What "offshore" and "onshore" mean
An onshore broker is licensed and supervised in the country where its clients live, under that country's rules. An offshore broker is licensed in a different jurisdiction, often a small financial centre such as Seychelles, Mauritius or the British Virgin Islands (BVI), and serves clients in other countries from there.
The difference is not only the address. The licence decides which rules the firm follows, who supervises it, how client money must be held and where you can complain if something goes wrong. For background, see What Regulation Protects.
Tiers of regulators
Traders often group regulators into tiers by how strict they are. This is an informal grouping, not an official ranking.
| Tier | Examples | Typical features |
|---|---|---|
| Top tier | FCA (UK) | High capital requirements, strict conduct rules, leverage limits for retail clients, regular reporting, an independent complaints route and often a compensation scheme |
| Middle tier | CySEC (Cyprus), FSCA (South Africa), CMA (Kenya) | Real supervision and licensing conditions; protections vary by country |
| Offshore tier | FSA Seychelles, FSC Mauritius, BVI regulator (see Other Regulator Registers) | Lighter capital and reporting rules, fewer limits on leverage and products, limited or no compensation scheme |
An offshore licence is still a licence. It does not mean the firm is a fraud. It means the rules protecting you are usually lighter than those of a top-tier regulator. A firm with no licence anywhere is a different and much worse case.
Why brokers set up entities in Seychelles, Mauritius or the BVI
Many international broker groups hold several licences, one per entity. Common reasons for adding an offshore entity:
- Leverage and product rules. Top-tier regulators cap leverage for retail clients and restrict some products. An offshore entity can offer higher leverage to clients outside those jurisdictions. See Leverage Limits.
- Cost and speed. Capital requirements, licence fees and reporting duties are usually lower.
- Global reach. A top-tier licence normally covers clients in that region only. An offshore entity is used to serve clients elsewhere.
- Tax and corporate structure. These centres are often used for holding and operating companies.
When you open an account, check which entity you are actually contracting with. The group may advertise a top-tier licence while your account sits with the offshore entity, under offshore rules. The Broker Checklist and Verify a Broker pages show how to check this.
Cross-border service rules
A licence works mainly inside the regulator's own jurisdiction. When a broker serves clients in another country, that country's law also applies:
- Many countries require a local licence to offer investment services to their residents, wherever the firm is based.
- Some allow foreign firms to serve residents only if the client approached the firm on their own initiative, without marketing. This is often called reverse solicitation, and its scope differs by country.
- A foreign regulator generally protects clients only as far as its own rules reach. It cannot override the law of your country.
In short, a licence in Seychelles or Mauritius tells you the firm is supervised there. It does not tell you the firm is allowed to serve you where you live.
Local law comes first: the position in Pakistan
For Pakistani residents, Pakistani law applies before any foreign licence. The official positions are:
- The supervisor is the Securities and Exchange Commission of Pakistan (SECP), with trading in listed securities and commodities only via SECP-licensed securities and futures brokers.
- On licensing, under the Futures Market Act 2016, s.47(1), no one may carry on a regulated activity (futures broker, adviser, representative) without an SECP licence.
- On penalties, under the Futures Market Act 2016, s.104(3), operating without a licence carries, for an individual, a fine of up to PKR 250 million or up to 3 years' imprisonment, or both.
- On payments, per the SBP, remitting foreign exchange to overseas forex/margin/CFD platforms is not allowed through any payment channel (FERA s.5(1)).
- On residents themselves, per the SBP, the purchase of offshore forex/margin/CFD products by Pakistani residents violates section 4(1) of FERA 1947.
- On status, per the SECP, offshore forex/CFD platforms operate without regulatory approval in Pakistan.
- On protection, per the SECP, offshore platforms have no Pakistani licence or oversight and offer no legal protection or recourse.
This means a foreign licence, of any tier, does not give an offshore platform Pakistani approval. It also means a Pakistani resident has no local regulator to turn to in a dispute with such a platform. This page explains the official position and is not legal advice. For a specific situation, speak to a qualified lawyer. More on the local framework is in Law and regulators.
To find locally licensed firms: per the SECP, lists of licensed brokers are on the PSX and PMEX websites. For local markets, see PSX basics.
Is an offshore forex broker safe?
"Safe" has several parts, and offshore regulation is usually weaker on each:
- Client money. Rules on segregated funds may be lighter or less strictly audited.
- Compensation. If the firm fails, there may be no scheme to repay clients.
- Disputes. Complaints go to a foreign regulator or ombudsman, if one exists, under foreign law. See File a Broker Complaint.
- Leverage. Higher leverage magnifies both gains and losses. Leveraged forex and CFD trading can lose money fast, and losses can exceed what you planned to risk. Read Risk management.
There is also the separate risk of scams posing as brokers. SECP warnings by press release naming platforms (Quotex 09.04.2025; IBKR look-alikes, IGIL Securities, BMA Capital No.108 etc. 22.05.2025; Hillhouse Capital, S-169 Wharton 13.01.2026), none of which names Exness. Fake platforms often copy real brand names or claim licences they do not hold. See Scam Warning Signs and Clone Sites and Fake Apps. If you lose money to one, beware of recovery scams and use Report a Scam.
This guide is general and does not assess any single broker, including Exness, the broker this site partners with.
How to check a broker's licence
- Find the exact legal entity name and licence number in the broker's legal documents.
- Search that name on the regulator's own register, not on a link the broker sends you. Our register guides: FCA, CySEC, FSCA, FSA Seychelles, FSC Mauritius, CMA Kenya, others.
- Compare the website domain and contact details with those on the register.
- Check which entity your account would sit with, and which country's rules it follows.
- Check your own country's law and regulator warnings.
Frequent questions
What is an offshore broker?
A broker licensed in a jurisdiction other than where its clients live, often a small financial centre with lighter rules, such as Seychelles, Mauritius or the BVI.
Is offshore vs onshore regulation only about leverage?
No. It also covers capital requirements, client money rules, reporting, complaint handling and compensation. Leverage is only the most visible difference.
Does an offshore licence mean the broker is a scam?
No. A licensed offshore firm is supervised in its home jurisdiction. It does mean weaker protection than top-tier regulation, and it does not make the firm approved in Pakistan.
Can a Pakistani resident rely on a foreign regulator?
Only within that regulator's own rules. Per the SECP, offshore platforms offer no legal protection or recourse in Pakistan, and the SBP's position on residents and remittances is set out above.
Where can I find licensed brokers in Pakistan?
On finding licensed brokers, per the SECP, lists of licensed brokers are on the PSX and PMEX websites.
Where can I learn more about offshore forex regulation?
Start with Regulation and Safety, then What Regulation Protects and the Broker Checklist.