Here is a scenario that plays out thousands of times a day and almost never gets questioned.

A trader compares brokers. One of them prominently displays an ASIC licence. That carries weight, and reasonably so: there is a great deal required of an ASIC-regulated broker. The trader signs up, funds the account, and starts trading, confident about who is holding their money.

Except the entity that opened their account may not be the ASIC-regulated one. It may be an entity in another jurisdiction entirely, with different leverage, different protections and a completely different dispute process.

Nothing improper has necessarily happened. This is standard industry structure. But the trader almost certainly does not know, because the only place it is disclosed is in documentation that very few people read.

(Disclosure: I am the founder and CEO of TabTrade, licensed by the FSC in Mauritius. I previously spent years at brokers operating exactly the multi-entity structures described here. This is a description of how the industry works, not an accusation about any particular firm.)

Why brokers ended up with multiple entities

This structure did not appear by design. It accumulated, jurisdiction by jurisdiction, as regulation tightened.

When I was at Pepperstone, ASIC and the FCA were the licences to have. CySEC existed but was not top of anyone’s list. Then a series of changes reshaped the map.

Brexit meant UK-licensed firms could no longer passport into the European Union, so brokers serving European clients needed an EU-based licence. Cyprus, already growing on the back of MiFID passporting, became the obvious destination and its share of the industry expanded sharply.

European regulators tightened leverage for retail clients. Australia followed a similar path, though the timeline is longer than most people remember. ASIC’s review of the retail OTC derivatives sector dates back to 2017, when it found several hundred thousand client accounts and roughly two billion dollars in client money. Consultation Paper 322 opened for industry submissions in August 2019 and drew more than four hundred responses. The product intervention order itself was made in October 2020 and took effect on 29 March 2021, capping retail leverage and restricting how brokers could promote themselves.

Each of these changes had the same effect. Brokers holding a tier-one licence suddenly had a large population of clients they could no longer serve on the terms those clients wanted, particularly outside the licensing jurisdiction. So they acquired additional licences elsewhere to house their overseas business. New Zealand became attractive for a period. So did the Bahamas, Seychelles, Mauritius and others.

The result is that a mature broker today is often not one company. It is a group: a tier-one entity for its home market, and one or more offshore entities for everyone else.

What actually changes between entities

This is not a cosmetic distinction. Depending on which entity holds your account, several things differ.

Leverage. Often the single largest practical difference, and frequently the reason the offshore entity exists in the first place.

Client money treatment. Segregation requirements and the rules governing how your funds are held vary by jurisdiction.

Dispute resolution. Whether you have access to a well-established external ombudsman scheme, and what that scheme can compel, depends entirely on the entity you contracted with.

Compensation arrangements. Some jurisdictions operate investor compensation schemes with defined limits. Many do not.

Advertising and conduct rules. These bind the entity, not the brand.

The marketing sits at group level. The protections sit at entity level. Those are not the same thing, and the gap between them is invisible from the homepage.

How to find out which entity you are with

The information is disclosed. It is simply disclosed where nobody looks. A few reliable places to check:

The client agreement or terms and conditions. This is the contract. The counterparty is named in it. This is the definitive answer.

The product disclosure statement, where one exists, or the equivalent risk disclosure document.

The privacy policy, which usually names the entity collecting and controlling your data.

The footer, read carefully. Many brokers list each entity and its licence separately, often with a line explaining which entity serves which regions. It is genuinely there. It is just set in small type below the fold.

Your deposit details. The account name on the transfer instruction tells you where your money is actually going.

The signup flow itself. Some brokers detect your country and route you automatically. Occasionally you are given a choice. Usually you are not, and the decision has been made before the form loads.

If you cannot determine which entity holds your account from any of these, that itself is informative.

Is this a problem?

Mostly, this is legitimate structure. Serving clients across dozens of countries under a single licence is not possible, and the alternative to multi-entity groups is not better protection, it is simply fewer people being able to open accounts at all.

Where I think the industry can do better is disclosure. There is a meaningful difference between a broker that clearly explains which entity you are dealing with and why, and one that leans on a tier-one badge in its advertising while onboarding the overwhelming majority of its clients somewhere else. Both are legal. They are not equally transparent.

As a trader, you do not need to be cynical about it. You need to be specific. Do not ask “is this broker regulated?” Ask “which entity am I contracting with, where is it licensed, and what does that mean if something goes wrong?”

That is a question with a real answer, and it takes about five minutes to find.

Frequently Asked Questions

Why do brokers have more than one licence?

Because regulation is national. A licence in one jurisdiction generally allows a broker to serve clients in that jurisdiction, not globally. As major regulators tightened leverage and conduct rules, brokers acquired additional licences elsewhere to continue serving international clients, which is how the modern multi-entity group structure emerged.

How do I find out which entity holds my account?

Read the client agreement you signed, which names your counterparty directly. The privacy policy and product disclosure statement usually name it too, and the account name on your deposit instructions is another reliable indicator. If none of those make it clear, contact support and ask directly.

Is it misleading for a broker to advertise a tier-one licence if most clients are onboarded elsewhere?

It is standard practice and generally legal, provided the entity relationships are disclosed somewhere in the documentation. Whether it is transparent is a separate question from whether it is compliant, and different brokers handle it very differently.

Does the entity I am with change my trading conditions?

It can. Leverage limits are the most common difference, and they are often substantial. Spreads and execution depend more on the broker’s underlying technology and liquidity relationships, which are frequently shared across entities within the same group.