Compare FCA Regulated Brokers

Are you on the hunt for an FCA regulated broker but unsure where to start? We can help!

The FCA (Financial Conduct Authority) is the UK’s financial regulator and are renowned for being one of the most stringent, respected and reputable regulators in the world. But how do you separate the good from the bad when there are so many options to choose from?

Well, look no further! This guide was designed to help you discover what an FCA regulated broker is and what their obligations are, whilst also underlining the importance of trading with an FCA regulated broker.

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What is the FCA and What Does it Do?

GraphicsThe FCA, or the Financial Conduct Authority, is a British public agency that is responsible for the functioning of the financial markets in the UK. The main aim of the FCA is to ensure honest and fair markets for consumers, businesses and the financial markets themselves. This is done by protecting consumers, enhancing market integrity and promoting fair & healthy competition.

The fees and capital requirements for holding an FCA licence are much higher than other licences around the world, as it has a reputation for placing certainty on trader security. All brokers regulated by the FCA must hold client funds in segregated bank accounts, so funds cannot be used for their own day-to-day requirements, and must hold at least GBP 1million in operating capital at all times.

Over 55,000 financial services firms and financial markets are regulated by the FCA in the UK!

How Do You Compare FCA Regulated Brokers to Find the Best One?

As the FCA is considered one of the most respected financial regulators in the world, it is fair to assume that trading with an FCA regulated broker is safe. Of course, there is always the odd naughty broker who gets found out and loses their licence, but typically most FCA brokers are safe to trade with. So how do you separate the great brokers from the good?

When comparing FCA regulated brokers consider these factors:

Regulation

This may seem like an odd consideration as of course your broker has an FCA licence, right? That may be the case but is your trading account actually under that licence or another one? We have been made aware that many FCA regulated brokers are actually onboarding UK residents (and others) to other licences under their company umbrella. They do this so traders can continue to receive higher rates of leverage, welcome bonuses etc. without FCA oversight. This is not necessarily a bad thing, however you should always know which licence you are trading under and if you want to be trading under their FCA licence, instruct them to do so.

Trading Costs

Every FCA broker will charge you to place trades on their platform, that is a given, however it is important to know what they are charging you for and how much. There are three main charges to any trade:

  1. Spread
  2. Commission
  3. Overnight financing

Some brokers will offer “spread only” trading (no commission), or “spread-free” (commission-only) trading. Be wary of such gimmicks – if a broker does not charge you any spread, expect to be charged a very high commission, and if the broker states they do not charge commission, expect a very wide spread.

Our recommendation is to ask a couple of brokers how much they charge to trade 1 x CFD of the Wall St 30 and 1 lot of EUR/USD. Ask them what the spread of each would be, if there are any commissions added and how they calculate their financing charges.

Platform Choice

There are plenty of trading platforms to choose from, each with different pros and cons. Most FCA regulated brokers offer the popular MT4 platform but there are many others to choose from that may appeal more than MT4. Shop around and test drive a few demo account’s to see what’s out there and what you like.

Deposits & Withdrawing Methods

Most FCA brokers will accept deposits via debit or credit card, and bank transfer. Some others offer far greater variety when it comes to funding methods – PayPal, Neteller, ChinaPay, Skrill and even Bitcoin are just some other methods available to you. If you are quite particular about how you would like to deposit funds, ensure that your broker of choice offers that method. For example, if you would like to deposit using Skrill, make sure your broker offers this method.

Customer Service

You can tell a lot about a broker by the quality of their customer support team. Some ASIC brokers offer excellent customer service – pleasant, knowledgeable, human and most importantly, helpful! Other brokers offer very poor support, and we feel that could be a sign of things to come.

We would recommend calling the support team of a few brokers and asking some generic questions to gauge how helpful and informative they are.



Why Choose an FCA Regulated Broker?

Despite the fact that FCA brokers can no longer offer leverage greater than 30:1 to retail clients, there are still some benefits of using an FCA broker.

Firstly, the FCA is a very well respected regulator and has a fabulous reputation. This alone should fill traders with plenty of confidence that they are trading with a safe broker.

Brokers that are regulated by the FCA must also hold client funds in segregated bank accounts and hold a minimum of GBP 1million in operating capital. The FCA also provides a compensation scheme of up to GBP 50k to protect traders against broker’s that go rogue.

Finally, the FCA do not simply hand out licences to any broker that requests one. There is a very strict (and time-consuming) process that takes place before a broker is granted an FCA licence. Not only do the FCA need to see proof of sufficient operating capital, but its Directors are all heavily scrutinised to ensure they are of good faith and quality. Most successful FCA licence applications take a minimum of six months to complete.