Verify a Broker's License Like an Auditor

[Fairman]

Verify a Broker's License Like an Auditor

Scenario: a website for "ExampleFX" displays the logo of a well-known regulator and a license number. Your task is to decide whether the claim holds. The company, its license number, and the regulator here are invented for the exercise.

Step one, find the legal entity. The footer says the site is operated by "ExampleFX Global Ltd," registered in an offshore jurisdiction. The regulator logo appears beside a different name: "ExampleFX Europe Ltd."

Step two, search the regulator's official register, reached by typing its address yourself, for the exact name of the entity that would hold your account. Suppose the register lists "ExampleFX Europe Ltd" with the license number shown, but has no record of "ExampleFX Global Ltd."

Step three, compare. The license belongs to a sister company, not to the one that will take your deposit. The protections of the European entity, such as compensation schemes and negative balance protection, do not extend to clients of the offshore one.

Step four, check the permitted activities and the web addresses on the register. The listed domain differs by one word from the site you visited, which is a clone warning.

Scorecard: entity match, no. License active, yes. Domain match, no. Client terms refer to the regulated entity, no.

Verdict: do not deposit. Three of four checks failed.

Your turn: run the same four checks on your own broker and write the results in a table.