When we started testing and reviewing forex brokers, we concentrated on offering an honest and helpful approach to all forex traders worldwide. The goal was to discover trustworthy brokers, along with provide needed information to those who might need additional considerations before creating an account. This determination was the basis of a Trust Score. This Trust Score represents an algorithm, which uses all the information we gathered from each forex broker so that we could achieve a standardized level for broker trust.
Overall, the Trust Score is a numerical variable ranging from 1 to 99, with 99 being the highest level of forex broker trust.
What Are The Variables For The Trust Score?
All variables used for the Trust Score refer to:
- Total years in business
- Specific regulatory licenses a broker has
- Corporate structure (if the company is a bank or publicly traded)
- Opinion score by our in house research specialists: Stefan Grasic and Braden Chase
Keep reading to find a list of the regulatory licenses used at the moment. Keep in mind that not all licenses are the same. As an example, receiving permission from the Commodity Futures Trading Commission (CFTC) to operate in the United States is complicated and costly. That makes CFTC regulation confer a higher Trust Score than for a broker to be regulated by the Financial Sector Conduct Authority (FSCA) in South Africa, which is comparatively easy.
The Trust Scores we used in our analysis are based on the following regulatory licenses:
Tier-1 Jurisdictions (High Trust):
- Australian Securities & Investment Commission (ASIC) – Australia
- Commodity Futures Trading Commission (CFTC) – United States
- Financial Conduct Authority (FCA) – United Kingdom (UK)
- Investment Industry Regulatory Organization of Canada (IIROC) – Canada
- Japanese Financial Services Authority (JFSA) – Japan
- Monetary Authority of Singapore (MAS) – Singapore
- Securities Futures Commission (SFC) – Hong Kong
- Swiss Financial Market Supervisory Authority (FINMA) – Switzerland
Tier-2 Jurisdictions (Average Trust):
- Central Bank of Russia (CBR) – Russia
- China Banking Regulatory Commission (CBRC) – China
- Cyprus Securities & Exchange Commission (CySEC) – Cyprus
- Dubai Financial Services Authority (DFSA) – United Arab Emirates
- Financial Markets Authority (FMA) – New Zealand
- Financial Services Board in South Africa (FSB) – South Africa
- Israel Securities Authority (ISA) – Israel
- Securities and Exchange Commission (Thailand) – Thailand
Tier-3 Jurisdictions (Low Trust):
- BVI Financial Services Commission (FSC) – British Virgin Islands
- Mauritius’ Financial Services Commission (FSC) – Mauritius
- Offshore – Any Offshore Jurisdiction (St. Vincent, Vanuatu, Nevis, etc.)
We added as much information as possible from our database for the countries we monitor and track. Our database is one of the most reliable independent databases, which includes many forex regulators on the web.
What Are The Risk Levels For The Trust Score?
To help you get an accurate understanding of the Trust Score, we cataloged Trust based on three risk levels: low, average, and high.
Low-Risk Trust Score: 85-99
The most reliable brokerage firms are the ones with a low-risk score. In our view, a low-risk firm is the one we won’t have second thoughts about when opening and funding an account. That said, keep in mind that all investing carries risk. Even though there is a low-risk score for a broker, there is no 100% assurance that the broker won’t run into trouble. So, our risk review doesn’t equal a guarantee of solvency or future profit. There are plenty of unpredictable events, such as the unexpected removal of the euro ceiling by the Swiss National Bank back in 2015 or the COVID-19 pandemic.
Average-risk Trust Score: 70-84
An average-risk broker is safe to trade with, but we recommend being cautious before creating and funding an account. Our advice is to look at the regulatory licenses for brokerage firms before trading with them. In this way, you will know whether or not a firm is regulated in their own country, or in your country. Regulation in the state of residence represents a clear indicator there is extra protection available if a broker experiences a legal issue.
High-risk: 69 or below
A high-risk brokerage firm must be looked upon cautiously. In most situations, such firms don’t have a trustworthy regulatory license, and they might even come with a history of financial or legal problems. Our recommendation is to avoid high-risk firms unless you have a clear and compelling reason to do business with them. For example, maybe no other broker offers services to your country.
Comparing Trust Scores
If you want to compare Trust Scores, check out our other reviews. Each broker’s trust score is available at the top of each review.
Parallel to the trust score we are also testing each broker based on our in house testing criteria which can be found here.
All trading involves risk. More than 60% of investors lose money in Forex and CFD trading. As these complex instruments allow for the use of leverage, there is a high risk of losing more money than you have deposited. Before attempting to participate in spread bets and CFDs, consider how well you understand them and if you can afford to lose your money.