Compare UK Brokers to Trade FTSE 100 (UK100) 2023

Disclaimer:

Broker Comparison Ltd does not provide investment advice. The information provided is of a general nature and does not address the circumstances of any particular individual or entity. You should always check up-to-date fee and charges information with any broker prior to making any trade. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information that has been provided. If you are unsure of anything, you should seek financial advice from an authorized advisor.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. Losses may exceed the value of your position. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money. Capital at risk.

Please check the fee structure on your broker’s website before taking any investment decision.

Are you struggling to find your broker to trade FTSE 100 in the UK? No worries, you have come to the right place. This article will explain what to look for when finding FTSE 100 brokers in 2023. We’ll also list and review some of the popular CFD brokers in the market to trade & invest in the FTSE 100 Index.

What is the FTSE 100 Index?

FTSE 100 is an index comprising the shares of the largest companies listed on the London Stock Exchange. While FTSE is the abbreviation used for Financial Times Stock Exchange, the value that appears after FTSE (i-e, FTSE 100) represents the number of companies forming the index. The change in the prices of the constituent stocks determines the index value. Not to mention, the UK100 index is one of the crucial indicators of the UK economy.

Which Companies are Listed on the FTSE 100 Index?

Companies should have pounds denomination, listed on the London Stock Exchange (LSE), and satisfy minimum stock and float liquidity prerequisites to be eligible for inclusion on the FTSE 100 index.

The FTSE 100 is an index that tracks companies across all stock market areas. In particular, it highlights leading corporations in retail, consumer goods, healthcare, technology and energy. Raw material suppliers’ equities, including those in the mining, oil and gas industries, and pharmaceutical companies, are examples of critical contributors to the FTSE 100. The following table provides some examples of some of the largest FTSE 100 firms in the UK based on market capitalization, organised according to the industry in which they operate.

What Affects the Price of FTSE 100?

The FTSE 100 calculation involves a weighted average market capitalization of all the London Stock Exchange stocks. Stocks with larger market caps have a more significant weightage in the FTSE 100, and their performance greatly impacts the price fluctuations of the index. Each company’s market capitalization is analysed once every three months, and necessary adjustments to the index are made accordingly. For instance, If one company’s market capitalization surpasses the other, the index composition resets.

It’s critical to grasp what drives the FTSE 100’s price, not just when to buy but also when to sell. The price of the index is affected by various factors, including

Economic events

The FTSE 100 index price can have severe implications caused by economic events. For instance, the financial ramifications of the Covid-19 outbreak triggered intense volatility in the index leading it to drop from 7600 to less than 4900 in just a couple of months. The FTSE 100 index value is also affected by news releases, such as decisions about interest rates, reports on the GDP of the UK, and data on manufacturing, housing, employment, and inflation.

Exchange rate

As the FTSE 100’s components generate a large portion of their revenue outside the United Kingdom, currency rates can also impact the index’s price. For example, every $1,000 in revenue would be worth £500, provided the exchange rate is $2 per pound. If sterling weakens to $1.5 per pound, every $1000 in revenue is worth £667. The decline in sterling boosted sales by 33%.

News releases

Volatility in the stock market often follows a particular news release. The FTSE 100’s price may be changed by news about any of its industry or components. Positive news instigates traders to buy more stock. On the other hand, negative news increases selling pressure. For instance, a disappointing earnings report, socio-economic instability, a governance lapse, or an unfortunate event can create panic amongst investors pushing them to sell off their FTSE positions.

Commodity prices

The FTSE 100’s price can be affected quite a little by changes in commodity prices, as about 15% of the businesses on the index are commodity equities. For example, consumers tend to cut back on their investment in FTSE stock amid a surge in commodity prices as the living costs strike and real income declines.

Reports on earnings

Index price can be significantly affected by changes to the valuation of FTSE components, depending on the weight of the stock.

How to Buy, Trade & Invest in the FTSE 100 Index?

Being the widely used index in the UK, FTSE 100 provides traders and investors with a wide variety of trading opportunities. In this section, we explain how to gain exposure to the price swings of the FTSE 100 via CFD trading, spread betting and exchange-traded funds (ETFs).

Since the FTSE 100 is a stock index, you can’t invest in it directly. Instead, traders can use derivatives like CFDs and spread bets to speculate on securities based on FTSE 100 member companies. But CFD trading is quite risky. So you need to have a better understanding of the risk involved before you start trading FTSE 100 via CFD trading or spread betting.

On the other hand, Clients can buy ETFs directly in addition to trading them. There is no minimum investment required for purchasing ETF shares, at least not in the same sense as purchasing shares of a mutual fund. However, as ETFs are traded on a per-share basis, in order to get started, you will need to have at least the value of one share at the current price, unless your broker gives the possibility to acquire fractional shares of stock.

CFD trading

CFDs refer to derivative trading without putting the total value of an underlying asset. For instance, clients only need a fractional amount to open a CFD contract and start speculating over its prices. A contract for difference (CFD) is an agreement to trade the difference between an asset’s opening and closing prices. Albeit, CFD trading comes with some risk and it is important you know the risk involved before starting your trading journey.

Spread betting

Spread betting involves betting on the price movement of an underlying asset. In spread betting, you don’t have to own any derivative instruments linked to the FTSE 100 index. That means you have the flexibility to go long or short on the position as needed.

Although spread betting and CFD trading look similar, they have some technical differences.

Taxation is the primary distinction between the two. Spread bets are free from the capital gains tax, while profits from CFDs are taxed as capital income. Because trading does not result in acquiring legal title to the underlying assets, you are exempt from paying stamp duty for either product in the United Kingdom. However, this usually depends on personal circumstances, please ask your accountant before you open an account and  start trading.

Furthermore, spread betting entails placing a bet on whether prices will go up or down; it cannot provide institutional-grade spreads when trading with banks or hedge funds. On the other hand, CFDs can be traded directly with hedge funds and banks, allowing traders to benefit from smaller spreads and lightning-fast execution.

While brokers charge varying spreads on trading FTSE 100, let us mention a few. The spread on UK100 at eToro is from 1.5 pips; clients need to pay a spread from 0.9 pips for trading FTSE 100 on Capital.com.

FTSE 100 ETFs

FTSE ETFs track the performance of the FTSE 100 index by investing in the same 100 companies that make up the index. It is possible to buy and sell exchange-traded funds, much like shares on a stock exchange. Investors can gain exposure to the underlying tradable asset by closely following the index’s price movements. The following are some of the most popular FTSE ETFs:

• Vanguard FTSE 100
• iSharesCore FTSE 100
• HSBC FTSE 100

Notably, ETFs might be cost-effective if you want exposure to many components while keeping your risk profile low. Before taking any positions in the FTSE, investors and traders should review their risk management approach, irrespective of their selected product.

Fees to Consider when Investing in FTSE 100

Essentially, trading FTSE 100 will also have some associated costs. Brokers allowing you to trade FTSE 100 are likely to have different pricing structures.

Trading fees

As a fee for the deal, your broker might charge a spread and a commission depending upon your selected tradable instrument type and duration. Some brokers often add their additional charge to market spreads, typically known as commission. Moreover, keeping your positions open past 10 p.m. UK time also incurs a swap fee. Therefore, you should carefully go through the costing structure of your prospective broker before signing up with it.

Non-Trading Fees

You might also want to check the non-trading fees, such as deposit or withdrawal fee, administration or account activity fee, etc. It should also be in line with average industry standards.

How to Get Started with an FTSE 100 Broker

Getting started with an FTSE 100 broker involves three simple steps listed below;

Step 1: Choose a broker and provide proof of identity

First, you must filter out a UK FTSE broker that matches what you are looking for. You can choose from the brokers listed in this article. After you have selected the broker, access its registration page and provide the required details. Almost all UK FTSE brokers need their clients to complete the KYC process. Therefore, use a copy of your national ID card, driving licence, or passport to prove your identity. You may also need to submit a copy of your bank statement or utility bill to verify your address.

Step 2: Deposit funds

Once you have registered successfully, it’s time to add funds to your account. FTSE brokers typically offer multiple payment options, including Debit cards, Credit Cards, bank transfers, wire transfers, e-Wallets (Skrill, Neteller, PayPal), etc. Each payment method can have a different associated cost. Select your preferred payment method and deposit what you budget for FTSE trading.

Step 3: Start trading

Having your account funded makes you all set to start placing your trades. Investors can go for short-term or long-term trades depending on their trading preferences.

How to Choose Your FTSE 100 Broker in the UK

Regulation

Broker regulation is a critical factor you shouldn’t overlook when selecting your FTSE brokers in the UK. Regulated brokers tend to remain transparent compared to the non-regulated ones. Furthermore, regulated brokers work with large banks and financial institutions to ensure their capital and liquidity requirements. The Financial Conduct Authority (FCA) oversees brokers in the United Kingdom. Therefore, you might want to select a broker with FCA regulations.

Reputation

Reputation is another crucial element that needs your attention. Well-reputed brokers tend to remain transparent and maintain the best ethical practices when compared to an unrecognised broker.

Spreads & Commissions

You don’t wish to sign-up with an expensive broker, would you? Well, always check the pricing structure of your prospective broker and ask it to confirm if there is any hidden cost. Your broker should have a competitive pricing structure. The best method is to compare its prices with competitors to ascertain if the broker employs reasonable spread and commissions. As per our recent research in the UK market, spread on FTSE 100 starts from 2.0 pips. However, you should always consult your broker to know the exact rates.

Customer support

Customer service is a good measure of broker skill and professionalism. A broker without real-time customer service may also have delayed signups, followed by prolonged deposit and withdrawal processing time. You should also check if you can communicate with the broker in your language. A good CFD broker must offer multilingual customer support.

Payment methods

Choosing a broker also involves vetting deposit and withdrawal processing time and checking available payment options. Check if your broker has a quick process for deposits and whether it releases payments on time. For example, you can ask your broker to confirm how long it would take to process deposits via credit card, debit card, and bank wire? Ideally, payments through credit card and debit card are instantaneous, while bank transfers take five to seven business/working days. Since some brokers may levy hefty deposit and withdrawal fees, don’t forget to compare the prices of each payment method before making a final move.

Now that you understand what the FTSE index is, how to trade it, and what to look for when choosing a FTSE broker, let’s look & compare some of the popular brokers you to trade FTSE in the UK.

Disclaimer: Broker Comparison Ltd does not provide investment advice. The information provided is of a general nature and does not address the circumstances of any particular individual or entity. You should always check up-to-date fee and charges information with any broker prior to making any trade. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information that has been provided. If you are unsure of anything, you should seek financial advice from an authorised advisor.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. Losses may exceed the value of your position. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money.

1. eToro

eToro is the leading social trading platform that caters to the trading needs of both retail and professional traders. The broker is based in Israel and has several regional offices in various parts of the world, including the U.K. The globally regulated company operates under the FCA regulation in the U.K.

Signing up with eToro is relatively quick, but the company needs to verify your account, which may take up to a couple of days. Supported options for deposits and withdrawals include, but are not limited to, Debit cards, Credit cards, e-wallets (Skrill, Paypal, Neteller), Bank transfers, Web money, etc. U.K clients only need a deposit of $10 to get started with the broker.

Besides user-friendly trading platforms and flexible account types, eToro offers a wide range of financial instruments, including forex, stocks, commodities, indices and ETFs. While the company is famous for its exceptional copy trading services, exploring options for FTSE 100 on eToro is worthwhile. The company allows clients to speculate over FTSE 100 index prices using a leverage of up to 1:20.

eToro employs a spread starting from 1.5 pips for trading the FTSE index. Clients also need to pay swap fees on overnight positions. Since eToro doesn’t offer spread betting, you can trade the UK100 index only as CFDs. Please study the table below to know the spreads’ starting range and commission charges for different FTSE 100 stocks. You can also read eToro’s full review on our website.

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2. XTB

XTB is one of the pioneers of forex and CFD brokers, headquartered in Poland. The company has been serving the retail trading industry for the last two decades. Besides holding regulations from ASIC and CySEC, the company is licensed by the FCA to operate in the United Kingdom. The broker offers a wide range of tradable assets across multiple financial markets, such as forex, commodities, stocks, and indices.

While the company takes pride in offering user-friendly trading platforms like xStation5, seamless trading conditions with a wide range of payment options make it a preferred choice for both newbies and veterans. Clients can sign up with the broker for any deposit since the company doesn’t specify a minimum deposit threshold.

In addition to offering the lowest spreads for trading FTSE 100 indices, with a spread from 1.4 pips on UK100, the company offers FTSE 100 leverage of up to 1:20. The broker also takes pride in providing deep liquidity and instant trade execution, ensuring minimum slippage. Moreover, the company claims that clients trading FTSE 100 can be rest assured of a competitive pricing structure at XTB.

The company might charge a commission of 0.08% per lot if you wish to trade FTSE ETFs. XTB’s spread on the FTSE 100 index starts from 1.7 pips, while it hovers from 0.8 to 0.9 pips on major FX pairs, such as EURUSD. Other commendable features of the broker include a cash rebate program for high volume traders and demo accounts for both newbies and seasonal investors. We also have XTB’s full review on our website.

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3. Pepperstone

Founded in 2010, Pepperstone is an online forex and CFD broker best known for its instant trade execution model. The straight-through processing broker passes clients’ orders directly to liquidity providers without having them interpreted to ensure transparency. In addition to holding regulations from top-tier regulators worldwide, the company operates under the FCA supervision in the United Kingdom.

Whether you wish to spread bet or open a CFD contract, Pepperstone facilitates you in either case. Clients can trade multiple financial instruments, including the FTSE 100 index. The company offers leverage up to: 1:30 for major currency pairs, 1:20 for non-major currency pairs, gold, and major indices, 1:10 for commodities other than gold and non-major equity indices, and 1:5 for individual equities.

Pepperstone employs a competitive pricing structure. While the spread on major currency pairs like EURUSD and GBPUSD is from 0.69 pips and from 0.88 pips respectively, clients can trade the UK100 index with spread from 1.0 pip. Clients must also pay 2.5% swap charges on FTSE 100 positions held overnights.

Considering the trading needs of both newbies and skilled traders, the company offers user-friendly interfaces with all the basic and advanced tools necessary for meaningful trading. Signing up for an account with Pepperstone doesn’t take more than a couple of minutes. Multiple funding methods, like debit cards, credit cards, wire transfers, POLi, e-wallets, and BPay, make it even more convenient for clients to get started. The minimum deposit to trade on a standard account with the company is £200 or equivalent.

Easy-to-use trading platforms, multiple account types, copy trading services, and inexpensive fee structure for trading FTSE 100 and other indices are the key features why investors prefer signing up with Pepperstone. Please read Pepperstone’s full review on our website to find more details about the broker.

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4. Plus500

Plus500 is a multi-regulated brokerage firm best known for its premium quality trading platforms. The company has been serving the retail CFD industry for over a decade. In the United Kingdom, Plus500 operates under the approval of the Financial Conduct Authority (FCA).

Plus500 offers a wide selection of tradable assets across various asset classes, including forex, shares, options, commodities, indices, and ETFs. Moreover, the company allows clients to trade country-specific indices at the best pricing. For instance, clients looking to trade the FTSE 100 index can open their position using leverage up to 1:20 with a spread from 0.03%. The company doesn’t employ commissions on trading indices. While clients can access advanced trading features like dynamic charts and real-time price quotations for free, swap charges applied to overnight positions when trading the UK100 index are payable.

Signing up with the company involves filling up the registration form and completing the KYC process. The broker accepts a minimum deposit of 100 GBP. Clients can use multiple payment methods to fund their accounts, including but not limited to Debit cards, Credit cards, wire transfers and e-wallets (Skrill, Paypal, Neteller), etc. Should you wish to know more about Plus500, please read the full review on our website.

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Bottom Line

All the information you need to compare some of UK’s CFD Brokers offerring FTSE 100 index is here. As a rule of thumb, before choosing any platform, you are suggested to investigate the platform’s regulatory status and reputation.