What Tier 1/2/3 regulators mean and what a licence gives you

Tier: a useful but unofficial scale

There is no official “first-tier regulator”: Tier 1/2/3 is a convention the industry uses to group regulators by strictness of requirements and quality of supervision. This site uses the same split in its broker rating; cards for all regulators with details are gathered on the Regulators page.

What a strict licence gives you

A clear example: the rules for retail CFDs in the EU introduced by the regulator ESMA in 2018 and enacted by national regulators. A retail client of a company under such a licence gets:

• segregation: client money is held separately from the company's money;
• a leverage cap (1:30 on major currency pairs);
• mandatory negative balance protection;
• a standard risk warning with the broker's share of loss-making accounts;
• restrictions on bonuses and on incentivising trading.

On top of that comes a compensation scheme in case the broker collapses: up to £85,000 per client in the UK (FSCS), up to €20,000 in Cyprus (ICF), up to AUD 150,000 in Australia (CSLR). Limits for the other jurisdictions: the Regulators page.

What an offshore licence gives you

In the jurisdictions under which international brokers serve clients from Mexico (Seychelles, Belize, the Bahamas, BVI, Mauritius), a licence also exists and also imposes requirements: segregation of client funds is usually included. But there are no compensation funds for retail forex broker clients in these jurisdictions, leverage is not capped (1:2000 and higher appear in the shortlist), and there's no mandatory NBP or standard risk warnings either. What exactly each regulator can do: in its card on the Regulators page.

Brand and company: whose licence is yours

The shortlist's brands hold several licences each, but a specific client is served by one specific company, and for Mexico that is an offshore entity. An example from the shortlist: the Exness group has FCA and CySEC licences, but those companies work only with B2B and EU clients, while a client from Mexico is served by Exness (SC) Ltd under the FSA Seychelles. All the rules and all the protection are determined by the licence of the company in your client agreement: it's stated in the agreement and in the footer of the broker's site, and in the broker cards in the shortlist the licence applicable to Mexican clients is flagged separately.

Step 1: a written complaint to the broker

Any dispute starts with a formal complaint to the broker itself: via a ticket or the support email, with order numbers, event times and screenshots. A chat with support doesn't count as a complaint: a dispute that may go higher needs a written trail. The complaint procedure and response timelines are set in the client agreement.

Step 2: your company's regulator

If the broker rejected the complaint or stays silent, the complaint goes to the regulator. Important: the regulator of the company you signed the agreement with, not “the brand's regulator”. Regulators' powers vary widely: some have a dedicated ombudsman and decisions binding on the broker, while at some offshore regulators the matter ends with checking the licensee, without any payout to the client. The complaint channel and what exactly each regulator in the shortlist can do: in its card on the Regulators page.

Step 3: The Financial Commission

An independent dispute-resolution body for the forex market. It works only with member brokers: the dispute is reviewed free of charge for the trader, the decision is binding on the member broker, and in case it refuses to comply the commission has a compensation fund: payouts of up to €20,000 per complaint. Whether a specific broker is a member is checked against the list on the commission's site.

If every step is exhausted

What's left is the court of the jurisdiction where the serving company is registered: for a client from Mexico that means a foreign legal system, language and lawyers. The practical conclusion from the whole ladder is one: the amount of real protection is fixed at the moment you choose a broker, by its entity's licence. Once a dispute has arisen, nothing more can be added to it.