Methodology: regulator tiers and the Licence Score
Our ratings measure one thing — the strength of a broker's regulatory footprint. They don't measure trading costs, platform quality or customer service, and they are never influenced by commercial relationships.
1. Regulator tiers
We place each regulator in one of four tiers by assessing five factors: capital requirements, client-money rules, access to a statutory compensation scheme, retail conduct rules (leverage caps, negative balance protection, bonus bans) and enforcement track record.
| Tier | Description | Examples |
|---|---|---|
| 1 Top-tier regulation | Strict capital, client-money and conduct rules with active enforcement; usually leverage caps and often compensation schemes. | FCA, ASIC, CFTC/NFA, FINMA, JFSA, MAS, CIRO, BaFin, CBI, SFC |
| 2 Strong regulation | Credible regulators with real rulebooks, but fewer safeguards than tier 1 (e.g. no compensation scheme or looser leverage rules). | CySEC and other EU regulators, DFSA, FSRA, FSCA, FMA, ISA |
| 3 Moderate regulation | Established offshore or emerging-market regulators with capital and reporting requirements but limited retail protection. | FSC Mauritius, SCB Bahamas, CIMA, CMA Kenya, Labuan FSA |
| 4 Light / offshore | Light-touch offshore licensing, registration-only jurisdictions or self-regulatory dispute bodies. Minimal practical protection. | FSA Seychelles, VFSC, FSC Belize, BVI FSC, MISA, SVG registration, Financial Commission |
Tiering involves judgement. Reasonable people disagree about edge cases (for example whether CySEC belongs with tier 1 because of EU rules). We review tiers annually and when regulators materially change their rules.
2. The Licence Score (0–100)
The Licence Score is calculated automatically from our licence data:
- Strongest licence: tier 1 = 50 points, tier 2 = 38, tier 3 = 24, tier 4 = 12.
- Additional tier-1 licences: +6 each, up to +18.
- Additional tier-2 licences: +3 each, up to +9.
- Other licences: +1 each, up to +3.
- Operating history: +1 per two years since founding, up to +10.
- Public listing: +5 if the broker or its parent is listed on a stock exchange.
Brokers with no licence on record can score at most 10 (from operating history). Inactive, defunct or merged brands are not scored. Labels: 80+ very strong, 62+ strong, 45+ moderate, 25+ weak, below 25 very weak.
3. What the score does not capture
- Which entity you get. A group with FCA and Seychelles licences scores highly, but if you are onboarded to the Seychelles entity your protection is tier 4. Broker pages show every entity so you can see this.
- Enforcement history and complaints. We note significant events in broker profiles but don't score them automatically.
- Financial strength. Capital, profitability and auditor quality matter but aren't consistently disclosed.
4. Data sources
Licence matches come from regulators' public registers, company disclosures, regulatory announcements and published licence listings. Where a reference number is shown, it is labelled "reported" — the register is always the authority. If you find an error, use the correction form on the broker page.