Compare FCA Regulated Forex Brokers in UK 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.

If you are looking for an FCA-regulated broker best suited to your trading needs, this article lists some of the popular FCA-regulated brokers in the United Kingdom to trade forex and CFDs. We’ve handpicked these brokers after considering various factors, including an active FCA license, the fee structure, and available payment methods.

What are FCA-regulated brokers, and what do they do?

Brokers authorized by the U.K.’s Financial Conduct Authority are known as FCA-regulated brokers. Being the U.K.’s primary financial regulator, FCA stipulates rules and regulations for licensed entities to act in the best interest of investors.

Brokers with FCA authorization need to keep clients’ investments in separate bank accounts, have a minimum of 1Million GBP in operational capital, and process withdrawal requests instantly. The Financial Conduct Authority (FCA) also protects traders from liquidation issues with brokers and offers a compensation plan under the IFSC scheme with a maximum payout of up to £85,000.

Why Trade with an FCA Regulated Forex Broker?

Internationally recognized as a powerful financial center, London is a good place to start when looking for a financial regulator with an excellent track record. Since the Financial Conduct Authority (FCA) monitors and enforces stringent regulatory frameworks on all financial services providers and individuals within the United Kingdom, trading with FCA-regulated brokers offers you a sense of increased security.

The FCA remains excessively active in ensuring brokers’ compliance with stipulated regulations amid tradeable products and consumer protection. Known for enforcing trader safety and punishing bad brokers for decades, FCA plays a broader role in providing a secure trading environment. Here are a few advantages of trading with an FCA-regulated broker below;

How to find an FCA regulated broker that is right for you, and what to look for when choosing one

Although signing up with any FCA-regulated broker is fine, however, finding the one that suits your trading needs is preferable. Below are some factors that may help you filter your choice comfortably.

Platform: Brokers provide different trading platforms to enable traders to connect to the market. While some offer custom-built proprietary trading platforms or cTrader, others rely on industry-standard platforms like MT4/MT5. Although MT4 is amongst investors’ top favorite trading platforms, it might not suit beginners due to having too many options to explore.

Fees: Whether you trade forex or the stock and commodities market, the fee element is unavoidable. All FCA-regulated brokers don’t necessarily have a cheap costing structure. So you must carefully consider the trading fees when signing up with a broker with FCA supervision. For instance, you can check if the available spreads, commissions and overnight swaps your prospective broker offers are competitive with the average industry standards. Also, do not forget to check the non-trading costs, such as transaction fees on available payment methods and inactivity charges on dormant accounts.

Broker Type: Depending on your trading preferences, the type of broker might also be your concern. Typically, two types of brokers dominate the market, including dealing desks and non-dealing desks. Dealing desks are also sometimes referred to as market makers. These brokers intervene in clients’ orders before passing them to the market. On the other hand, non-dealing or STP/ECN brokers process clients’ orders instantly without interfering with them. Not to mention, STP/ECN brokers are known to have low latency rates compared to dealing desks.

Trading Conditions: You might also wish to confirm the trading conditions before signing up with any broker. Intermediaries employ different trading conditions. For instance, some brokers don’t offer micro accounts, while others don’t allow scalping. Therefore, opening an account with a broker that suits your trading needs should be preferable.

Benefits of Using an FCA Regulated Broker

While there are numerous benefits of using an FCA-regulated broker, let us enlist a few below.

Minimal trading restrictions

Unlike other countries where investors can only explore limited options owing to the rigid regulatory framework, FCA-regulated brokers tend to have the least trading restrictions. For instance, brokers do not offer scalping or hedging techniques to investors in the U.S., followed by maximum leverage limits.  However, most FCA-regulated brokers do not restrict clients from hedging or scalping.

Variety of asset classes

In addition to allowing a wide range of trading tactics, FCA-regulated forex brokers encourage using cutting-edge financial instruments, including binary options trading and spread bettings.

Flexible trading

In most parts of the world, CFD trading might be considered too risky by regulators. However, U.K. brokers are allowed to offer derivative trading in line with FCA regulations, ensuring low risk besides being transparent. For instance, FCA-regulated brokers will have a low latency rate in addition to offering GSLs to avoid slippage issues. Still, it is worth mentioning that CFD trading carries increased risk exposure, and you should proceed with extreme caution while trading leveraged products.

Indemnity insurance

FCA-regulated brokers offer insurance of up to £85000 to U.K. clients under the IFSC scheme if the company faces liquidation.

How to check if a broker is regulated

Ponzi schemes and investment frauds are typical in the forex and stock market perpetrated by unlicensed brokerage firms. Therefore it is critical to confirm whether or not your prospective broker is regulated. No matter how much you like or trust the company or how well it is reputed, it would help if you always did your research beforehand. Let us enlist a few simple steps that you can follow to confirm the regulation status of your broker.

1) Get hold of the company’s registration number.

Typically, brokers list their registration or licensed number at the bottom of their homepage. However, if you don’t find it there, ask the company to provide you with it.

2) Track the company on the respective regulator’s licensing register.

Once you have the licence number, tracking the company on the concerned regulators’ websites becomes easy. For instance, you can visit www.fca.gov.uk to check the status of an FCA-regulated broker.

3) Understand the information.

Even if the company appears to be regulated, do not forget to check its validity. Sometimes, companies continue providing trading services with expired licenses. An expired permit shows that the company isn’t regulated anymore if it had been regulated previously.

Please note that the business name of your broker can differ from its trading name. Therefore, make sure to consult the broker’s website for complete information. Typically, brokerage firms mention their parent company at the bottom of their homepage.

How does the FCA supervise financial service firms in the U.K.?

The FCA regulatory supervision comprises three fundamental approaches: proactive, reactive, and sector scanning.

Proactive supervision

The proactive oversight of businesses is the primary focus of the regulatory authority. Using the information and on-site visits, the Financial Conduct Authority (FCA) exercises direct supervision over firms to identify and reduce the firms’ significant risk factors.

Reactive supervision

Following reactive supervision, the FCA takes prompt action in response to incidents that can potentially render negative results for consumers or such events imposing adverse outcome threats.

Sector scanning

The sector scanning approach is primarily concerned with looking into the future and involves conducting in-depth thematic analyses of products or issues in a market segment where consumers may have more significant hazards.

How Does the FCA Categorise the Firms it Regulates?

Previously, the FCA used to classify regulated businesses according to their performance in one of four categories, marked by the letters C1 through C4. However, the Financial Conduct Authority (FCA) has recently streamlined this method and now distinguishes between firms based on whether they have a “fixed portfolio” or a “flexible portfolio.” The FCA establishes the type of necessary supervision for these firms, depending upon their respective categories.

While the FCA regulates many firms in total, there is a relatively small population of firms known as fixed portfolio firms. The FCA believes that these firms require strict supervisory attention because of their size, market presence, and customer footprint. These businesses are assigned to an individual supervisor, and the FCA monitors their activities proactively.

On the other hand, companies with flexible portfolios are subject to reactive supervision, which means that the Financial Conduct Authority (FCA) only gets involved when it receives a report, has reservations concerning the relevant firm’s activity, or for some other reason.

The FCA’s Role In Trading

FCA-regulated brokers are subject to laws enforcing market discipline, adjusting provider behavior to protect customers from potential harm, and assisting if something goes wrong.

The Financial Conduct Authority’s (FCA) responsibility in the foreign exchange market is to monitor the actions of forex brokers and ensure that they comply with regulations aimed at safeguarding end-users and the economy as a whole.

An FCA-regulated broker is obligated to take into account the best interests of its clients and to treat them on a fair basis. In addition, the FCA mandates brokers to present information to clients transparently.

FCA’s Mission

The need for FSA replacement was strongly felt owing to the organization’s weaknesses, leading to lax oversight during the financial crisis. Therefore, the FCA started regulating the financial sector in the United Kingdom, replacing the Financial Services Authority (FSA) role in 2012. The Financial Conduct Authority (FCA) is more powerful than its predecessor, the Financial Services Authority (FSA), and it places a greater emphasis on the needs of consumers.

The Financial Conduct Authority’s (FCA) primary mission is to regulate the provision of financial services by establishing a set of directives and enforcement procedures. The Financial Conduct Authority’s board is accountable to the Financial Services Ombudsman, who can bring material to the notice of parliament and the industry via several publications.

Guidelines for FCA Regulated Brokers

The FCA aims to safeguard consumers by enforcing its rules and regulations. Those less knowledgeable about the financial markets can benefit from the framework’s protection against those having a better grasp of them. The regulatory body prescribes guidelines for brokers to handle customer complaints and put sincere efforts into resolving them.

• The FCA mandates brokers to serve customers fairly and make decisions that are in customers’ best interests even if there is no customer request.
• FCA guides CFD brokers to maintain discipline in internal processes that protect the organization’s and clients’ rights.
• FCA anticipated CFD brokers to expect the FCA’s guidance and assistance to be available in setting up internal procedures to safeguard and address potential problems.

How FCA Regulation protects you

FCA employs strict rules and regulations to ensure clients’ protection in various ways. To make things digestible, let us break down FCA’s course of action into three stages: pre, active and post-consumer.

Pre-consumer stage

FCA keeps educating consumers about some of the most prevalent dangers they may encounter when using financial services. It keeps generating alerts about the companies operating without FCA permission.

Those most vulnerable to financial and investment frauds are the focus of FCA’s ScamSmart program. If you’ve been promised unrealistic returns from an unknown investment firm, this tool provides the means for you to investigate it thoroughly. FCA’s InvestSmart campaign informs first-time investors about the dangers of investing online that they may not be aware of.

The regulatory authority promotes awareness campaigns and engages with a network of consumer organizations that help it shape its regulatory strategy.

Active consumers

Besides mandating brokers to treat clients fairly, the regulatory body requires brokers to deliver products and services that meet customers’ needs. It necessitates brokers to prioritise the safety of their customers over their financial interests. For instance, it bounds brokers to keep clients’ money in segregated bank accounts. Not to mention, FCA-regulated brokers need to ensure sufficient working capital to fulfil clients’ orders anytime.

Post-consumer

The post-consumer stage involves reviewing individual cases and taking respective actions. FCA encourages clients to report frauds, potential threats, or other bad behaviour of their respective brokers to FCA. The regulatory body holds the autonomous power to impose financial penalties or revoke its licence if the accused firm is found guilty of breaching the code of conduct. Furthermore, the FCA requires brokers to provide funds compensation to clients in the event of becoming bankrupt.

FCA-regulated Brokers Fees

Since FCA makes brokers act in investors’ best interest, it guides brokers to maintain healthy competition by keeping prices reasonable. Typically FCA-regulated brokers make money via spreads charging. However, clients also need to pay commission or swap fees on overnight positions and other miscellaneous charges, such as withdrawal fees, account inactivity fees, currency conversion fees, etc.

Compare UK  FCA Regulated Brokers in the UK 2022

1. eToro

eToro is one of the leading multinational brokerage firms. With its head offices in Israel and the UK, the company has been serving both retail and institutional traders for over a decade. The broker offers cutting-edge trading and investment options to its customers by providing a diverse range of tradable assets across major asset classes, including currencies, stocks, indices, and commodities. The most notable feature of this platform is the social trading facility. Besides holding FCA regulations, eToro is licensed worldwide by top-tier regulators, including ASIC and CySEC. While eToro keeps clients’ investments in segregated accounts, it also offers funds protection features, such as negative balance protection and indemnity insurance.

Signing up with eToro is relatively straightforward. The entire process, from account registration to verification, doesn’t take more than a couple of days. The company supports various payment methods, including debit cards, credit cards, e-wallets (PayPal, Skrill, Neteller), bank transfers, etc. UK-based clients can get started with the company for £10 only, while clients in the rest of the world need to deposit a minimum of $200. Those funding their account with bank transfers might need to pay even more (i-e, £500). Notably, eToro employs a maximum deposit limit of 2250 € on unverified accounts.

eToro provides a comprehensive product range that includes more than 2702 stocks, 49 currencies, 32 commodities, 13 indices, and 264 exchange-traded funds (ETFs). In addition to spot trading, the firm allows customers to trade with any amount without buying or selling the underlying asset through CFDs (Contracts for Differences).

Keeping its trading cost in line with the industry standards, the company offers variable spreads. For example, the broker charges spread from 1.0 pips on major currency pairs, while spread from 2.0 pips is payable on trading commodities and spread from 0.75 pips to trade indices. The company also allows you to trade on leverage. The maximum available leverage for forex pairs is up to 1:30, while clients can trade stocks, indices, and commodities using a leverage of up to 1:5, 1:20, and 1:10, respectively. The only drawback of signing up with eToro is the limited customer support available only to eToro’s club members. For instance, the company doesn’t offer a live chat feature to non club members. You can also read the full eToro review on our website.

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2. XTB

Founded in 2002, XTB is a multi-regulated CFD broker. Besides competitive spreads and advanced trading tools, a quick trade execution policy is the key feature that entices traders to sign up with it.

While the company offers flexible account types, XTB’s trading platform xStation5 seamlessly caters to the trading needs of both newbies and professional traders. Limited trading restrictions and the availability of rich educational resources make it one of the popular FCA-regulated brokers. In addition to keeping clients’ money separate from its investment capital, the company claims to have been compliant with all the AML guidelines.

There is no minimum or maximum deposit amount stipulated by the broker to ensure onboarding for everyone. The company doesn’t charge any fee on deposits and withdrawals either. XTB spreads are in line with the average industry standards. For instance, the company has spread starting from 0.35 pips on major currency pairs like EUR/USD.

To facilitate margin-based trading, the broker allows clients to use a leverage of up to 1:30 for trading currency pairs and leverage up to 1:20 for trading commodities. Clients looking to trade stock and CFDs may need to pay a commission of 0.08% per standard lot. In addition, a cash reward scheme motivates traders to trade huge volumes. Because XTB demo accounts never expire, users can hone their trading skills without risking their own money. If you are interested in learning more, this link will take you to a comprehensive evaluation of XTB on our website.

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3. Pepperstone

Pepperstone is a global brokerage firm that allows clients to explore countless trading opportunities across various markets, including stocks, indices, currencies, and commodities. With state-of-the-art trading tools and superior customer care around the clock, the company entices newbies and skilled professionals to sign up with it.  Besides holding FCA regulations, the company is authorized by various top category financial regulators worldwide.

Unlike dealing desk brokers, the company promotes transparency and does not interfere with clients’ orders. Instead, it passes them directly to liquidity providers. CFD trading is available on various asset classes, including currencies, equities, commodities, indices, and ETFs. The broker provides a leverage of up to 1:30 for trading currencies, indices, and commodities.

Clients only need an initial investment of £200 to begin trading with Pepperstone. However, UK-based clients can start for even smaller amounts. Pepperstone’s onboarding process is pretty fast, and the company does provide a wide variety of payment methods for making deposits. These include debit cards, credit cards, e-wallets (such as Skrill, PayPal, and Neteller), and wire transfers.

The company makes a diverse selection of trading platforms available, including cTrader, MetaTrader 4, and MetaTrader 5. The price structure of the company is competitive relative to market standards. Trading popular foreign exchange pairs like the GBP/USD and EUR/USD at Pepperstone typically results in spreads from 0.86 & 0.70 pips, respectively. The following table provides more information on the costs and spreads involved at Pepperstone.

Further, the company works with third-party vendors like DupliTrade & MyFXBook to make social trading more accessible and convenient. In addition, the customer support department remains available around the clock, five days a week. Should you wish to know more, please navigate to the brokers’ area of our website to read the complete review on Pepperstone.

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4. Plus500

Plus500 is one of the leading FCA-regulated brokers operating with its regional offices all around the world, including the UK. The company is known for its premium trading features, such as competitive spreads, instant trade execution, low latency rate, and minimal margin requirements.

Plus500 employs dynamic spreads. For example, clients can trade major currency pairs like GBP/USD for a spread from 0.13 pips. Similarly, a spread from 0.04 pips applies to commodities like Oil, while indices, including UK100, are available to trade for a spread charge from 2.0 pips at Plus500.

In compliance with FCA regulations, Plus500 must maintain clients’ funds in segregated bank accounts. On the other hand, the European Securities and Markets Authority (ESMA) requires Plus500 to provide its clients with negative balance protection so they may not incur losses on their investments. Plus500 also protects clients’ deposits under indemnity insurance. If the company goes into liquidation, it is bound to offer compensation of up to 85000 GBP per client.

While the broker allows clients to access a rich product portfolio, it facilitates spot and CFD trading in six financial markets, including forex, stocks, indices, commodities, shares, options, and ETFs. Other prominent features include a trading academy, market insights, and investor relations programs.

Signing up with the company only needs you to deposit £100. Clients can fund their accounts using multiple payment methods, including debit cards, credit cards, and wire transfers. The company doesn’t charge deposit or withdrawal fees. Plus500 offers leverage up to 1:30.

Plus500’s pricing models are among the most competitive in the market. All of the company’s services, including real-time price quotations, dynamic charts, and position rollovers, are free of charge. However, currency conversion costs and inactivity fees may be incurred by clients. You can also read the complete Plus500 review on our website.

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Does the FCA put limits on leverage for CFD trading in the UK?

Yes, FCA enacted leverage restrictions owing to the increased risk involved in leverage trading. Essentially, leverage magnifies the risk of loss besides increasing profit-making potential. UK brokers can offer maximum leverage up to 1:30 for trading CFDs across multiple asset classes, such as currencies, stocks, indices, and commodities. However, leveraged trading involves increased risk exposure. Besides increasing market exposure, it also magnifies the risk of loss. So, have a better understanding of risk management before using leverage to trade CFDs.

Although some brokers had started shifting abroad or opening operations in no-leverage regions like the Cayman Islands, Vanuatu, St. Vincent, and Grenadines, etc. The FCA has warned some of them (not publicly) against onboarding UK clients who want to trade CFDs without corresponding leverage ratio limits.

Differences between FCA Regulated and FCA Authorised Brokers

Regulations are the set of rules and laws that are imposed by government bodies and are tailored to a given sector of the economy. On the other hand, authorisation is the permit to be allowed to operate in a certain jurisdiction. The authorised type is typically determined by a broker’s location and its respective business domain.

The key difference between FCA-regulated and FCA-authorised brokers is the scope of the applicable framework. FCA’s regulating mechanism is based on three operations: Authorization, Supervision, and Implementation.

Authorization

An FCA-regulated financial service provider must be registered or authorised before being regulated. Then the FCA monitors the firm and its employees to ensure all criteria are met.

Supervision

FCA supervision involves proactive oversight of huge companies besides reactive monitoring of occurrences and thematic study of sector or firm-wide hazards.

Implementation

This operational activity enables FCA to impose sanctions on firms or individuals not meeting the required criteria. The FCA can prosecute, compensate consumers, and cease the commercial activity of the business.

FCA aims to improve market integrity, foster healthy competition, and safeguard customers by supervising, enforcing, and authorising the respective entities. Therefore, all investment, consumer credit, and financial firms must obtain the FCA licence for continuing operations inside the UK.

How Does The FCA Intervene In The Case Of Financial Abuse

FCA imposes fines on companies or individuals and issues statements to the public as part of its enforcement powers. In addition, it has the authority to conduct investigations and impose disciplinary action upon finding anyone in breach of conduct. Furthermore, the FCA is authorised to initiate legal actions against offenses of a criminal nature. This is crucial when investigating market manipulation, insider trading, and other “white-collar” crimes. FCA exercises these powers to dissuade individuals from breaking FCA rules.

Bottom line

According to UK legislation, a CFD broker operating in the UK must be authorised and invigilated by the Financial Conduct Authority (FCA). The regulatory firm strictly oversees brokers, binding them to remain fair and transparent to their clients. Furthermore, the FCA reserves the right to change the legislation to protect the interest of investors. In this piece, we’ve tried to uncover the rationale behind signing up with FCA-regulated brokers, followed by an explanation of how they ensure clients’ safety and security. After reading this article, we hope finding your FCA-regulated brokers in the UK won’t be difficult for you. If you are a UK resident, you can start trading with any forex broker that is fully authorised and regulated by the Financial Conduct Authority (FCA).