FCA closes 24 CFD firms that sold UK authorisation as a halo

The Financial Conduct Authority (FCA) says 24 contracts for difference (CFD) firms are closing or have closed after it challenged UK entities that did little UK business but lent their authorisation to offshore affiliates. The count is an interim figure from a two-year supervisory cycle that opened in December 2024, not a final tally, so more cancellations should be expected before that cycle ends.

On September 25, 2026 the FCA said that "Twenty-one Contracts for Differences (CFD) firms have closed since 2025" and that "Three other firms are currently cancelling their permissions" (FCA press release, September 25, 2026). Its target is firms that "carry out little UK business but use their authorisation as a badge to make linked overseas companies look more trustworthy than they really are." It names no firms and gives no portfolio total. Read with the December 13, 2024 portfolio letter and the October 30, 2025 investor warning, it is a progress report on a stated objective, and this analysis sets out what it means for groups that keep a UK entity mainly for marketing value.

Key facts

• 21 CFD firms closed since 2025 and three more are cancelling their permissions, for a total of 24 (FCA, September 25, 2026).
• Actions taken included trading restrictions, required independent reviews and enforcement investigations in the two most serious cases (same source).
• Around 20% of firms in the CFD portfolio appeared to be conducting little or no activity, and some appeared "to exist purely to provide an FCA 'halo'" to wider groups (FCA CFD portfolio letter, December 13, 2024).
• Around 40% of portfolio firms held professional client money under Title Transfer Collateral Arrangements (TTCA), according to the same letter.
• UK retail CFD protections were estimated in 2019 to save retail consumers between £267m and £451m per year (FCA PS19/18), a figure the FCA re-cited on October 30, 2025.

Methodology and the three documents behind the count

This piece rests on three FCA primary documents, read in full and quoted from the original text, plus the 2019 policy statement the FCA cites for its protection estimate. The window runs from December 13, 2024 to September 25, 2026. For comparison it uses European Securities and Markets Authority (ESMA) and Australian Securities and Investments Commission (ASIC) publications. The FCA did not name any of the 24 firms, state the portfolio's size, or identify the two firms under investigation, and none of those facts is inferred below. Where arithmetic is used, it is labelled as such. For context, see our analysis of offshore FX licensing and the split between real regimes and paper ones.

Sources: FCA portfolio letter (PDF), FCA, October 30, 2025, FCA, September 25, 2026.

Related:SEC release 34-106458 fines OTC Link $575,000 over Reg SCI gaps

What the 2024 letter actually said about halo firms

The December 2024 letter, signed by Mark Francis as Interim Director, Wholesale Sell-Side, set out seven areas of focus for "the next two-year cycle". The fourth was headed "'Halo' firms". The key passage reads: "Around 20% of firms in the portfolio appear to be conducting little or no activity, and thus not using their permissions enough to justify continued authorisation. Some of these firms appear to exist purely to provide an FCA 'halo' to wider 'groups'." The harm: the arrangement "gives false comfort to global retail clients who see the FCA association but contract with an offshore 'group' entity rather than the UK authorised firm, without UK regulatory protection."

Two definitions matter. "Group" covers "not only formal/legal groups but looser and less formal groups, e.g. where firms are connected through the same Ultimate Beneficial Owner." And "CFDs" was used generically to include spread bets and rolling spot forex.

On tools, the FCA said it would "continue to invite them to cancel their permissions and robustly challenge them on their future plans where they do not accept this invitation", and would examine whether "'last minute' injections of funds from controllers" amount to "renting an FCA 'halo'."

An FCA halo firm, in the regulator's own usage, is a UK-authorised CFD entity that carries on little or no regulated activity in its own right and whose main function is to lend credibility to overseas companies in the same group. The December 13, 2024 portfolio letter put the share of largely inactive firms at around 20% of the CFD portfolio and said some existed "purely" for that purpose. The harm the FCA identifies is a mismatch between what the client sees and who the client contracts with: a retail trader sees the FCA name, but the account sits with an offshore entity outside UK client money rules, leverage limits and complaint routes. Firms were offered two routes: cancel, or prove with realistic revenue projections that meaningful UK business is coming. By September 25, 2026, 24 firms had closed or were cancelling.

The change-in-control door is now effectively shut

The less-noticed half of the halo section concerns acquisitions. The letter said the FCA would keep "a strong gateway to all entry routes into the CFD portfolio, including changes-in-control ('CiC')", and that this had "resulted in multiple withdrawals of CiC applications on largely inactive 'halo' firms, where we are concerned that potentially unscrupulous actors may be seeking to acquire a UK firm to give customers of overseas 'groups' false comfort".

The operative sentence is this one: "We regard a CiC on a regulated firm which is making little or no use of its permissions to be little different to a new authorisation application and will closely scrutinise CiC notifications bearing these characteristics." A buyer now pays for a shell and still faces an authorisation-grade review, so the shortcut is gone. Compare how acting as principal is becoming an FCA permission rather than an entitlement.

How the 2025 warning connected halo firms to client protection

The October 30, 2025 release said the FCA "is concerned that firms are using high-pressure techniques to encourage investors to claim they are professional clients", and its notes to editors described the second route out of UK protection: "Others are redirecting retail clients to associated CFD providers in third country jurisdictions without equivalent consumer protections." The release stated that "Firms must not push elective professional or redirection promotions onto their retail clients."

The £267m to £451m figure the FCA cited on October 30, 2025 is a 2019 estimate of how much UK retail consumers save each year because of the CFD restrictions, not a measured loss. The release said retail client protections "prevent nearly 400,000 people a year from risking more than their original stake in CFDs and provide between £267m and £451m worth of protection", and its notes say the figures "are taken from the FCA's PS19/18". That policy statement made the CFD restrictions permanent from August 1, 2019. In PS19/18 the sentence is forward-looking: "Retail consumers are expected to save between £267m and £451m per year from our measures." The range values the leverage limits of 30:1 to 2:1, the 50% margin close-out, negative balance protection and the incentive ban together. It is not an amount lost through redirection.

PS19/18 had already flagged the risk. Its supervisory focus areas included "attempts to avoid the effect of our new Handbook rules by" both "inappropriately opting up clients to become elective professional clients" and "moving clients to associated non-UK entities". The leverage side of that story is covered in our analysis of how retail FX leverage caps hold at 30:1 as enforcement moves offshore.

"Consumers need to know exactly who they're dealing with and what protections they have. When firms blur the lines between their UK-regulated activities and overseas businesses, we will step in. These closures show we're prepared to take action to protect consumers."

— Dominic Holland, director of sell-side supervision, Financial Conduct Authority (FCA press release)

How the UK, EU and Australia handle the onshore-offshore gap

Sources: FCA PS19/18; ESMA product intervention measures; ESMA reverse solicitation statement; ASIC 22-082MR; ASIC 23-298MR. Last updated: September 29, 2026.

The three regimes share near-identical product rules and the same gap: those rules bind only the local entity and only for retail clients. The routes around them are the same everywhere, reclassifying the client or moving them to an unsupervised affiliate. ESMA pressed on solicitation, stating in January 2021 that a third-country firm promoting its services in the Union cannot rely on reverse solicitation whatever its terms say. ASIC has pressed on classification. The FCA goes after the licence itself.

Cancelling a barely used permission needs no finding of misconduct. The arbitrage risk shifts rather than disappears: a group that loses its UK halo may seek another onshore licence for the same role. Compare our coverage of offshore FX licensing.

Enforcement context: what the record shows and what it does not

The FCA's release confirms "enforcement investigations in the 2 most serious cases" but gives no names, case references or penalties. FCA investigations are usually not made public until a Warning Notice statement or Final Notice, so the silence says nothing about how the cases will end, and this piece does not guess which firms are involved.

The 2024 letter also treats offshore links as a prudential issue. It said the FCA had "seen two recent firm failures that led to shortfalls in TTCA funds held, and one of these had all funds placed with an offshore counterparty." The concern "is exacerbated when Retail clients are opted-up to Professional client status inappropriately, signed up simultaneously for TTCA, and/or high percentages of their funds are placed with offshore counterparties which may be connected 'group' entities." Once a client is professional and under a TTCA, their money is no longer segregated and can travel to a group affiliate.

The closest named precedent on misclassification is Australian. In release 23-298MR, ASIC said it had overseen more than A$17.4 million in compensation from eight OTC derivative issuers, including about A$13.1 million paid to 435 derivatives clients of Oztures Trading Pty Ltd, which the issuer reported were "retail clients incorrectly classified as wholesale clients". The firm's Australian financial services licence was cancelled on April 6, 2023 at its own request. Earlier UK action against offshore-linked CFD distribution is covered in our report on how EverFX was ordered by the FCA to stop offering CFDs to UK customers.

What this means for groups with a UK CFD entity

The practical question for a multi-entity group is whether the UK firm has a commercial reason to exist that does not depend on the offshore brand. The 2024 letter lists what the FCA will look at: regulated activity, a "credible business plan containing realistic revenue projections", and "last minute" capital injections from controllers.

• Brokers and CFD providers: showing the FCA reference number next to an offshore account-opening flow is the core pattern described. The September 2026 release warns consumers about "an overseas firm with a very similar name to a UK firm", so shared brand names are an obvious review point.
• Buyers: a dormant UK CFD firm is no longer a licence shortcut; expect change-in-control review at the depth of a new application.
• Treasury: TTCA money sent to a connected offshore counterparty sits inside the same review.
• Compliance and legal teams: elective-professional opt-ups and any flow that moves a UK retail client to an affiliate need a record showing the client asked for it and understood the protections lost.
• Distributors and introducers: the 2024 letter promised "deep-dive business model analysis on all remaining Distributors".

The strongest industry counter-argument is that a UK entity with little retail business can be legitimate: it may serve institutional clients, act as a hedging hub, or be preparing for growth. The business-plan route allows for that. The test is not size but whether the permission is used for UK regulated activity or only shown to clients elsewhere.

"CFDs are complex, high-risk products. The protections given to retail investors under our rules save UK consumers millions each year. We are concerned that some firms are trying to get people to invest more than they can afford to lose. Investors should be very wary of CFD firms attempting to bypass our rules in this way and of those on social media touting investments which look too good to be true."

— Mark Francis, director of sell-side markets, Financial Conduct Authority (FCA press release, October 30, 2025)

What's next: why 24 is an interim number

The 2024 letter framed the halo work as part of "the next two-year cycle", starting December 13, 2024, so the cycle runs to around December 2026. The September 25, 2026 release is a mid-course report, with three of the 24 cancellations still in progress.

Some arithmetic shows why the number is unlikely to be final. The FCA has not published the portfolio's size, so the 20% share cannot be turned into a firm count. If the 24 made up the whole 20% cohort, the portfolio would hold about 120 firms. That is a calculation, not an FCA figure, and not every one of the 24 need have been a halo firm.

Three predictions follow and can be checked. First, more cancellations of UK CFD permissions are likely before the cycle closes around December 2026. Second, the two enforcement investigations are the most likely source of any future Final Notices on halo arrangements; if either reaches that stage, it would be the first public case record of the programme. Third, the October 2025 release said the FCA would "launch a consultation around client categorisation" in the coming months. That work will decide how hard it is to move clients out of retail protection. More on the Regulation desk.

TL;DR

The FCA said on September 25, 2026 that 21 CFD firms have closed since 2025 and three more are cancelling their permissions, a total of 24, after it challenged UK entities that did little UK business but lent their authorisation to offshore affiliates. The programme comes from a December 13, 2024 portfolio letter that found around 20% of portfolio firms largely inactive and set a two-year supervisory cycle, so 24 is an interim count. The FCA named no firms and opened enforcement investigations in two cases. A change in control of a dormant firm is now treated much like a new authorisation, closing the licence-shortcut route. The protections at stake were valued in PS19/18 at £267m to £451m a year in retail consumer savings.

FAQ

Which CFD firms did the FCA close?

The FCA did not name any of them. Its September 25, 2026 release says 21 CFD firms have closed since 2025 and three others are cancelling their permissions, and that enforcement investigations were opened in the two most serious cases. The release gives no firm names, no register references and no portfolio total. Any list claiming to identify the 24 is not drawn from the FCA's announcement.

Can a group still buy a dormant UK CFD firm to get a licence?

In practice the route is largely closed. The 2024 letter says the FCA regards a change in control of a firm making little or no use of its permissions as "little different to a new authorisation application" and will closely scrutinise such notifications. It also records multiple withdrawn change-in-control applications on inactive halo firms. A buyer should expect a review as demanding as a fresh application, including a credible business plan.

What does the £267m to £451m figure measure?

It comes from the FCA's 2019 policy statement PS19/18, which estimated that retail consumers would save between £267m and £451m per year from the permanent CFD restrictions. The October 30, 2025 release restated it as the value of retail protections. It is a forward-looking estimate, not a record of actual losses.

Does this apply to FX brokers or only CFD firms?

The 2024 letter used "CFDs" as a generic term covering contracts for difference, spread bets and rolling spot forex. A UK firm offering leveraged FX to retail clients as principal therefore sits in the same portfolio. A "group" includes firms connected only through a common ultimate beneficial owner.

Are more closures likely?

Probably. The halo work is one objective in a two-year supervisory cycle that began with the December 13, 2024 letter, which puts its end around December 2026. The September 2026 figure of 24 includes three cancellations still in progress, and the FCA has not said the work is finished.

This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.