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

XTB 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, Commodities, Cryptocurrencies, Stocks and ETFs. The broker supports various trading platforms and tools such as xStation 5.

XTB is highly regarded for its regulation by multiple authoritative bodies, including the FCA, CySEC, CNMV, KNF, FSC(Belize). This multi-regulatory oversight underscores its commitment to maintaining high standards of safety and transparency.

In this article, we will explore XTB’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 XTB Operate Under FCA Regulation?

Yes, XTB operates under FCA regulation. The FCA reference number of this firm is 522157. 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 XTB 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, XTB 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 XTB, 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?

XTB 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 XTB. 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 XTB Have?

CySEC (Cyprus Securities and Exchange Commission):

XTB is regulated by CySEC. Established in 2001, Cysec is Cyprus’s financial regulator. Since Cyprus joined the European Union in 2004, CySEC’s regulations align with the MiFID directive, ensuring compliance with EU-wide financial standards and investor protection. This regulation allows the broker to offer services across the European Economic Area (EEA) under the MiFID II directive, ensuring investor protection and transparency. CySEC regulation requires brokers to follow strict guidelines for handling client funds, including segregation and periodic reporting.

KNF

XTB is regulated by the Komisja Nadzoru Finansowego (KNF). The KNF, established in 2006, is Poland’s financial regulatory authority, responsible for overseeing the country’s financial markets and institutions.

The KNF ensures that XTB adheres to strict guidelines for transparency, financial stability, and investor protection. This includes maintaining adequate capital reserves, segregating client funds from the company’s own, and providing regular financial reports. KNF regulation helps protect Polish investors and ensures that XTB operates securely and in compliance with Polish financial regulations.

FSC(Belize)

XTB is regulated by the Financial Services Commission (FSC) of Belize. The FSC, established in 1999, is the regulatory authority overseeing non-bank financial services in Belize.

The FSC requires XTB to comply with strict regulations, including maintaining adequate capital, protecting client funds by segregating them from company assets and providing regular financial reports. FSC oversight helps ensure that XTB operates transparently and securely, offering a safe trading environment for clients in Belize and internationally.

CNMV

XTB is regulated by the Comisión Nacional del Mercado de Valores (CNMV) in Spain, which is responsible for overseeing and regulating the financial markets in the country. Established in 1988, the CNMV ensures that firms operating in Spain, like XTB, comply with strict financial conduct standards, promoting transparency, fairness, and security.

Under CNMV regulation, XTB is required to maintain adequate capital reserves, segregate client funds from its own, and provide regular financial reporting. This regulatory framework protects clients by ensuring that their funds are kept secure and that the company operates in a transparent and compliant manner. CNMV oversight enhances trust and confidence in XTB, reinforcing its commitment to providing a reliable and secure trading environment for clients in Spain and across Europe.

Frequently Asked Questions

What is XTB ?

Founded in 2002, XTB is an exchange-listed forex and CFD broker with headquarters in Poland and offices in over 13 countries. The broker offers more than 5,500 forex, CFDs as well as real stocks and ETFs for trading on its proprietary platforms. XTB boasts of over 800,000 clients from all over the world.

Is XTB Considered Safe?

Yes, XTB is considered safe. The broker is regulated by seven major regulatory authorities, including the  FCA, CySEC, CNMV, KNF, FSC(Belize) These regulations ensure strict compliance with industry standards and provide protection for client funds.

What is the Maximum Leverage for FCA in XTB?

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

Here are the XTB 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 XTB?

XTB, the minimum deposit is $0.

Does XTB Offer Negative Balance Protection?

Yes, XTB 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 XTB Offer an Investor Protection Scheme?

Yes, XTB 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.