Many popular trading brands operate a group of companies: one licensed in the EU for European clients, and one or more "global" entities licensed offshore. The offshore entities advertise what EU rules forbid – leverage of 500:1 or more, deposit bonuses and trading competitions – and some actively try to move European clients onto them. Our old site recommended some of these firms. We no longer do, and this guide explains why.
What an EU licence gives you that an offshore one does not
| Protection | EU/EEA entity (retail) | Typical offshore entity |
|---|---|---|
| Maximum leverage | 30:1 majors, down to 2:1 crypto | 500:1–2000:1 or "unlimited" |
| Negative balance protection | Required by law | Sometimes promised, not enforceable in the EU |
| Margin close-out | Mandatory at 50% of margin | Set by the broker |
| Bonuses and incentives | Prohibited | Common, often with withdrawal conditions |
| Investor compensation | €20,000–€100,000 depending on the country | Usually none |
| Out-of-court complaints | National ombudsman, FIN-NET | Rarely any independent route |
| Supervision of client money | EU segregation rules, audits, reporting | Light-touch |
The table is not theoretical. Leverage limits exist because ESMA's own analysis found that most retail CFD accounts lose money, and higher leverage makes losses faster. Compensation schemes exist because brokers do fail – see what happens if your broker goes bust.
"Regulated" does not always mean supervised
Some jurisdictions register companies rather than supervise them. St Vincent and the Grenadines, for example, has stated that its Financial Services Authority does not regulate forex trading or brokerage; firms incorporated there are simply companies. Other offshore regulators (Seychelles, Mauritius, Vanuatu, Belize) do issue licences, but with lower capital requirements and much less oversight than in Europe.
Our regulator pages flag offshore authorities in amber so you can tell the difference at a glance, and every broker profile shows whether we have a European licence on record.
How Europeans end up with offshore entities
- Reverse solicitation claims. EU rules allow a non-EU firm to serve an EU client who approached it entirely on their own initiative. Regulators, including ESMA in a 2023 statement, have made clear this is a narrow exception that cannot be used to get around the rules through marketing.
- Being "upgraded". An account manager suggests switching to the global entity for higher leverage or a bonus. You then sign a new agreement with a different company.
- Affiliate and influencer marketing that links to the global sign-up page rather than the EU one.
If you have an account with a group that also has an EU entity, open your client agreement and check which company you signed with.
If you still want higher leverage
The legitimate route is professional client status with an EU-licensed broker, available only if you meet MiFID II's criteria. You will lose some protections, but the firm will still be supervised, audited and subject to EU client-money rules. For most people, trading smaller positions within ESMA limits is the better answer.
Frequently asked questions
Is it illegal for me to use an offshore broker?
A broker says it is regulated. Is that enough?
This guide is general information, not personal financial, tax or legal advice. Rules change; we review this page regularly and show the date of the last update above. Found an error? Tell us. See our editorial policy.
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