The Financial Conduct Authority (FCA) is a UK financial regulatory body that focuses on the regulation of retail and wholesale financial services firms and is one of the most prestigious regulators in the UK and worldwide, particularly in the forex and CFD market, where regulation was necessary. The FCA is, in fact, the successor of the previous UK regulator the FSA, and is responsible for the regulation of around 58,000 financial businesses registered in the United Kingdom.
The British regulatory agency acts as an investigative authority and ensures that brokers must comply with strict demands in order to protect traders and maintain a safe trading environment. For example, FCA brokers must keep clients’ funds in a segregated account and hold an amount of at least £730,000 to prove their financial stability. Apart from protecting clients’ funds, an FCA regulated broker must be a part of the Financial Services Compensation Scheme (FSCS) and by being part of the FSCS, the FCA regulated broker ensures that clients are safe in case of insolvency with a compensation guarantee of up to £50,000.
The FCA also has some restrictions regarding CFD trading as it limits leverage ratio to between 30:1 and 2:1 for CFDs sold to retail clients and makes sure that the brokers must provide protections to ensure that a trader cannot lose more than the total funds in their account. Moreover, an FCA broker must close a trader’s position when the funds fall below 50% of the margin needed to maintain the open positions on the CFD account.
As you can see, trading with an FCA broker gives you the peace of mind to trust the firm and focus on your trading rather than brokers’ manipulations and scams.
We have listed the top three FCA regulated brokers and compared the pros and cons of each one of the brokers. Hopefully, after reading this guide, you will be able to choose the best FCA regulated broker that matches your needs.
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Best FCA Regulated Brokers in 2021
Nowadays, finding an FCA broker is not such a difficult task as the majority of top leading brokers are FCA licensed. Yet, there are some major differences between each broker that you should take into consideration before you start trading. Here are our top picks for the best FCA regulated Brokers in 2021.
1. eToro - Best FCA Regulated Broker
eToro is a registered company in the UK under the name eToro (UK) Ltd. and is fully authorized and regulated by the Financial Conduct Authority (FCA), under firm reference number 583263. In 2013, the world’s largest social platform was one of the first CFD brokers to get licensed by the Financial Conduct Authority (FCA) under its UK broker license. In our view, eToro ranks above other top FCA regulated brokers due to its unique social trading platform that enables users to interact with each other and get the necessary edge in the market. Furthermore, the online broker operates since 2006, which makes one of the oldest and most reliable brokers out there.
Being regulated by FCA, eToro indeed limits leverage ratio to 1:30 for retail clients. However, professional clients can trade with a leverage of up to 1:400 if passing successfully a test that determines their qualifications as a Professional Client.
In addition to being FCA regulated, eToro also holds licenses from the Cyprus Securities and Exchange Commission (CySEC) as well as from the Australian Securities and Investments Commission (ASIC).
- eToro offers a leverage ratio of up to 1:400 for professional traders
- In addition to being regulated by FCA, eToro is regulated by CySEC and ASIC
- eToro is the largest social trading platform with more than 4.5 million users
- Apart from cryptocurrency trading, eToro is not available for US residents
- Charges an inactivity and a withdrawal fee
2. Plus500 - User-friendly proprietary trading platform
Plus500 was founded in 2008 and is a member of the London Stock Exchange under the symbol LSE: PLUS. The broker has a registered online trading company in the United Kingdom, Plus500 UK Ltd, which is authorized by the Financial Conduct Authority reference number 509909. Overall, Plus500 is considered safe as it is regulated by top-tier regulators such as FCA and is listed on the London Stock Exchange.
The Plus500 trading platform itself is one of their biggest selling points. The dashboard uses Plus500’s own proprietary web-trading software (also available as a mobile app), which users find intuitive and easy to use. Plus500 also offers a wide range of more than 2000 tradable financial instruments that can be traded through CFD including: stocks and shares, forex, cryptocurrency, commodities, and many more.
- Plus500 offers a leverage ratio of 30:1 for retail clients and 300:1 for professional traders
- Plus500 is safe and secure trading platform
- A huge range of stock CFDs
- MetaTrader4 is not available
- Limited research tools
3. Capital.com – FCA approval for adherence to data security and security of deposits
Capital.com is the trading name of Capital Com (UK) – an online trading platform launched in late 2016. In the last four years, Capital.com has gained a positive reputation in the United Kingdom’s online trading community. The company is registered in England and Wales, with their online trading arm authorized and regulated by the FCA under registration number 793714.
In addition to running one of the most sophisticated trading platforms, it is also one of the limited few AI-Powered trader platforms in the country. Capital Com is also dedicated to their client security, and to preserve their trader’s privacy, the broker will collect no more personal data from their clients than is necessary. Additionally, the broker maintains segregated and insured bank accounts for their client funds.
Apart from UK’s FCA regulation status, Capital.com is also registered and regulated by the CySEC in Cyprus under license #319/97 and in Belarus by the National Bank of Belarus under license #193225654.
- Registered and regulated in multiple financial jurisdictions
- Maintains segregated bank accounts for client funds
- Maintains a host of security features for customer accounts including data encryption
- Doesn’t insure trader deposits with the FSCS or any other insurer
4. FXCM – Reliable broker with years of experience
Forex Capital Markets (FXCM) is the trading name of the FXCM Group of Companies and is registered in England and Wales as Forex Capital Markets Limited (FXM LTD). It is a highly reputable online trading brokerage and has cultivated this popularity for the past 20 years. It is authorized and regulated by the FCA under registration # 217689.
In addition to the client data safety and security of deposit measures taken by FXCM including maintaining a segregated bank account for client funds, FXCM has adopted several other platform-based security protocols. The most pronounced is a host of risk management orders as well as negative balance protection for its Clients in Europe.
Key features that endear this FCA regulated broker to its clients include maintaining a highly versatile trader platform available on the web and mobile apps, its competitive and transparent order pricing, and hosting one of the largest collection of tradable CFD trading instruments.
- Highly regulated and with a solid reputation both locally and internationally
- Maintains solid security measures for customer funds that include segregation of funds and risk management tools like negative balance protection
- Will only collect relevant user data and won't share it with third parties
- Doesn’t support two-step verification
- Client deposits aren’t insured with the FSCS or any other insurer
5. Forex.com - Best FCA Regulated Broker that Accepts US Traders
Forex.com is a trading name of GAIN Capital UK Limited which is a registered company in the United Kingdom under the number 1761813 and is regulated by the Financial Conduct Authority under the number 113942. In terms of trading conditions, Forex.com is more suited to professional individual traders who are looking to diversify their portfolio and get more advanced trading tools. This broker, which is also regulated by other top-tier regulators, has a wider selection of products and trading platforms than most other brokers in the industry.
Unlike the other investment platforms in the market, Forex.com offers a huge selection of more than 4500 tradable assets and a selection of trading platforms that include its web-trader platform, the MetaTrader4, the MetaTrader5, and the NinjaTrader. Moreover, Forex.com is different in the sense that it offers a Direct Market Access (DMA) for professional traders who are looking for straightforward and transparent liquidity.
- Highly regulated and reputable broker
- Forex.com is available in the United States
- Forex.com offers the Direct Markets Accees (DMA) account for professional active traders
- The fee structure is unclear
- Forex.com is not a social trading platform
What Should You Look for in FCA Regulated Broker?
The application process for brokers that want to be FCA regulated may take almost 2-3 months and requires a firm to be financially stable and completely legit. By now, you have a list of the top FCA regulated brokers to choose from based on your needs and trading preferences. If you are still in doubt as to which broker to choose, here are some significant factors to consider.
Security and Safety of Funds
All FCA brokers are safe in terms of protection and trading conditions, however, regulators cannot control security risks such as cyber threats and data protection. With the increasing number of cyber-attacks, brokers need strong security features to protect their clients. For example, eToro and Plus500 offer the 2-factor authentication (2FA) service, which is simply a security code sent to your phone.
By being FCA regulated, a broker participates in the Financial Service Compensation Scheme (FSCS), which one of the largest compensation schemes in the world, offering protection for traders of up to 50,000 GBP.
This review confirms that the brokers on our list are making the effort to protect clients’ funds as well as users’ security and data protection.
Execution Model – NDD/DD
The broker type is an important consideration when choosing a broker. Basically, there are two types of online brokers: Dealing Desks (DD) and No Dealing Desks (NDD) with each execution model has its own advantages and disadvantages. Market maker brokers like eToro and Plus500 do not connect traders to a global liquidity pool but by being a market maker, they are much flexible. A market maker can any market they want, fixed spreads, zero-negative balance protection, variable lot sizes, and guaranteed stop-loss order.
On the other hand, No Dealing Desk (NDD) brokers like Forex.com offer to connect you to a pool of liquidity providers which allows you to trade transparently and get access to real live quotes. A no dealing desk broker usually provides tighter variable spreads and removes any potential conflict of interest.
Spreads and Fees
Regulated brokers are subjected to a few restrictions but regulators cannot restrict commissions associated with trading. It is important to find out what kind of spreads are available (fixed or variable), what are the financing fees such as deposit and withdrawal, inactivity fee, and an overnight fee. In general, most brokers charge similar fees so it might be more beneficial to check the spreads payable before you select a broker.
One of the advantages of trading with an online broker is the small capital required to start trading. While traditional stock and futures brokers require a few thousands of dollars to start trading, the majority of online brokers allow you to start trading with just a small deposit of a few hundreds of dollars or even lower. Forex.com, for example, requires an initial deposit requirement of $50. Plus500 maintains a minimum deposit requirement of $100 while eToro has a minimum deposit amount of only $200.
In the past decade, social trading has become extremely popular among forex and CFD traders. In simple terms, a social trading platform is an online community for traders, however, the latest development of social trading networks is the ability to copy trades of other members of the community. As a result, a social trading platform can potentially improve your chances of profitability and save you on hours of market research and analysis.
If you are looking for a social trading platform that is suitable for online trading, the eToro is the right choice. The broker more than 4.5 million users on its platform, and enables users to easily copy trades of other members.
Range of Available Products
Another factor to consider when choosing an online broker is the selection of products. Sometimes, you might even choose a specific broker because of the availability of a certain stock, currency pair, or commodity. Therefore, it’s recommended that you check the selection of the product and markets of each one of the brokers. We can tell you that Forex.com has the highest selection of assets that include more than 4500 products, however, eToro is offering the CopyPortfolio, which are market portfolios that collect stocks, commodities, and ETFs under a chosen strategy.
The bottom line for you, trading with a regulated FCA broker simply reduces the risk for you. That is the main purpose of regulators. Due to the increasing involvement of regulators such as the Financial Conduct Authority, the forex industry has been cleaned in the past few years and seems to be consolidating in its status. After all, forex and CFD brokers are an important link to the markets, offering a much more convenient way to start trading.
The FCA is more powerful than many other regulators, which ultimately benefit you and other traders. Consequently, an FCA regulated broker can be trusted to provide reliable information and protect investors’ funds.
What is the Financial Conduct Authority (FCA)?
The Financial Conduct Authority (FCA) is a financial regulatory agency in the United Kingdom that regulates financial firms such as Forex and CFD brokers that provide financial services to customers. In recent years, the FCA has strictly regulated the CFD sector by restricting brokers and ensuring the protection of clients.
Why should you trade with an FCA regulated broker?
The FCA oversees all firms that are registered in the United Kingdom offering financial services. It is considered as one world’s most strict regulator with a positive reputation of strength and reliability. Some of the benefits of trading with an FCA regulated broker include the safety of funds, the financial stability of FCA regulated broker (an FCA regulated broker must have at least 1 million in operating capital), the restrictions on margin trading, withdrawals must be processed instantly, and traders will be compensated in the event of insolvency.
How do I know if a company is FCA regulated?
You can simply go to FCA's official website and search for the company on the financial services register. Once you find the company, you will be able to see whether it is authorized under the status tab.