Brokers Are High-Risk Because of Reversal, Not Solvency
A licensed forex or CFD broker is a regulated financial firm, frequently better capitalised and more heavily supervised than the merchants a bank onboards without discussion. It is still classified high-risk, and the reason is arithmetic rather than prejudice: most retail clients lose money, and a losing client has a route to reverse the payment.
The published figures are consistent across supervisors. ESMA found 74–89% of retail CFD accounts loss-making in the work behind its 2018 intervention measures.[1] The UK FCA has cited approximately 80% over 2016 to 2022, and the Australian ASIC found 68% of retail CFD investors lost money in its FY2024 review.[2]
Two further factors compound it. Deposits are frequently funded by card, which imports the full chargeback right into a product where the client may later regret the outcome. And the sector carries a legacy: the unlicensed and offshore-only operators that dominated the market a decade ago trained acquirers to treat the whole category as suspect, which licensed brokers still pay for at boarding.
Client Money Is the Structural Requirement
Client money segregation is the defining banking requirement for a broker, and it is a harder placement than the operating account. The funds are held for clients, must be legally isolated from the firm’s own assets, and must sit at institutions the regulator will accept.
Under the FCA’s client assets regime, client money is held in trust in segregated accounts at approved institutions, with daily reconciliation and defined diversification expectations.[3] CySEC applies the equivalent requirements to MiFID II investment firms, with client funds separated from the firm’s own funds and held at credit institutions.[4] ASIC operates its own client money rules for Australian financial services licensees.
The banking consequence is specific: a client-money account cannot generally sit at an EMI. An EMI safeguards rather than takes deposits, and most regimes require client money at a credit institution. So a broker needs at least one real bank relationship regardless of how good its EMI stack is, and that bank relationship is the slow, selective one.
The Licence Decides Whether a Client-Money Account Is Available at All
| Licence | Bank and EMI appetite | Card acquiring | Practical constraint |
|---|---|---|---|
| FCA (UK) | Broad; CASS-compliant client money accepted | Available | Leverage caps and negative balance protection; strict promotion rules |
| CySEC (Cyprus) | Broad within EEA; MiFID II passport | Available | Cypriot bank onboarding 4–8 weeks; correspondent USD access is the constraint |
| ASIC (Australia) | Broad domestically | Available, narrower panel offshore | Product intervention order on retail CFDs |
| Other EEA (BaFin, CNMV, CONSOB) | Broad; same passport | Available | Local conduct rules layered on MiFID II |
| Offshore-only (SVG registration; Vanuatu, Comoros licences) | Restricted; tier-1 declines | Specialist processors only | Schemes move unlicensed forex toward the gambling category |
Reclassification changes the economics, not merely the paperwork. Forex and CFD activity is coded to MCC 6211, securities and financial trading. Where the activity is not licensed in the market it serves, the schemes treat it as speculative rather than investment activity and it moves toward the gambling category, with the pricing and registration profile that follows, and a narrower set of issuers willing to authorise it.[5] An operator that believes it has a banking problem often has a licensing problem expressed through a merchant category code.
Product rules also feed the dispute ratio directly. ESMA’s intervention measures, made permanent in national regimes across the EEA, cap retail leverage by asset class and require negative balance protection, alongside standardised risk warnings.[1] A broker operating inside those limits produces fewer catastrophic client outcomes, and fewer catastrophic outcomes is what an acquirer is buying.
Funding and Withdrawal Rails Decide Durability More Than the Institution
Deposit and withdrawal design does more to determine a broker’s banking durability than the choice of institution. The objective is to reduce the share of funding that carries a reversal right, without damaging conversion.
Card deposits convert best and cost most in risk terms, because the chargeback right travels with them for the full dispute window. Account-to-account payments under open banking settle without a chargeback right in most implementations and are well suited to a funded-account model where the client is already verified. Bank transfer suits larger initial deposits. Local methods dominate their home markets and frequently outperform cards outright.
On withdrawals, the operative rule is return to source. Sending funds back to the instrument they arrived on is both an anti-money-laundering control and the single most effective chargeback defence available, because it removes the client’s claim that the money was not returned. It also means the payout stack has to reach every rail the deposit stack accepts, which brokers commonly discover after building the deposit side alone.
Strong Customer Authentication under PSD2 shifts fraud liability to the issuer for authenticated transactions in the EEA and UK.[6] For brokers, over-applying exemptions to protect deposit conversion is a false economy: it moves liability back precisely on the transactions most likely to be disputed later.
What Broker Banking and Acquiring Costs
| Component | Licensed (FCA, CySEC, ASIC, EEA) | Offshore-only |
|---|---|---|
| Card discount rate | 4–8% | 8–12% |
| Rolling reserve | 5–10% held 180 days | 10–20% held 180 days or more |
| Client-money bank account | Available; 8–16 weeks onboarding | Rarely available at a credit institution |
| Operating EMI | €100–€500 monthly | €500–€1,000+ monthly |
| Chargeback fee | €25–€50 | €30–€50 |
Ranges are indicative across the partner network as of and move with processing history and client mix, and above all with the dispute ratio. As in gambling, the licensing delta dominates: the same broker under a recognised licence moves from the right-hand column to the left one, and the client-money account becomes available at all rather than merely cheaper.
Through the placement model the pricing on the broker’s agreements is the institutional rate. Jagelski & Partners is paid by the institution, not by the client, and does not mark up banking or acquiring pricing.
How Jagelski & Partners Helps
Broker placement is sequenced around the client-money account, because it is the slowest and most selective component and everything else can be arranged in parallel with it. The assessment establishes which credit institutions will accept the firm’s regulatory status and client-money structure, then builds the operating and treasury layers around that anchor, with acquiring arranged alongside.
It also covers the parts of the file acquirers actually price: merchant category code and whether it survives review, licensing sufficiency for every market served, deposit and withdrawal rail mix, return-to-source policy, and the dispute controls that keep the ratio clear of the 1.5% merchant Excessive threshold that Visa’s Acquirer Monitoring Programme applies from (2.2% in the CEMEA region).[7] Licensing pathways themselves are covered on the forex broker licensing page.
What we do not do. We do not place brokers into markets they are not licensed for, and we do not present trading activity under a merchant category code that misdescribes it. Both are terminable at scheme level.
Frequently Asked Questions
Because the risk to an acquirer is reversal, not solvency. Regulators require brokers to publish the share of retail accounts that lose money, and those disclosures run from roughly 68% to 89% across major regimes: ESMA found 74–89% of retail CFD accounts loss-making, the FCA cites approximately 80% over 2016 to 2022, and ASIC found 68% in FY2024.
Acquirers read those numbers as a forward estimate of dispute pressure. Card-funded deposits import the full chargeback right into a product where the client may later regret the outcome.
Generally no. An EMI safeguards funds rather than taking deposits, and most client-money regimes require the funds at a credit institution. The FCA’s client assets regime holds client money in trust in segregated accounts at approved institutions with daily reconciliation; CySEC applies equivalent MiFID II requirements.
The practical consequence is that a broker’s stack has an irreducible bank component. Operating accounts, payouts and treasury can run through EMIs; client money usually cannot.
The client-money bank account. It is the slowest component at 8 to 16 weeks and has the shortest list of willing counterparties, while operating accounts, treasury and acquiring can all be arranged in parallel around it.
Brokers who solve operating banking first and treat client money as an afterthought discover the constraint at the worst point in the launch schedule, because the regulator will not accept the structure without it.
Because the activity is not licensed in the market it serves. Forex and CFD activity codes to MCC 6211, securities and financial trading. Where it is unlicensed, the schemes treat it as speculative rather than investment activity and move it toward the gambling category, with the pricing, registration and issuer-authorisation profile that follows.
An operator that believes it has a banking problem frequently has a licensing problem expressed through a merchant category code.
FCA, CySEC, ASIC, and the EEA regimes all open broad bank, EMI, and acquiring markets, with CySEC and the EEA licences carrying the MiFID II passport. The differences between them are conduct rules and onboarding speed rather than banking appetite.
Offshore registrations in Saint Vincent (whose FSA does not license forex activity at all) and offshore-only licences from Vanuatu or Comoros are the sharp break: tier-1 institutions decline, acquiring runs through specialist processors, and a client-money account at a credit institution is rarely available at all.
Directly, through the dispute ratio. ESMA’s intervention measures, now permanent in national EEA regimes, cap retail leverage by asset class, require negative balance protection, and mandate standardised risk warnings.
A broker operating inside those limits produces fewer catastrophic client outcomes, and fewer catastrophic outcomes is what an acquirer is buying. Brokers offering uncapped leverage to retail clients in regulated markets present the opposite profile and are priced accordingly.
It means sending withdrawals back to the instrument the deposit arrived on. It is an anti-money-laundering control and simultaneously the most effective chargeback defence available, because it removes the client’s claim that funds were not returned.
The design consequence is that the payout stack has to reach every rail the deposit stack accepts, which brokers commonly discover after building the deposit side alone.
For a licensed broker, card rates run 4–8% with rolling reserves of 5–10% held 180 days, operating EMI maintenance of €100–€500 a month, and chargeback fees of €25–€50. The client-money bank account is available with 8 to 16 week onboarding.
For offshore-only licences, card rates run 8–12% with reserves of 10–20%, and a client-money account at a credit institution is rarely available. Ranges are indicative across the partner network as of June 2026.
Usually, and the first step is diagnosis rather than placement. A scheme-level exclusion cannot be documented around; an acquirer decline on dispute ratio is a controls and structure problem; a PSP decline often means only that its panel does not cover the vertical.
Terminated merchants can carry a MATCH listing for five years, which narrows the acquirer set sharply, so the assessment establishes which route is realistic before any new application is made.
No. Jagelski & Partners is paid by the institution that takes the business, through a referral or revenue-share arrangement, not by a fee billed to the client. The pricing on the broker’s agreements is the institutional rate, with no markup and no onboarding fee.
Ready to Place Client Money and Acquiring That Hold?
Book an assessment. We establish which credit institutions will accept the firm’s regulatory status and client-money structure, then place the operating and treasury layers around that anchor, with acquiring arranged alongside, pre-qualified before any formal application. No markup on institutional pricing. No onboarding fee.
References
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- European Securities and Markets Authority, Decision (EU) 2018/796 temporarily restricting contracts for differences for retail clients (2018, product intervention under Article 40 of Regulation (EU) No 600/2014), citing NCA analyses finding 74–89% of retail CFD accounts loss-making; leverage caps by asset class, negative balance protection, and standardised risk warnings, subsequently made permanent in national EEA regimes, esma.europa.eu, accessed .
- Financial Conduct Authority, Retail CFD loss statistics (approximately 80% of retail accounts loss-making, 2016–2022); Australian Securities and Investments Commission, Review of retail CFD trading outcomes, FY2024, finding 68% of retail investors lost money, fca.org.uk and asic.gov.au, accessed .
- Financial Conduct Authority, Client Assets Sourcebook (CASS), client money segregation, statutory trust, approved-institution requirements, and daily reconciliation, handbook.fca.org.uk CASS, accessed .
- European Union, Directive 2014/65/EU (MiFID II) and Commission Delegated Directive (EU) 2017/593, safeguarding of client financial instruments and funds, eur-lex.europa.eu, accessed .
- Visa Inc., Visa Merchant Data Standards Manual (integrity-risk MCC provisions) (April 2026 edition), treatment of MCC 6211 and reclassification of unlicensed speculative trading activity, corporate.visa.com, accessed .
- European Union, Commission Delegated Regulation (EU) 2018/389 (regulatory technical standards on strong customer authentication under PSD2), including the exemption regime (the authentication liability shift sits in PSD2 itself, Directive (EU) 2015/2366 Article 74(2)), eur-lex.europa.eu, accessed .
- Visa Inc., Visa Acquirer Monitoring Programme (VAMP) Fact Sheet (2025); merchant Excessive threshold 150 basis points from , corporate.visa.com, accessed .