When we founded ForexBrokers.com in 2016, we knew that we wanted to make it easier for traders to identify secure, reliable brokers. It’s a harsh reality; not every player in the finance industry is trustworthy, and not every company that offers brokerage services has your best interests at heart.
So, we set out to help forex traders find answers to a common – but important – question: Can I trust my broker with my money?
This effort ultimately lead us to develop Trust Score.
What is Trust Score?
Trust Score is a powerful proprietary algorithm that allows traders to get an at-a-glance rating of a broker’s overall trust. Fed by our own extensive research, data collection, and in-house expert opinions, Trust Score produces an individual numerical rating for each broker. Rankings range from 1 to 99 (the higher a broker’s Trust Score, the better).
Trust Score Variables
So, how do we calculate a broker’s Trust Score?
A number of unique data-driven variables are factored into the calculation that determines a broker’s Trust Score. These variables include:
- Total years in business.
- Corporate structure (Is the firm publicly traded? Is it a bank?).
- Number (and quality) of held regulatory licenses.
- Overall opinion score from our in-house industry expert, Steven Hatzakis.
Below, we’ve included a comprehensive list of the regulatory licenses that we recognize and incorporate into our Trust Score algorithm. We’ve conducted extensive research and collected data on regulatory bodies across a wide range of regulatory environments, jurisidictions, and countries.
It’s important to note that licenses are not all weighted equally.
For example, becoming licensed by the Commodity Futures Trading Commission (CFTC) to operate in the United States is far more complicated, expensive, and, as a result, more significant than registering with the Financial Sector Conduct Authority (FSCA) in South Africa.
We’ve sorted regulatory agencies into three categories (Tier 1, Tier 2, and Tier 3), with Tier 1 indicating the most stringent regulatory environment (which is good) and Tier 3 the least.
Trust Score regulatory licenses
Regulatory licenses that are currently tracked and factored into Trust Score are ordered by tier, and listed alphabetically by Country:Tier-1 Jurisdictions (High Trust):
- Australian Securities & Investment Commission (ASIC) - Australia
- Investment Industry Regulatory Organization of Canada (IIROC) - Canada
- Securities Futures Commission (SFC) - Hong Kong
- Central Bank of Ireland (CBI) - Ireland
- Japanese Financial Services Authority (JFSA) - Japan
- Monetary Authority of Singapore (MAS) - Singapore
- Financial Markets Authority (FMA) - New Zealand
- Swiss Financial Market Supervisory Authority (FINMA) - Switzerland
- Financial Conduct Authority (FCA) - United Kingdom (UK)
- Commodity Futures Trading Commission (CFTC) - United States
- China Banking Regulatory Commission (CBRC) - China
- Cyprus Securities & Exchange Commission (CySEC) - Cyprus
- Securities and Exchange Board of India - India
- Israel Securities Authority (ISA) - Israel
- Central Bank of Russia (CBR) - Russia
- Financial Sector Conduct Authority (FSCA) - South Africa
- Securities and Exchange Commission (Thailand) - Thailand
- Dubai Financial Services Authority (DFSA) - United Arab Emirates
- Securities Commission of the Bahamas (SCB) - Bahamas
- Financial Services Commission (FSC) - Belize
- Bermuda Monetary Authority (BMA) - Bermuda
- BVI Financial Services Commission (FSC) - British Virgin Islands
- Cayman Islands Monetary Authority (CIMA) - Cayman Islands
- Mauritius' Financial Services Commission (FSC) - Mauritius
- Vanuatu Financial Services Commission (VFSC) - Vanuatu
Trust Score Ratings
"Highly Trusted" 90-99
Brokers that have earned Trust Score’s “Highly Trusted” rating are considered the most trustworthy firms in the industry. Simply put, we would not hesitate to open and fund an account with a Highly Trusted broker ourselves (and have done so many times).
It’s important to note here: just because a broker has earned a Highly Trusted rating does not mean that it is immune from running into trouble, and our risk assessment is by no means a guarantee of solvency for the indefinite future. Some events (like the Swiss National Bank abruptly removing its euro ceiling in 2015, for example) are impossible to predict, and such market anomalies can have catastrophic effects on forex brokers.
Our Trusted rating indicates brokers that are reliable and trustworthy. Just one tier removed from our coveted “Highly Trusted” rating, “Trusted” firms are a solid choice, and may simply hold fewer regulatory licences or feature different corporate structures than those brokers that have earned our top Trust Score rating.
"Average Risk" 70-79
Average Risk brokers are firms we generally consider to be safe, but that may warrant a closer inspection before you open and fund a live trading account. At the least, we always encourage traders to check the regulatory licenses for Average Risk firms to verify that they are regulated in their own country of residence.
When a broker is regulated in its own country of residence, there are typically additional protections and provisions in place, in the case of a broker going under or getting into legal trouble.
"High Risk" 60-69
High-risk firms should be scrutinized and carefully reviewed before opening an account. These forex brokers are – in most cases – operating without credible regulatory licensing, and likely have a history of legal or financial issues.
Before considering an account with a high-risk firm, we recommend checking our country guide for your country of residence to see if a more trusted broker is available.
"Do Not Trust" <59
Simply put, we do not recommend opening an account of any kind with a broker that earns a “Do Not Trust” rating. At ForexBrokers, we will never recommend that you use a broker if we don’t believe that there are adequate protections in place to safeguard traders and their funds.
Comparing Trust Scores
Curious how each brokers’ Trust Score stacks up against the competition?
Our cutting-edge Comparison Tool works in tandem with our research and testing data to help you pick, compare, and ultimately choose the best (and most trustworthy) broker for you. Check out our Comparison Tool here.
Have an idea for how we can improve our scoring methodology? Email us, we'd love to hear from you.
Forex Risk Disclaimer
"There is a very high degree of risk involved in trading securities. With respect to margin-based foreign exchange trading, off-exchange derivatives, and cryptocurrencies, there is considerable exposure to risk, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or related instrument. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable, or that they will not result in losses." Learn more.