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EU forex brokers

As is the case with other businesses in the European Union, there also exists a common framework for foreign exchange. Furthermore, there is a Pan-European financial regulator that is in charge of safeguarding the stability of the EU's financial markets and enhancing investor protection - the European Securities and Markets Authority (ESMA).

 

Financial services providers in all Member States have to adhere to a number of requirements, set out in the EU legislation. One of the reasons for this unified approach is that forex brokers licensed in a certain EU Member state are entitled to offer its services to citizens of all EU and EEA countries, without further hassle.

 

Here are some of the requirements all forex brokers legally operating in the EU must meet:

 

– Client Account Segregation – Whenever clients deposit money in their trading accounts, it must be kept separate from the broker’s operating funds. Thus the clients’ funds remain shielded in case of mishaps like a broker’s bankruptcy.

– Minimum Capital Requirement: EU forex brokers have to meet certain capital adequacy requirement, which varies by country and by license type. Typically, financial services providers must hold and maintain at least €730 000, which guarantees that the company is financially stable.

– Transaction reporting: Financial services providers in the EU are required to report their clients’ transactions on a regular basis. This requirement and other wide-ranging MiFID measures are designed to improve investor protection and promote market integrity and transparency.

– Compensation Scheme: EU forex brokers are also required to take part in some sort of Compensation Fund or Scheme. If a broker becomes insolvent or ceases trading, the Fund/Scheme is able to pay compensation to its covered clients.

Leverage of no more than 1:30: This is a “temporary” restriction introduced by ESMA last year, but the regulator keeps extending it ever since, so it will probably become permanent. It is also imposed for investor protection concerns

Provision of negative balance protection: This means that the broker guarantees that its clients’ balances may never become negative, so they can never lose more than they have deposited. 

 

Now that the UK is exiting the EU, there are a lot of uncertainties to be dealt with. UK’s financial regulator, the FCA, came up with the Temporary Permissions Regime (TPR). This regime will allow EU financial providers to continue to operate in the UK, while they seek full FCA authorization, if the UK leaves the EU without an implementation period in place. However, it remains largely unclear how and whether UK forex brokers will continue to operate in the EU. 

 

Anyway, most European forex brokers will probably choose to be licensed in Cyprus or in Malta, instead in the UK, because of all the complications.

 

Due to its well-balanced financial regulation, rather favorable tax regime and well-developed technology sector, Cyprus has already become a popular trading hub.  Forex brokers authorized by CySEC have to abide by a number of rules, which provide significant assurance for the security of clients’ funds.

 

Online Forex trading is also widespread in Malta. Financial services providers operating there have to be licensed by the Malta Financial Services Authority (MFSA).

EU forex brokers

Broker Country Regulation Platforms Min.deposit Review
Cyprus, UK, Mauritius CySec, FCA, FSC MT4, MT5, Web $10 Review Website
Cyprus, Australia CySec, ASIC MT4, MT5 $5 Review Website
UK, Australia, South Africa FCA, ASIC, FSCA MT4, Trading
Station,
NinjaTrader
$50 Review Website
UK, Cyprus, UAE, South Africa FCA, CySEC, DFSA, FSB MT4, MT5, FxPro
Markets,
cTrader
$100 Review Website
Cyprus CySEC MT4, MT5, Web $1 Review Website
Cyprus, UK, South Africa, UAE CySec, FCA, FSCA, DFSA MT4, MT5, Web $5 Review Website
Cyprus, UK CySEC, FCA MT4, MT5 $1 Review Website
UK FCA MT4, Web, MT4
for Mac
$100 Review Website
Cyprus, Australia CySec, ASIC MT4, Web,
Mobile app
$100 Review
Cyprus CySEC MT5 $100 Review

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