Federal Financial Supervisory Authority (BaFin)
The Federal Financial Supervisory Authority (BaFin) is Germany’s financial regulatory body responsible for supervising banks, financial services institutions, insurance companies, and forex brokers. BaFin operates under the European Securities and Markets Authority (ESMA) framework, ensuring that German forex brokers adhere to EU-wide investor protection and trading standards.
The Federal Financial Supervisory Authority (BaFin) is a leading European regulator committed to protecting investors and ensuring transparent forex markets in Germany. Choosing a BaFin-regulated forex broker offers strong safeguards under both German law and ESMA’s EU-wide standards.
- 30:1 for major currency pairs
- 20:1 for non-major currency pairs, gold, and major indices
- 10:1 for commodities other than gold and non-major indices
- 5:1 for equities
- 2:1 for cryptocurrencies
- Licensing and supervision of financial institutions and forex brokers.
- Implementation of ESMA’s guidelines on leverage, margin requirements, and investor protection.
- Enforcement of anti-money laundering (AML) and anti-fraud regulations.
- Monitoring of marketing practices and compliance reporting.
- Visit the BaFin Company Database.
- Search for the broker’s name or registration number.
- Verify license type, regulatory status, and contact information.
- Capital Adequacy: Minimum capital of €730,000 for investment firms.
- Negative Balance Protection: Mandatory for retail clients.
- Leverage & Margin Limits: Enforced as per ESMA standards.
- Segregation of Funds: Client funds must be kept separate from broker operational funds.
- Ban on Bonuses: Promotional bonuses and incentives for retail clients are prohibited.
- Standardized Risk Warnings: Brokers must clearly communicate risks and loss percentages.
Advantages
- Backed by strong German legal and financial systems
- ESMA-aligned investor protection and compliance
- High transparency and strict broker auditing
- Investor compensation up to €20,000 under EdW (Entschädigungsreinrichtung)
Limitations
- Limited broker flexibility due to strict compliance rules
- Leverage restrictions may reduce appeal for high-risk traders
- No access to brokers not licensed in the EU
Country
Germany
Established
2002
Contact
+49 (0) 228 4108 0
Complaint bodies
Federal Financial Supervisory Authority (BaFin), Financial Ombudsman Services of Germany
Hotline
+49 (0) 228 4108 0
Complaint email
Last updated on: March 28, 2025
High Risk Warning : Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.