- XM is a Leader in Trade Execution with a No Requotes / Rejection Policy, 99.35% of Trades Executed in Less Than 1 Second
- Regulated by the UK's FCA (Ref No: 705428)
- UK Address: 1 Ropemaker Street London EC2Y 9HT United Kingdom
- UK Phone: +44 02031502020
The UK is one of the largest forex markets accounting for over 40% of global FX trading volume. Although emerging markets have expanded their share of the forex trading volume in recent years, the UK is unlikely to forfeit its top position any time soon.
London has been an important center of global finance for centuries and is the birth place of modern capital markets. The financial services industry in the UK contributes over £65 billion of tax revenue and employees over 2 million people.
Best Online FX Brokers in the United Kingdom
- No Frills CFD Provider with Low Transaction Costs
- Regulated by the UK's FCA (Ref No: 509909)
- UK Address: 78 Cornhill London EC3V 3QQ United Kingdom
- UK Phone: +44 02038761641
- Cutting Edge Social Trading Technology Connects You with 4.5 Million Traders in 170 countries
- Regulated by the UK's FCA (Ref No: 583263)
- UK Address: 42nd Floor One Canada square Canary Wharf London E14 5AB United Kingdom
- UK Phone: +44 02031500302
- Established 2007, Strong Financial Backing from Parent Company, Asian Financial Giant, Henyep Group
- Regulated by the UK's FCA (Ref No: 186171)
- UK Address: 3rd Floor 28 Throgmorton Street London EC2N 2AN United Kingdom
- UK Phone: +44 02073309000
- Top Notch Forex Broker with a Global Presence and a Long Operating History
- Regulated by the UK's FCA (Ref No: 113942)
- UK Address: Park House 16 Finsbury Circus London EC2M 7EB United Kingdom
- UK Phone: +44 2075508500
Table of Contents
Who Regulates Forex Trading in the UK?
Retail Forex Trading is regulated by the Financial Conduct Authority (FCA) in the United Kingdom. The FCA was established under the Financial Services Act of 2012 and replaced the Financial Services Authority.
The FCA is charged with regulating, supervising, investigating and enforcement with respect to Great Britain’s financial markets and covers over 56,000 businesses. It’s objectives including making the financials markets “honest, fair and effective” for all participants including small investors. It is an independent government body which is fully funded by fees collected from companies it regulates.
What is the Financial Services Compensation Scheme?
The FCA requires its regulated forex brokers to contribute to the Financial Services Compensation Scheme. It covers individual investors for up to GBP 50,000 of losses resulting from investment firms in default. This is significantly higher coverage than, for example CYSEC regulated brokers, which only cover the first EUR 20,000 of investment losses.
What changes has the FCA proposed in re Forex Regulation in 2017?
In light of increasing strict forex regulation in various European countries involving marketing, leverage and bonus incentives, the FCA has also began to revisit regulation of the retail forex industry.
In a consultation paper released December 2016, the FCA has proposed a leverage cap of 50:1 for experienced traders and a maximum of 25:1 for traders with less than 12 months of experience. They feel traders using high leverage tend to have to early close outs of losing trades from small market fluctuations where lower leverage traders can sustain greater market volatility. The FCA believes the proposed leverage caps will reduce trader losses by 20-40%.
They are also considering a restriction on bonus promotions. Some of the problems the FCA has identified with bonus incentives are broker hopping, volume conditions on bonuses leading to excessive trading, and unclear bonus withdrawal conditions.
Why are non-FCA regulated Forex Brokers allowed to operate in the UK?
Non-FCA regulated brokers are permitted to solicit UK forex traders because of EU legislation known as MiFID (Markets in Financial Instruments Directive). MiFID has been in force since 2007 and was created with the goal of increasing the competitiveness of European financial markets. It involves a certain degree of harmonization of financial regulatory standards across all European Union member countries.
One key feature of MiFID is it allows for “regulatory passporting” across European Economic Area (EEA). This helps decrease the regulatory and compliance burdens of operating in multiple European countries. This means, for illustration, Cyprus based CYSEC regulated firms can legally operate in the UK without a license from the FCA under MiFID.
While FCA and CYSEC regulation must meet MiFID standards, they are not the same. Thus, brokers naturally tend to choose to get licensed in European countries with less onerous regulation, lower capital requirements and lower taxes.
Implications of Brexit on Forex Regulation in the UK?
At the time of writing, it is not clear what impact Brexit will have in terms of regulatory passporting. This will depend on the exit deal negotiated between the EU and the UK. If the UK does not retain EEA membership, UK based forex brokers will need to open an European subsidiary to continue servicing EU clients. Likewise, Cyprus based forex brokers would need to open an FCA regulated UK subsidiary to reach UK forex traders.
UK Forex Summary
|Broker||Bonus||Min Deposit||FCA Ref No.||Date Authorised||UK Office||UK Phone|
|Plus500||-||$/€/AUD 100||509909||June 29, 2010||78 Cornhill London EC3V 3QQ United Kingdom||+44 02038761641|
|XM||$30 no deposit bonus, 20% deposit bonus||$5||705428||Mar 5, 2016||1 Ropemaker Street London EC2Y 9HT United Kingdom||+44 02031502020|
|Etoro||$100 referral bonus||$50||583263||Sept 5, 2013||42nd Floor One Canada square Canary Wharf London E14 5AB United Kingdom||+44 02031500302|
|HYCM||25% deposit bonus||$50||186171||Jan 12, 2001||3rd Floor 28 Throgmorton Street London EC2N 2AN United Kingdom||+44 02073309000|
|Forex.com||N/A||$250||113942||Jan 12, 2001||Park House 16 Finsbury Circus London EC2M 7EB United Kingdom||+44 2075508500|