IG FCA Regulation 2024: Supervision, Investor Protections, and More

IG is a leading forex and CFD broker that provides online trading services to traders and investors worldwide. It offers an extensive range of trading instruments, including Forex, indices, Cryptocurrencies, Shares, Commodities. The broker supports various trading platforms and tools such as MT4, WebTrader, MobileTrader (MobileApp), ProRealTime.

IG is highly regarded for its regulation by multiple authoritative bodies, including the ASIC, FCA, JFSA, SFC (Hongkong), FSCA, MAS, FMA, GmbH, FINMA. This multi-regulatory oversight underscores its commitment to maintaining high standards of safety and transparency.

In this article, we will explore IG’s FCA regulation, its importance, the investor protection scheme, and negative balance protection. Additionally, we will provide information on other brokers regulated by the FCA. 

Does IG Operate Under FCA Regulation?

Yes, IG operates under FCA regulation. The FCA reference number of this firm is 114059 and 944492. This regulation ensures that the broker adheres to the high standards set by the FCA, providing a layer of security and trust for its clients. Being FCA-regulated means that IG must follow strict guidelines to protect client funds, ensure transparency, and maintain the integrity of its operations.

What is FCA?

FCA stands for the Financial Conduct Authority. It is one of the top-tier regulators in the world, responsible for overseeing financial markets and firms in the United Kingdom. Established on April 1, 2013, the FCA took over from the Financial Services Authority (FSA). The FCA oversees approximately 42,000 businesses, including banks and investment firms. Its goal is to ensure that these firms, banks, and financial institutions operate fairly and transparently. The FCA enforces strict rules; for instance, it requires firms to keep client money in separate accounts. It also limits leverage to 30:1 for retail clients and provides negative balance protection.

Additionally, the FCA mandates a 50% margin close-out rule. It also offers dispute resolution through the Financial Ombudsman Service (FOS). Furthermore, the Financial Services Compensation Scheme (FSCS) provides compensation of up to GBP 85,000 if a firm fails. These measures help protect consumers and maintain trust in the financial system

How FCA Regulation Safeguards Retail Traders

Here are five key protections for retail traders under FCA regulation. As an FCA-regulated forex broker, CMC Markets offers these protections

1. Safety of Client Funds: 

The FCA’s primary function is to protect consumers from unfair practices. This includes requiring brokers to hold client funds in segregated accounts, separate from their operating funds. This safeguard helps protect your money from potential misuse. By ensuring these accounts are compliant with strict regulations, your funds remain secure even if the broker faces financial difficulties.

2. Negative Balance Protection:

 The FCA mandates negative balance protection for retail clients, meaning you cannot lose more money than you have deposited. Additionally, the 50% margin close-out rule automatically closes your positions when your account balance falls below a certain level. This rule is designed to prevent significant negative balances, offering peace of mind while trading.

3. Strict Leverage Limits: 

To help manage risk, the FCA enforces strict leverage limits of 30:1 for retail clients. This measure is particularly crucial in volatile markets, where high leverage can lead to substantial financial losses. By capping leverage, the FCA aims to reduce risk exposure and protect investors from excessive losses.

4. Stringent Reporting Requirements: 

FCA-regulated brokers must adhere to rigorous reporting standards, providing regular updates on their operations. This includes client asset reports, transaction reporting, and market data reporting. Such transparency ensures that brokers operate fairly and honestly, giving you confidence in their practices.

5. Dispute Resolution and Compensation:

 In case of disputes with your broker, the Financial Ombudsman Service (FOS) serves as an independent body to resolve issues fairly and impartially. If a firm fails, the Financial Services Compensation Scheme (FSCS) offers protection of up to £85,000 per eligible investor, ensuring you are not left out of pocket. This compensation provides an additional layer of security for your investments.

How Can I Verify If My Broker is FCA Regulated?

To verify if your broker, such as IG, is regulated by the FCA, follow these steps:

1. Find the Broker’s Reference Number or Name: Obtain this information from the broker’s website.
2. Search the FCA Register: Visit the FCA Financial Services Register and enter the broker’s reference number or name.
3. Check the Broker’s Authorization: Ensure that the broker is authorized to provide “Rolling spot forex contract” services to retail customers in the UK.
4. Match Firm Details: Verify that the details on the FCA website, such as the broker’s website and email, match those provided by the broker. Any discrepancies might indicate an unauthorized broker, and you should avoid trading with them.

FCA-Regulated Forex Brokers: Who Else Is on the List?

IG is one of the leading FCA-regulated forex brokers. However, there are other FCA-regulated forex and CFD brokers that can serve as alternatives to IG. These alternatives include:

These brokers operate under FCA regulation. According to FCA rules, they offer leverage up to 30:1 and provide investor protection and negative balance protection for retail traders. To learn more about FCA-regulated forex brokers, you can read our content on the best FCA-regulated forex brokers.

What Other Regulations Does IG Have?

ASIC (Australian Securities and Investments Commission):

IG is regulated by ASIC. Founded in July 1998, the Australian Securities & Investments Commission (ASIC) is Australia’s national corporate regulator, overseeing corporations, markets, and financial services in accordance with the Australian Securities and Investments Commission Act 2001. Being based in Australia, ASIC regulation ensures that the broker complies with Australian laws on financial services, including responsible conduct, risk management, and financial reporting. Client money is kept in segregated accounts, and there is an emphasis on risk disclosure and trader protection.

FSA in Japan:

IG is regulated by the FSA in Japan. Established in 1997 the FSA Japan regulates and oversees the financial services industry including forex, overseeing banking, securities and exchange, and insurance sectors, and more. The FSA in Japan allows a maximum leverage of 1:400 for retail forex traders and investors. The FSA ensures that IG adheres to guidelines for maintaining adequate capital, protecting client assets, and ensuring transparent operations for clients in Japan and other regions. 

MAS

IG is regulated by the Monetary Authority of Singapore (MAS). MAS, founded in 1970, is the government body responsible for overseeing financial institutions in Singapore, ensuring financial stability and investor protection.

Under MAS regulation, IG must follow strict rules, including maintaining enough capital, keeping client funds separate from company assets, and providing regular financial reports. MAS supervises forex trading and limits the maximum leverage to 1:20 to manage risk. Although there is no specific protection scheme, MAS’s oversight ensures that IG operates safely and transparently. For more details, you can visit their website: http://www.mas.gov.sg.

FMA

IG is regulated by the Financial Markets Authority (FMA) of New Zealand. The FMA, established in 2011, is responsible for overseeing financial markets and ensuring fair, transparent, and efficient operations in New Zealand.

The FMA requires IG to follow strict guidelines, including maintaining sufficient capital, protecting client funds by keeping them separate from company assets and providing regular financial reporting. This regulation ensures that IG operates securely and fairly, offering a reliable and transparent trading environment for clients in New Zealand.

FINMA

IG is regulated by the Swiss Financial Market Supervisory Authority (FINMA). FINMA, established in 2009, is Switzerland’s independent financial regulatory body responsible for supervising banks, insurance companies, and financial intermediaries to ensure the stability of financial markets.

FINMA requires IG to comply with strict standards of financial security, including maintaining sufficient capital, protecting client funds by segregating them from company assets and ensuring transparent and accurate financial reporting. FINMA’s oversight ensures that IG operates with integrity and reliability, providing a secure trading environment for clients in Switzerland.

FSCA

IG is regulated by the Financial Services Board (FSB) of South Africa. The FSB, established in 1990, was the financial regulatory authority in South Africa responsible for overseeing non-banking financial institutions before being replaced by the Financial Sector Conduct Authority (FSCA) in 2018.

Under FSB regulations, IG was required to maintain strict standards, including holding adequate capital, protecting client funds by segregating them from company assets, and ensuring transparency through regular financial reporting. This regulation helped ensure that IG operated securely and reliably, offering a safe trading environment for clients in South Africa.

SFC (Hongkong)

SFC regulation refers to the rules and oversight provided by the Securities and Futures Commission (SFC) of Hong Kong. Established in 1989, the SFC regulates financial markets, including brokers, investment firms, and asset managers, to ensure a stable and transparent financial environment in Hong Kong.

To operate in Hong Kong, financial service providers, including forex brokers, must obtain a license from the SFC. The SFC enforces strict capital requirements, risk management standards, and transparency rules. It mandates that firms maintain segregated client accounts to protect investor funds and implement measures to combat financial misconduct. By overseeing these regulations, the SFC plays a crucial role in maintaining market integrity and safeguarding investor interests in Hong Kong.

GmbH

IG operates under the regulatory framework of a Gesellschaft mit beschränkter Haftung (GmbH) in Germany, which translates to a company with limited liability. This legal structure provides important protections for shareholders and clients alike, ensuring that the company’s liabilities are limited to its assets.

As a GmbH, IG must adhere to strict corporate governance standards, including maintaining adequate capital, ensuring transparency in its financial reporting, and complying with regulatory requirements specific to financial services. This structure not only enhances the trust and confidence of clients but also reinforces IG’s commitment to operating with integrity and professionalism. The GmbH designation signals a commitment to regulatory compliance and sound business practices, ensuring that clients can trade with peace of mind in a secure environment.

Frequently Asked Questions

What is IG ?

Founded in 1974 as IG Index by British Financier Stuart Wheeler, IG is a well-known forex and CFD broker. It offers over 100 forex currency pairs, CFDs, commodities, stocks, indexes, gold, silver, oil, bitcoin, and other cryptocurrencies for your personal investment and trading options. 

Is IG Considered Safe?

Yes, IG is considered safe. The broker is regulated by seven major regulatory authorities, including the ASIC, FCA, JFSA, SFC (Hongkong), FSCA, MAS, FMA, GmbH, FINMA. These regulations ensure strict compliance with industry standards and provide protection for client funds.

What is the Maximum Leverage for FCA in IG?

The maximum leverage offered by IG under FCA regulation is 30:1 for retail traders. However, leverage may vary based on the tradable assets.

Here are the IG leverage limits under FCA regulation:

• 30:1 for major currency pairs (e.g., GBP/USD, EUR/USD,)
• 20:1 for non-major currency pairs, gold, and major indices (e.g, S&P 500, Nasdaq 100 (US)
• 10:1 for commodities other than gold and non-major equity indices
• 5:1 for individual equities and other reference values

What is the Minimum Deposit for IG?

The minimum deposit for a card payment is $50, and there is no minimum deposit for a bank transfer

Does IG Offer Negative Balance Protection?

Yes, IG offers negative balance protection. All FCA-regulated brokers must offer negative balance protection. Negative balance protection means that traders are protected from losing more money than they have in their trading accounts. If a trade results in losses that exceed the amount of funds in the account, negative balance protection ensures that the trader’s balance cannot go below zero. This prevents the trader from owing the broker any additional money.

Does IG Offer an Investor Protection Scheme?

Yes, IG offers an investor protection scheme in accordance with FCA regulations. All brokers regulated by the FCA must provide this protection. In the event of a bank’s liquidation, losses would be distributed among clients based on the proportion of their funds held with the failed bank.

Any loss of funds resulting from this may be compensated under the Financial Services Compensation Scheme (FSCS). The FSCS provides compensation up to a strict limit of £85,000 per person, per institution, and this limit is subject to the total balances held with that institution.