

  UK’s Financial Conduct Authority (FCA) has published a warning against forex brokerage BECFD. According to FCA, the broker, operating via the website becfd.com, has been targeting UK without their authorization. Read more

FCA warns of Plusoption binary options broker

Mar 13 2018 14:42:24

 UK’s Financial Conduct Authority (FCA) has warned that the company Tradeplus Solutions is offering financial services to UK clients without the necessary authorization and that it may be a scam.   According to the FCA, the company operates the binary options brokerage plusoption. Read more

FCA to change license requirements for STP forex brokers – media

Mar 07 2018 14:24:55

UK’s Financial Conduct Authority (FCA) is looking into forcing the straight-through processing (STP) forex brokers to upgrade their licenses to those for full market makers, reports Finance Magnates. Read more

Hong Kong’s SFC warns of IMS FX, TechoFx

Mar 06 2018 08:57:42

 Hong Kong’s Securities and Futures Commission (SFC) has issued a warning against the forex brokers IMS FX and TechoFX. Both are claiming to have addresses in Hong Kong, but the former’s claim is false, while the address of the latter belongs to a secretarial company. Read more

Belize’s IFSC alerts that FX Broker Pro is not licensed

Mar 02 2018 13:17:24

  Belize’s financial services regulator, the International Financial Services Commission (IFSC) has warned that the forex broker FX Broker Pro is not licensed, nor regulated by it. Read more

UK’s FCA warns against forex broker SolidCFD

Feb 28 2018 15:03:36

  UK’s Financial Conduct Authority (FCA) has issued a warning that the forex broker SolidCFD, which is not licensed to offer its services in the country, but has been targeting local investors.   It operates via the solidcfd. Read more

Out with the old, in with the new: Could digital currencies replace fiat money?

Feb 21 2018 15:41:59

  In 1971, US President Richard Nixon suspended the convertibility of the dollar into gold and pitched a stone into the relatively calm waters of the global economy. Read more

CONSOB issues cease orders against several forex, binary options brokers

Feb 20 2018 09:24:27

 Italy’s financial markets and service providers regulator CONSOB announced it has issued cease orders against several forex and binary options brokers that are operating in violation of Italian law. Read more

Switzerland’s FINMA warns of forex broker ProfitTrade24

Feb 19 2018 08:26:09

 Switzerland’s financial markets and services regulator FINMA has issued a warning against the forex broker ProfitTrade24. Read more

de | cn | ru