2018 was a milestone year for regulation in the European Union. The introduction of ESMA ushered in the first sweeping legislation of forex & CFD activities throughout the EU which the UK also participated in. The leverage restrictions introduced by ESMA led to an increased appetite for regulation in offshore jurisdictions like Vanuatu, Mauritius and Seychelles.

 

As time passed, offshore jurisdictions began to account for a larger percentage of a broker’s client base as demand for leverage flexibility outweighed the benefits the UK could offer like account balance protection. From our perspective the FCA welcomed this change as it resulted in less complaints to manage and retail brokers to oversee.

In 2022 the FCA made a significant change to capital requirements for FX and CFD brokers by transitioning to what is known as the IFPR (Investment Firms Prudential Regime Model). Previously, capital was tied to a risk management model like we find in Cyprus. IFPR effectively eliminated what were known as Match Principle (£125k) and Advisory Licenses (£50k). Brokers licensed before 2023 will need to increase capital to a minimum of £750k by 2027; a similar minimum capital threshold of £750k applies to new applicants as well. The change effectively made the UK less attractive than other regions due to higher capital, not to mention hefty local maintenance fees. Brokers relatively new to regulation may find the capital levels set by the IFPR to be too high a barrier of entry when compared to other jurisdictions.

The implementation of the Consumer Duty Requirement in 2023 has resulted in more oversight for FX brokers targeting retail clients. All promotional materials must be thoroughly reviewed by compliance in order to adhere to FCA policy. This change also applies to trading spreads and commissions. As such, adherence to these measures is far more burdensome than other jurisdictions. In essence, a broker looking to attract retail traders in the UK must have a much larger compliance team than years before.

 

The combination of higher capital, greater oversight, and leverage restrictions have made the United Kingdom less attractive for brokers targeting retail business. As a result, the granting of such permissions is more difficult than before as well. From our experience, only brokers with a significant amount of capital and experience should consider applying for a license in the UK.

Atomiq Consulting – Your Global Partner for Forex Broker Licensing

As the forex industry continues to evolve, regulation has become essential for brokers seeking long-term credibility and access to global markets. Around the world, regulators are refining their frameworks to balance innovation with investor protection, creating new opportunities for firms that position themselves early. While established centers such as the UK and Cyprus remain popular choices, emerging jurisdictions are gaining attention for their flexibility and efficiency. Whether you’re looking to obtain a forex license or explore alternative regulatory options, Atomiq Consulting provides expert guidance every step of the way.