​Meaning and Regulatory Strength Implied by License Authorized by FCA & EEA

The term ‘EEA Authorized’ refers to a cross-border service for member states that is provided by the Cyprus Securities and Exchange Commission (CySEC), which allows its members to travel in the European Economic Area (EEA). Enterprises authorized by EEA and the Financial Conduct Authority (FCA) are still regulated by Cyprus.

EEA firms with FCA authorization keep close cooperation with other European regulators, protecting legitimate rights and interests of consumers and maintaining the stability of the financial market.

The Financial Services Compensation Scheme (FSCS) proposed by FCA can step in to pay compensation when the authorized company used by harmed clients has gone out of business and cannot pay their claims.

Two situations can be divided as following when it comes to whether EEA firms are covered by FSCS:

1. Some are covered by EEA only, the information that has to be double-checked based on inquiries into the type of financial compensation registered by involved forex brokers with FCA.

2. The status of FCA direct authorization refers to the situation where the enterprise has registered for a financial service permit in the U.K. and is entitled to FSCS under the regulation of FCA.

In conclusion, an EEA firm authorized by FCA doesnt mean it is licensed by FCA and regulated effectively and powerfully, which is still determined by the country granting authorization, such as the U.K., and the licenses authorized by local regulators as well as the purchase of the customer protection plan. Many forex platforms will overstate their licenses authorized by EEA and FCA to tempt investors!

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