Best UK Forex Brokers (2020): Fees, Performance, Pros & Cons Compared

Best UK Forex Brokers

The United Kingdom (UK) is home to some of the world’s best Forex brokers. What are the regulatory requirements for trading Forex in the UK, and which are the best UK Forex brokers? In this guide, we compare their fees, performance, trading experience, and investor safety to show you everything you need to get started.

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The Forex market trades an enormous volume of trades per day, over $5 trillion to be more precise. This market, also known as forex or FX market, is the world’s biggest market across the globe, and not only this, with 24-hour trading, five days a week, it is also the most accessible and popular option.

But where profit is involved, risk is, too. And the forex market is no stranger to fraud and scams. For this reason, regulation is critical to keep the integrity and security of the market, and to protect consumers.

Yet due to the global scale of the market there is no singular overseeing authority and so, regulations vary greatly between jurisdictions. This lack of consistency can result in misinformation surrounding what exact role regulations, and indeed regulatory bodies, play and how they benefit consumers.

When it comes to the forex market, most traders have a number of questions. Is forex legal in the UK? If a list of the best UK forex brokers existed — which platforms would top it?

In this article, we’ll walk you through who the regulatory authority is over the forex market in the UK, but more importantly, how they can help protect your capital while trading forex. We’ll also outline how economic turbulence can affect the forex market, before highlighting the top 5 forex brokers in the UK. Lastly, we’ll finish by answering some of your most asked questions surrounding forex regulations in the UK.

Understanding the UK Forex Market

If you’ve done any reading on the forex industry yet you’ll have seen that in 2016 it saw an average daily turnover of $5.1 trillion, making it the largest and most liquid financial market in the world.

This size and accessibility presents its own challenges in terms of regulations – how exactly can a global, digital market be effectively monitored? Needless to say, one regulatory body just would not be effective. Independent regulatory and governmental bodies in different jurisdictions, regulating and monitoring on a more local level therefore is the current structure we see in place today.

Because of this, anyone new to, or unsure of, the market should make understanding the individual rules and regulations that apply to you a priority – in most cases, the law and how strict or relaxed it is will vary depending on the country you are trading in.

So, before we begin looking at  who regulates the forex market in the UK, how they work, and how they work to protect you and your funds, let’s discuss briefly the impact that economic turbulence can have on the Forex market

Economic Turbulence and The Forex Market 

Something that can’t be ignored, particularly in current times, is that the Forex market is susceptible to extreme volatility during times of economic turbulence.

In 2008-2012, we saw how the financial crisis caused an economic earthquake, with an estimated 8.8 million jobs losses throughout. In response, the central bank attempted to kick start economic growth by lowering interest rates more than ever before among major currencies. Due to this, carry trades, and similar strategies, performed differently after the crisis.

Today, we can see a repeat in market volatility due to the global impact of the coronavirus pandemic. The pound sterling is hitting record lows against the Euro and the dollar, and in response to this, The Bank of England has enforced a second emergency interest rate cut in weeks. The dollar (USD) has also made some almost record gains against the Australian dollar, among others.

With the current unemployment rate of 3.5%, at 5.8 million persons, set to soar in the next few months, experts are predicting the same, if not worse economic effects than the financial crisis of 2008. Right now, the full impact is yet to be seen.

Is Forex Legal in the UK?

As we mentioned briefly, the UK forex market is accessible globally, and as it’s one of the biggest markets in the world, it’s accessed by a whole lot of people. Because of this, there is not just one organization that regulates and monitors the market. Instead, this is done by separate authorities, depending on the country, who monitor the market on a more local scale.

Forex brokers in the UK are regulated mainly by the Financial Conduct Authority (FCA). This consumer watchdog agency is funded by forex brokers, as well as other financial services in the UK.

A key objective of the FCA is to ensure that all UK entities are licenced and actively creating and maintaining a trading environment that acts in the best interests of its traders.

Some other national forex market regulators around the world doing this job along with the FCA in the UK include, the following:

  • Securities and Exchange Commission (SEC) and the National Futures Association (NFA) in the USA
  • Australian Securities and Markets Authority (ASIC) in Australia
  • European Securities and Markets Authority (ESMA) in the European Union
  • Autorité des Marchés Financiers (AMF) in France
  • Comisión Nacional de Mercado de Valores (CNMV) in Spain
  • The Financial Services Agency (FSA) in Japan
  • The Securities and Futures Commission (SFC) in Hong Kong

UK Forex Broker Regulation: The FCA 

The FCA have an extreme amount of authority in the UK, giving them a Godfather like role of undertaking complete responsibility for the market and protecting consumers from fraudulent, even corrupt forex brokers. In order to operate in the UK, forex brokers must present themselves to the FCA and become a registered member, which means they’ve been accepted as a respected firm, so long as they continue to prove they are complying with its given rules and restrictions.

If at any stage the broker cannot show evidence they are practicing under the regulations set out by the FCA, it could face harsh disciplinary measures and may be even revoked its license.

Financial Conduct Authority Registration
Check out whether a broker is FCA registered by searching directly on the FCA register.

New and beginner traders especially, therefore, should make sure that the broker you are considering is fully licensed by the FCA. It’s also important now to trust a broker’s website for its word and to go directly to the FCA’s page directly to search.

Knowing this will offer you some confidence in ensuring that your money will be protected in the event of insolvency, fraud, or bankruptcy.

Furthermore, while knowing whether a broker is FCA licensed is the first step to your research, it does not automatically mean the broker is completely safe and secure and you should do some more research to be sure.

Outside of registering brokers in the UK, the FCA enforces regulation that benefits you as a consumer among some big fish.

How a Regulated Market (Seriously) Benefits You 

The first and most obvious benefit that a regulated UK forex market will bring to you is the confidence that your money is protected because you’ll know that FCA regulated brokers must regularly hand up audits around its financial practices, ensuring transparency. For example, brokers must show that clients funds are held in segregated accounts to its own capital.

In addition, the FCA enforces caps on leverage and monitors the implementation of this rule. This is to ensure that traders aren’t put in overtly risky situations, where the market takes a sudden turn against you, for example. Still however, there a number of high leverage forex brokers in the UK.

 

FInancial Services Compensation Scheme
The FSCA makes it quick and simple to check if you are eligible for compensation.

The FCA also ensures, if you wanted to close your account and transfer out your funds, you will receive an efficient and professional service to do this in a straightforward manner. What’s more, in the event of fraud, or loss, the FCA could compensate you for up to £50,000 through the Financial Services Compensation Scheme (FSCS). If the money lost exceeds this amount, you can still only be awarded a maximum of £50,000.

How to Avoid Getting Caught by a Forex Scam 

Forex scams can happen to anyone. We can all get deceived by fraudsters because they tend to be very good at what they do. They seem professional and go to great lengths to make a quick profit. If this happens to you, or if you have already been victim to a scam, go straight to the concerned governing body to report it. For UK traders, this will be the FCA’s scam report page.

The best way to avoid a scam is to be aware of the tactics used, and the crucial information to look out for. Here’s what we recommend:

Make sure the broker is regulated by the concerned authority.

In the case of the UK, this is a FCA. Make this the first thing you do as it will give you guidance on the brokers reputation and status.

Check the FCA’s warning list.

Thankfully, as well as holding a list of registered brokers, it also has a compiled list of broker’s that should be avoided at all costs. Needless to say, stay clear of any broker you see on this list.

Be aware of any perceived pressure to deposit funds.

Any pressure to deposit funds is a bad sign. Professional and regulated brokers ensure that potential clients feed secure and confident before making any such decision. In this case, if you feel yourself being pressured into depositing money before you have all the information needed, it’s a big red flag for a scam.

If forex were an easy route to success, everyone would be doing it. It requires vigilance, patience, time, knowledge and dedicated research, and like anything the more experience you have the better you (should) become. The key is to stay humble, don’t overstep your mark by taking on more than you can handle, but equally, with little risk comes little reward.

To help you get off to the best start, we’ve compiled a list of the safest, most secure, and best Forex Brokers in the UK. Each broker has different strengths to suit different levels, trading styles, and needs.

We believe many of the these are the top Forex trading platforms across all jurisdictions, but the following is our specific UK forex brokers list.

Top 5 UK Forex Brokers

The following list of 6 brokers are all regulated by the FCA in the UK. They are listed in no particular order and are chosen based on their reputation, regulations, and financial stability, among others. To help you choose, consider the trading platform, spread fees, and the research tools and support available. While they won’t all score highly on everything, each one has its own strengths.

1. Best Overall UK Forex Broker 2020: IG

IG What is Forex Page
IG offers a forex guide to help traders understand the market better

Pros

  • Advanced web-trading platform
  • Highly regulated
  • Competitive spreads for popular forex pairs
  • Over 16,000 markets to choose from

Cons

  • High inactivity fee after 2 years
  • No social/copy trading platform

IG is a highly regulated and trusted broker across the globe, with an extensive list of tradable assets, an excellent platform and research tools, competitive rates, and leading educational material.

IG is recommended for anyone prioritizing an advanced platform experience – and who isn’t, right? In terms of research, the company’s offering is premium, it also offers a broad range of tools including, technical analysis on charts and streaming news.

Everything is customizable, compactable and user-friendly. Alongside a clear layout, users can create personal, multiple workspaces to compliment categorized content.

IG’s fees are clear and transparent IG scores high on customer service, with quick and helpful answers around the clock on live chat, phone, email and social media. Beginner’s and those in need of extra support and education will enjoy IG’s impressive range of educational materia, and helpful and professional customer support team.

Develop your forex knowledge by checking out IG’s guide for forex traders, where you can learn things like; what exactly forex is and how it works, how to trade forex and the benefits of forex trading, among others.

Join IG UK here.

2. Best for Low Fees and Beginners: Oanda

Pros

  • Minimum deposit from only $1
  • Regulated by top-tier governmental regulatory bodies
  • Advanced and easy to use trading platform
  • Low spreads
  • Wide range of currency pairs offered

Cons

  • Customer service is professional but can be slow to respond
  • No negative protection on accounts

OANDA is a Canadian based company that offers clients spreads as low as 1.2 pips in EUR/USD. It also launched its own fxTrade platform and MetaTrader 4.

OANDA Forex Trading
OANDA offers an extensive range of currency pairs with low spreads.

Oanda’s fees are low overall, although the EUR/USD pair is higher than competitors. All fees are transparent and historical average spreads can be easily viewed. Oanda offers an extensive range of research tools including economic analysis from experts, calendars, live news feeds and progressive data analytics.

In terms of learning material, Oanda offers videos and articles with seperate sections for beginners and seasoned traders. While some of it needs an update, the live webinars and expert insights are definitely a bonus. Oanda’s customer service is available 24/7 but live chat and mobile support is restricted to 1:00 to 6:00 ET Monday to Friday.

Get started with Oanda here.

3. Huge Range of Tradable Assets: Interactive Brokers

Pros

  • Trading platform is best suited to advanced and high volume traders.
  • Very low cost trades for high volume traders and margin trading.
  • Access to 125 markets across 31 countries

Cons

  • Customer service isn’t the most responsive
  • Expensive overall for traders with low monthly trade volume.
  • Less order options than competitors
  • Hidden fees on the IBKR Pro plan

Interactive Brokers boasts a range of regulatory licenses. The company is best suited to professional traders, and offers 105 forex pairs, 7,400 CFDs, global exchange traded products, and much more.

Interactive Brokers TWS
Interactive Brokers TWS workspace layout

Interactive brokers offers an indepth research platform, covering risk analysis and global technical research news that serious traders will appreciate. IBKR’s offers iBot on mobile, a voice activated feature and while the service has improved overall over the year, its phone support can be slow to pick up.

Create an account with Interactive Brokers here.

4. Great All Round Offering: City Index

Pros

  • Low fees for forex, in addition to index CFDs
  • Seamless account opening
  • Quality research tools

Cons

  • High stock CFD fees
  • Desktop platform is not user friendly

Founded in the U.K in 1983, City Index offers access to forex, CFD and spread betting. Traders can utilize the MetaTrade 4 platform and its tools and features.

This platform is highly customizable, even when compared with competitors. City Index’s desktop platform has functionalities including a clear fee report and good selection of order-types but it isn’t the most user friendly.

Forex traders will have access to 84 global FX pairs, with tight spreads from 0.5 points, and was awarded the Best Spread Betting Provided in 2019 by OPWA. Beyond this range of forex pairs, traders appreciate its advanced platforms options and diverse, quality research tools.

City Index Trading Support Service
City Index offers a range of support services to its clients.

The company offers a range of support to clients including through an initial welcome pack, a call to walk you through the platform and monthly market intelligence emails.The customer service team is helpful and professional and available through live chat, phone and email although email support can take several days to respond. The team is also not available on weekends.

Get started with City Index here.

5. Great Platform and Pricing: Forex.com

Pros

  • Superb desktop and mobile functionality
  • Highly regulated and considered safe
  • High traders will appreciate account options

Cons

  • Higher spreads than international brokers
  • No negative balance protection on accounts

Owned by parent company GAIN Capital and founded in 2001, Forex.com was one of the first to bring forex to the market. Forex.com offers a top quality trading experience for forex traders and CFD traders in the UK and across the globe. Traders can benefit from low pricing, a range of full-feature trading platforms, in depth market research and an advanced mobile app.

Forex.com page
Forex.com offers access to over 300 markets, including forex.

Spreads start at around 1-2 pips for the most popular assets and can increase as high as 100 on less popular currency pairs. All spreads are variable and can increase or increase at any time.

The customer support team is quick to reply and can be reached through phone and live chat from 10 a.m ET Sunday to 5 p.m ET Friday. There is also limited customer support on social media and a chatbot that can answer basic questions, in addition to an FAQ’s page.

Join Forex.com here.

A Quick Guide to Forex Regulation in the UK

What is the required initial trading capital for forex brokers based in the UK?

Traders can trade with UK registered forex brokers with as little as £15. Some accept even less and can depend on the account type you hold. That said, institutional traders are generally required to make a higher initial investment. One of the benefits of trading with a UK forex broker is that they are permitted to offer traders a high leverage. As a result, there are many high leverage Forex brokers in the UK. This means you won’t need a high amount of capital to start off with.

Will my money be protected if a UK regulated broker becomes insolvent?

One way the FCA protects consumers money is through the Financial Services Compensation Scheme (FSCS). This is Scheme awards brokers in situations where a broker becomes insolvent and can no longer provide service to its customers.

The FCA guarantees compensation. The FSCS can award up to £50,000 in such a case. If your claim exceeds this limit you will still only receive the maximum of £50,000.

How safe will my money be with a UK based forex broker?

As the FCA monitors and regulates all forex brokers registered with it, brokers are required to follow strict regulatory guidelines around securing your funds. This includes the requirement that all UK based Forex brokers hold a minimum of £1 million in operating capital while it’s serving customers.

This helps keep things running smoothly by ensuring customers receive payments in a time efficient manner. It has the added benefit of giving consumers confidence that the broker is solvent.

In addition, the FCA requires traders to keep its operating capital separate to those of its traders. This helps to prevent any misuse, or wrong application of your money.

Is trading Forex taxable in the UK?

Yes, trading forex is taxable in the UK. However, unlike brokers registered in the U.S, there are no trading restrictions imposed on UK forex brokers. This includes no hedging or leverage restrictions. On top of this, forex brokers in the UK offer an overall better selection of trading, as binary options and spread betting are allowed in the UK. The fact that spread betting is not taxed in the UK makes it a preferred option to some traders as opposed to forex.

What payment options do UK based Forex brokers offer customers?

Another benefit of forex trading with forex brokers registered with the FCA is that all possible payment options are considered. If you want to transfer your money through a credit card (MasterCard, Visa, Union Pay, etc), an online payment processor (Skrill, Neteller, QIWI etc), cheque payments, or a bank wire, all methods are possible. It’s worth noting that although wire transfers are processed within a day of a withdrawal request, it can take 2 to 5 business days for the funds to be credited into your bank account.

Could a UK Forex broker trick me into a scam? 

Let us start by saying that if you sign up to a broker that is registered with the FCA in the UK then it is extremely unlikely, almost impossible, that you will end up being involved in a scam situation.

In a situation where this does happen, the FCA will move quickly to revoke the broker’s license and impose harsh penalties that, ultimately, ruins its reputation enough that it will find it impossible to trade anymore, even executives at the firm will find it hard to work in the industry again.

Are there ways to completely avoid a UK Forex broker scam?

To avoid being involved in a broker scam, check out the FCA’s online register of its regulated companies. If the company you are considering does not appear then forget it. If it does appear though, it’s still important to do your own research and get more information on the company. Being registered alone is not enough.

In fact, don’t just take a broker’s word that it is registered, make sure to check the FCA’s register. Illegitimate company’s have been known to go above and beyond what you would expect so they can make a profit.

The companies are often not even based in the UK but simply buy a UK email address to make it seem as though they are.

How do I choose the best UK Forex broker for my needs and experience?

Firstly, make sure to check the FCA online register and continue your research from that point. Each Forex broker generally something that it’s stronger at than another. Be it, its platform, research, education, or customer service.  Above we’ve highlighted the pros and cons of the top Forex brokers in the UK, taking the latter into account. We’ve also gone into more detail on each aspect of the individual broker.

Once you’ve narrowed down the best broker for you, a demo account is usually available that allows you to trade with virtual money while giving you a feel for the current trading environment.

About Author

Tim Fries Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim is also the co-founder of Protective Technologies Capital (protechcap.com).