In order to avoid such a disadvantage, we have to know who the broker's liquidity providers are and their shareholders. Regrettably, it is impossible.
Few regulators require brokers to declare their liquidity providers' information publicly, and even fewer brokers are open about their shareholding information.
FCA-licensed forex brokers are generally considered trustworthy, because:
The company has fulfilled FCA's minimum capital requirement. A dealer's license that allows the company to run a "market maker" business needs EUR730,000. An intermediary license where the company could facilitate STP execution needs EUR125,000. The cheapest is a restricted broker license in which the company cannot hold client funds, as it only needs EUR50,000.
FCA will monitor the company continuously to ensure the segregation of client funds, monthly report and audit, efficient management including AML and KYC procedures, and proper risk disclosure for clients.
FCA-licensed forex brokers are prohibited from manipulative trade practices, such as entering into positions against their clients. Brokers also should not make unrealistic promises or offering monetary benefits to encourage clients to take risky trading decisions.
FCA-licensed forex brokers should not offer extreme leverage. Since mid-2019, FCA requires brokers to limit leverage on CFD trading between 30:1 and 2:1.