Overall Rating: ★★★★☆ (4.2/5)

The Netherlands Authority for the Financial Markets (AFM) is the primary regulator overseeing financial services in the Netherlands, including forex and CFD brokers offering services to Dutch retail traders. The AFM enforces financial laws, supervises market conduct, and ensures brokers comply with European Union regulations under MiFID II and ESMA standards.

The AFM is known for its transparent, client-first regulatory culture, and its proactive approach to curbing high-risk trading practices. Although the AFM does not create standalone national rules for forex, it rigorously applies all EU-level protections and is particularly active in restricting irresponsible marketing and complex products.

Key Regulatory Measures Under AFM Supervision for Forex Traders

1. MiFID II and ESMA Compliance
   AFM-authorised brokers must adhere to all MiFID II provisions, including:

• Leverage limits (30:1 for major forex pairs)
• Negative balance protection
• Clear product classification and risk disclosures
• Ban on binary options and aggressive incentives

This places Dutch retail traders under a framework that protects against overexposure and poor risk management.

2. Prohibition on Bonuses and High-Risk Promotions
   The AFM enforces a ban on deposit bonuses and promotional incentives that could mislead or pressure inexperienced traders. Firms must present realistic expectations of performance and risk.
3. Client Fund Segregation and Capital Requirements
   Like other EU regulators, the AFM requires brokers to segregate client funds and meet capital adequacy standards to prevent insolvency-related losses. Brokers must also maintain accurate and auditable financial records.
4. Enhanced Suitability and Appropriateness Testing
   Before being allowed to trade CFDs or leveraged forex, retail traders must undergo a knowledge and experience assessment. The AFM places strong emphasis on ensuring brokers do not allow unsuitable access to high-risk products.
5. Investor Compensation Scheme (ICS)
   The Netherlands participates in the Dutch Investor Compensation Scheme, which offers coverage of up to €20,000 per client in the event of broker default.
6. Active Warnings and Enforcement
   The AFM maintains an active blacklist of unauthorised brokers, issues consumer warnings, and collaborates with ISPs to block access to offshore or fraudulent platforms targeting Dutch clients.
7. Strict Disclosure of Fees and Costs
   AFM-regulated brokers must clearly state their spreads, commissions, swap rates, and other charges. The total cost of trading must be transparent before account opening.

Why Retail Traders Rely on AFM Oversight

The AFM’s reputation for honest, transparent, and client-focused regulation makes it a dependable choice for retail traders seeking a secure environment. Although fewer international brokers operate under AFM due to its strict marketing rules, those that do are held to high standards, and Dutch clients benefit from exceptional regulatory clarity and investor safeguards.

Final Verdict

The AFM is a Tier-2 EU regulator with strong oversight, effective enforcement, and a conservative stance on leveraged trading and marketing conduct. For traders in the Netherlands, it ensures brokers provide fair access, clear communication, and robust protection in the forex market.