Forex Brokers and Regulatory Info for Euro Residents

Brokers for European Residents

IMPORTANT: European residents are encouraged to understand their home country's specific broker and regulatory landscape as there are many factors that will affect trading conditions and funds safety.

Europe has multiple layers of regulatory bodies working together; At the top, Europe-wide, there's strong consumer protections and strict product rules set by the ESMA and industry laws passed such as MiFID. Then locally, countries have local authority on regulating the operations and capital requirements of brokers in their region. This leads the following hierarchy of regulatory authority from the top down:

Pan Europe Regulations

ESMA - European Securities and Market Authority. The ESMA sets European-wide rules on trading that affect any regulated broker operation within Europe who deal to European residents. The main impact on Forex traders are the following ESMA set rules for European accounts:

Retail account leverage set as follows:

• 30:1 for major currency pairs
• 20:1 for non-major currency pairs, gold and major equity indices
• 10:1 for commodities other than gold (platinum, silver, etc) and non-major equity indices
• 5:1 for individual equities (stock CFDs)
• 2:1 for Cryptocurrencies (crypto CFDs)

Note: Margin closeout is set at a 50% initial margin rate. That means if you are required to post $100 of initial margin to control a position, once your account equity drops below $50, the position will be liquidated.

• Retail negative balance protection. This means you can only lose what you deposit/invest with the broker and not be held responsible for losses caused by your account beyond this amount. In the event of a shock market move (think black swan type events, unexpected events that cause the market to gap well beyond what anyone has seen before or would reasonably expect,) you would not be liable for losses caused by your positions that are greater than the capital you've invested. Any trader with 10+ years experience following the markets will tell you these events do happen and some are large enough to bankrupt brokers who had too much client exposure at the time.

• Requirement for retail funds to be held in segregated bank accounts. A segregated bank account means the funds stay separate from the broker's operational accounts and comingling of funds cannot take place. This helps prevent misappropriation of funds by the broker (say, to cover operational expenses, or just outright fraud,) or the loss of funds if pooled with other accounts that suffer losses greater than their deposits. This might seem like a desired custodial and banking setup for client assets at any broker, but we still see unregulated brokers do this by mixing all funds together and dipping into client funds for short term operational expenses (which as you can imagine is quite risky for the broker to do as they would not have enough funds to cover client withdrawals if too many clients pulled out at once.)

• Requirement for brokers to post high level stats on client account profitability at their brokerage. Usually done in the footer or risk disclaimer and presented as a percentage of accounts that are net profitable in a given time period.

The above protections mirror changes the FCA made for United Kingdom residents, and many major regulatory bodies around the world are shifting to similar rules. It's been generally accepted that such changes have helped curb client losses.

IMPORTANT: A non-retail, "professional", account option is available with some European brokers that open up far more leverage but do away with the client account protection features listed above. More info in a later section will be provided.

Country Specific Regulations

Drilling further down from ESMA and Euro-wide rules, local regulatory bodies (on the country level) have their own rules for how forex brokers can operate. In some cases, a country's regulatory body can also offer additional consumer protections, or dispute resolution services to their residents. The main concern of a local regulator is to make sure the broker's operations and company management is in compliance with their standards, so a lot of the differences are behind the scenes and might not be noticeable to a retail client.

Where a broker chooses to operate and where they get a regulatory license is also telling of the broker's strength and size. For example, it's a lot cheaper and easier for a broker to setup operations in Cyprus under CySEC, than say Germany under BaFin, so many new or smaller brokers will attract business in Europe through their Cyprus entity and thus will have much less capital requirements or operational / regulatory overhead to deal with vs other European jurisdictions. The balance between providing a stable trading and financial industry, and attracting businesses through competitive operational rules, is the challenge for local regulators in Europe.

IMPORTANT: Given the above paragraph, this indirectly highlights brokers who strive to be regulated in multiple countries within Europe to better serve European residents as a whole. This not only shows the broker's commitment to doing right by regulators, but by their clients, and speaks highly of the broker's stability and where their interests are in line with their clients. We will highlight one excellent example of such a broker in a later section of this page.

There are nearly as many country level regulatory bodies as there are countries in the European Union, so we won't be listing them all here, but the most popular regions by client numbers and brokers present are below with any relevant nots:

• Germany - BaFin - Germany's BaFin is often considered to have some of the strictest requirements for brokers when seeking to obtain a brokerage license in Europe. Seeing a broker who's regulated by BaFin is a good sign the broker is well established, properly staffed, follows proper compliant and regulatory rules, and is very well capitalized. BaFin also provides a client insurance fund for up to 90% of your deposit, or 20,000 EUR, whichever is less.

• Cyprus - CySEC - Once known for very loose regulation and laughably low capital requirements to start a forex brokerage, CySEC has come a long way and in the past half decade they have cleaned up their local forex industry. Broker capital requirements to maintain their regulatory licenses were raised significantly (though, they are still one of the cheaper and easier regions in Europe to start a brokerage,) enforcement actions and fines were raised, and active enforcement / audits now take place. Many shady brokers previously operating out of Cyprus have left thanks to CySEC's enforcement and new rules, which has greatly helped repair Cyprus' reputation as a financial center on the world stage. That said, many other regulatory bodies in Europe do not have such a negative history, and both politically and geographically speaking there are more stable countries to deal with.

(This section will be expanded soon with more local regulator info, specifically around France as they shift their rules around CFDs.)

High Leverage Options for European Residents

There are two main paths for getting higher than ESMA set retail leverage as a European client:

• The ideal and recommended way: Seek out a European broker who offers a professional trader account type. Qualify as a professional trader and you'll be able to trade with leverage up to 200:1. Not all European brokers offer this open, but a great example would be Pepperstone EU's Professional Client Status Program.

• The alterative: Use an offshore, but still regulated, broker that can service European residents. (Link skips to section below.)

Local European Brokers (Locally Regulated)

Pepperstone EU

https://pepperstone.com/en-eu/

Pepperstone was founded in 2010 and quickly grew to become one of the largest forex brokers in the world thanks to excellent execution quality and great customer service. Pepperstone is well regulated and has a history of doing right by their clients. The team behind Volatility.RED has extensive experience working with Pepperstone as clients feels strongly that Pepperstone will serve as an excellent broker choice for retail and institutional clients of all sizes. Pepperstone has some of the best execution quality in the industry.

NOTE: Given the wide regulatory coverage, Professional account designations for traders seeking higher leverage and extensive experience using Pepperstone as clients, the team at Volatility.RED encourage you to consider Pepperstone EU if you're a resident of the European Union.

• Regulation: Regulated by multiple European countries, such as Germany's BiFin and CySEC out of Cyprus, as well as having a presence in the UK under FCA regulation. Pepperstone also has some of the best global regulatory coverage in the industry, with entities regulated outside of Europe by the ASIC, FCA, SCB, DFSA, and CMA. Few brokers even come close to this level of global presence...)
• Pricing: Competitive spreads of 0-0.2 on Razor ECN account, and average spreads of 1.1 pips on Standard account
• Leverage: As set by the ESMA as listed above
• Account Minimums: $200 USD or EURO for all account types
• Products: Forex, CFDs on Equity Indicies, US Dollar Index, Commodities, Crypto, and US Shares
• Platforms: MetaTrader 4, MetaTrader 5, cTrader
  • cTrader also comes with cAlgo, a C# based algotrading platform for automated trading. cTrader in general is a great alternative to MetaTrader and a real competitive advantage for Pepperstone EU
• Notes:
  • Islamic account types (swap/interest free) available
  • NEW - Clients seeking higher than ESMA leverage can apply for PepperstonePro, Pepperstone's EU Professional Trader Status account type. Conditions apply and you must be able to prove experience and/or net worth to qualify

FP Markets

CySEC regulated with a large Euro presence, FP Markets is mentioned here but currently the team at Volatiltiy.RED has no direct experience trading on their platform and will expand this at a future date with more info should they be properly vetted.

• Regulation: CySEC
• Pricing: Considered competitive for most pairs, but some broker options in Europe are slightly tighter in fees and spreads
• Leverage: As set by the ESMA as listed above
• Products: Forex and CFDs
• Platforms: MT4, MT5, web trader

eToro

Currently the team at Volatility.RED feels that eToro's offering caters to absolute new traders and the copy trade industry. Their platform is proprietary and considered by many as easy to use. However, this comes as a trade off, as spreads and pricing are not as competitive with other broker offerings in Europe. Further, eToro runs a different model than most forex brokers, as they are a CFD focused broker first. Their marketing will heavily lean on being able to trade multiple asset classes within the same account, but often these 'asset classes' are by default CFDs on the underlying products and new traders may not realize this. We at Volatiltiy.RED will always suggest a proper stock broker for stocks, futures broker for futures and commodities, and a forex focused broker for forex trading. While there's nothing specifically wrong with eToro's offering, their marketing of CFDs can be confusing for new traders, and thus eToro does not align with the path we feel new traders would take when learning the markets. As the broker grows and evolves, we are happy to review and update this info should our thoughts change.

• Regulation: CySEC
• Pricing: Often considered not as competitive as other European broker offerings that are forex focused
• Leverage: As set by the ESMA as listed above
• Products: CFDs on most major asset classes, separate accounts are offered for trading the underlying assets directly, but CFDs are primarily marketed
• Platforms: proprietary phone and web apps

Brokers Regulated or Registered Outside of Europe and Take European Residents

VantageFX

VantageFX / Vantage Group was founded in 2009 by a team who strives to earn their client's trust. Vantage offers common MetaTrader platforms, but recently released their own unique mobile app that stands apart from what you find with MetaTrader Mobile. This sets them apart from other European options if you're a mobile only user and want something different.

Note: To anyone who used vantage from ~10 years ago, their offering has changed significantly and has become quite competitive in recent years. The major changes include a much faster execution time than their previous infrastructure provided. If you used them 8-10 years ago and felt they weren't great, they are worth revisiting again.

• Regulation: For European residents, VantageFX is regulated offshore but provides local offices and services to European residents. Vantage Group has other entities that service residents of other countries that may fall under different regulatory bodies.
• Pricing: Competitive spreads of 0-0.2 on their RAW ECN account, and average spreads of 1.3 pips on Standard STP account
• Leverage: Up to 500:1
• Account Minimums: $200 USD or EUR for all account types
• Products: Forex, CFDs on Equity Indicies, US Dollar Index, Commodities, Crypto, and US Shares
• Platforms: MetaTrader 4, MetaTrader 5, Vantage Mobile APP
• Notes:
  • Islamic account types (swap/interest free) available
  • Mainland Europe Client Deposit Methods Accepted: International / SWFIT based Wire transfer, Credit and/or Debit Card (Visa/ Master card), PayPal, Skrill, Neteller, and USDT (Tether)

BlackBull Markets

https://blackbullmarkets.com

Blackbull was founded in 2014 and is one of the faster growing fintech companies in New Zealand. Fully FMA regulated in New Zealand as well as registered with the FSPR and 3rd party for dispute resolution organizations.

• Registration: Regulated in New Zealand by the FMA, and registered as a financial service company with the Financial Services Provider Registry (FSPR)
• Pricing: Decent spreads of ~0.1-0.3 on EUR/USD (plus commissions) and comparable spreads to most competitive Euro brokers on their ECN / DMA / Prime type accounts, and spreads starting from 0.8 pips on their ECN Standard account without commissions
• Leverage: - Up to 500:1
• Account Minimums: $200 USD or EUR for all account types
• Products: Forex, CFDs on Equity Indicies, Oil, Nat Gas, Gold, and Silver
• Platforms: MetaTrader 4, MetaTrader 5, and MetaTrader's respective mobile and web apps
• Notes:
  • Islamic account types (swap/interest free) available
  • Mainland Europe Client Deposit Methods Accepted: International / SWFIT based Wire transfer, Credit and/or Debit Card (Visa/ Master card), China Union Pay, Skrill, and Neteller

Oanda Europe

Oanda is one of the oldest retail online brokers still around. They were founded in Toronto, Canada in the late 90's and grew globally from there. Oanda's offering in Europe is a bit different than their offering in other regions of the world, so as to remain competitive with other Euro brokers. Oanda is also known as one of the largest market maker style retail brokers around, meaning they set their own prices on currency pairs and do not offer an "ECN" type account that might source quotes from an external market source. That said, their pricing is still generally fair.

A team member of Volatility.RED with experience using Oanda in another region notes their pricing and offering are often not quite as competitive as other options available, and encourages people to use their Oanda Desktop application instead of MetaTrader should you choose Oanda as your broker. That is not saying Oanda is a bad choice, but they just follow a different model than most Euro brokers. Perhaps that model works better for you and your trading style, so don't be afraid to check them out.

• Regulation: For Euro residents, Oanda is regulated in the UK by the the FCA and will service European Residents.
• Pricing: 0.1 pips minimum (but often floats greater than this) + commission on Oanda's CORE account, and average spreads of 0.6 pips and up on their Premium Account
• Leverage: As set by the FCA, but conforms to ESMA set rates as listed above
• Account Minimums: No minimum deposit
• Products: Forex, CFDs on Equity Indicies, Commodities, and Metals
• Platforms: Oanda Desktop and MetaTrader 4 only.

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