5 Best ESMA Forex Brokers in [year]

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ESMA regulated Forex / CFD brokers offer traders one of the world’s tightest regulatory regimes with a high level of customer protection. Maximum leverage on Forex is capped at 1:30 while bonuses are banned, although neither of these issues should deter traders. Many of the best Forex brokers in the world enjoy their status as an ESMA regulated entity. We have reviewed them all and present our detailed broker by broker findings below.

1
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Best all around broker
High floating leverage + fast execution
2
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
ECN-style trading
Daily market research and Autochartist access
3
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
High level regulation in multiple jurisdictions
Impressive range of tradeable assets including vanilla options and gold options
4
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Solid broker for scalping and hedging
Institutional-style trading opportunities for retail traders
5
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Trade 1,000+ financial instruments
Experience low, competitive spreads
Multiple funding and swift withdrawal options

  • FXTM, Best all-around broker with high floating leverage and fast execution.
  • FP Markets, ECN trading with leverage up to 1:500..
  • AvaTrade, Highly regulated, choice of fixed or floating spreads.
  • BlackBull Markets, Best ECN trading environment, with scalping and hedging.
  • Eightcap, Competitive pricing + excellent daily videos.

FXTM

5.0/5 in this category
In Summary
Best all-around broker with high floating leverage and fast execution

FXTM ranks among the best ESMA Forex brokers due to its low trading costs and fast order execution. For a deposit of $500 or a currency equivalent, Forex traders get raw spreads from 0 pips for a commission between $0.80 and $4.00 per 1.0 standard lot, plus NDD execution, ideal conditions for scalpers, ranking it among the lowest trading costs covered by the ESMA regulatory framework. FXTM features the trusted MT4 trading platform, leader for algorithmic trading using EAs, and offers VPS hosting. FXTM additionally upgrades the out-of-the-box MT4 with six plugins and its FXTM Pivot Point Strategy. Beginner traders will benefit from the quality educational section available at FXTM. It consists of written content, videos, eBooks, webinars, and seminars. FXTM also developed an interactive Forex periodic table. Market commentary is available via podcasts, market analysis videos, and the FXTM Forex News Line. FXTM’s reported retail loss rate is 77.0%.

Pros
  • Excellent commission-based Forex pricing environment and transparency

  • Upgraded MT4/MT5 trading platforms plus proprietary mobile trading app

  • Quality market research and educational content for beginner traders

  • Proprietary copy trading platform, low minimum deposit, and high leverage

Cons
  • Limited choice of cryptocurrencies and commodities

FP Markets

5.0/5 in this category
In Summary
ECN trading with leverage up to 1:500.

FP Markets caters to traders within the ESMA regulatory framework via its Cyprus operating subsidiary. Forex traders are offered 60+ currency pairs, fast NDD order execution without requotes, and ECN pricing. The available trading platforms at FP Markets are MT4, MT5, its proprietary WebTrader, and its newly developed mobile trading platform FP Markets Trading App. The twelve plugins for MT4, part of the FP Markets Traders Toolbox, upgrade the core version to a competitive trading solution. Traders have two pricing options. The commission-free Standard account lists average spreads at 1.2 pips for the EUR/USD, the lowest cost, or $12.00 per 1.0 standard lot. A notably cheaper cost structure exists in the commission-based Raw account, with an average mark-up of 0.1 pips and a commission of $6.00 per round lot for a total cost of $7.00. Video tutorials and daily market reports are also available. The retail loss rate is 70.7%.

Pros
  • Choice of trading platforms and auxiliary trading tools

  • Very competitive cost structure and excellent asset selection

  • Low minimum deposit requirement and leverage of up to 1:500

  • Well-regulated and trustworthy

Cons
  • Availability of Iress geographically restricted

AvaTrade

5.0/5 in this category
In Summary
Highly regulated, choice of fixed or floating spreads

Traders looking for an ESMA compliant broker, a broad range of trading platforms, and a well-balanced asset selection from a commission-free trading environment will feel at home at Irish-based AvaTrade. Besides the well-known and trusted MT4, AvaTrade presents MT5, its proprietary WebTrader, its mobile app AvaTradeGO, its options platform AvaOptions, and its newly added social trading service Ava Social. Services by Trading Central are available as an MT4/MT5 plugin and in its mobile app. With 1,200 trading instruments, including options, AvaTrade presents a competitive asset selection. It is also a trusted cryptocurrency CFD broker operating within the ESMA regulatory framework. AvaTrade also offers a high-quality partnership program. Trading costs start from 0.9 pips or $9.00 per 1.0 standard lot. Beginner traders will benefit from SharpTrader, the spun-out trading academy featuring 40+ lessons and 200+ videos. It is the most in-depth broker-developed educational resource. The retail loss rate is 71.0%.

Pros
  • High-quality educational offering via SharpTrader

  • Excellent choice of trading platforms catering to various trading needs

  • Broad asset selection and cross-asset diversification opportunities

  • Well-regulated and trusted broker with oversight from a central bank

Cons
  • Trading costs competitive but nothing special

BlackBull Markets

4.5/5 in this category
In Summary
Best ECN trading environment, with scalping and hedging

BlackBull Markets was founded in 2014 in New Zealand. Like many antipodean Forex brokers, BlackBull Markets is an ECN broker, offering raw spreads and commissions. They are regulated in New Zealand by the Financial Services Providers Register (FSPR) and offer a maximum leverage on some Forex currency pairs as high as 500 to 1. In addition to their global headquarters in New Zealand, BlackBull Markets also has presences in the form of branch offices in New York and Malaysia. BlackBull Markets offers a relatively tight range of tradable assets: 27 Forex currency pairs and crosses, gold, silver, crude oil, natural gas, and 6 major equity indices. That should be sufficient for those traders with more focused strategies not requiring wide diversification.

BlackBull Markets Pros & Cons

Pros
  • ECN/NDD execution model with deep liquidity

  • Institution-grade pricing for retail traders via proprietary price aggregation

  • ZuluTrade and Myfxbook for social trading

  • Leverage of up to 1:500

Cons
  •  Limited deposit options

Eightcap

4.5/5 in this category
In Summary
Competitive pricing + excellent daily videos

Eightcap Pros & Cons

Pros
  • Low minimum deposit and high leverage of up to 1:500

  • Competitive cost structure

  • Excellent technology infrastructure and seasoned management team

  • Daily research and quality educational content

Cons
  • Limited leverage in some areas

Forex Brokerages Working Under ESMA Regulations

Forex/CFD brokerages operating under ESMA regulations carry two very notable regulatory conditions which are worth understanding. Firstly, the maximum leverage which can be offered to clients trading Forex currency pairs is thirty to one. This means that the largest trade you can open is your total account size multiplied by thirty. Some traders will not like the idea of being limited to a maximum leverage of thirty to one, but it is worth considering how much money you could become liable for at a much higher level of leverage in the event of a sudden huge price movement.

Closely connected to this is a further restriction which prevents any retail client from being liable under any circumstances for an amount beyond the funds which are already sitting in the brokerage account. This “negative balance protection” is a welcome one, as in the past when there have been huge sudden price movements which slip right through brokerage stops, such as the huge Swiss Franc move in January 2015, clients could suddenly find themselves legally liable for large sums far exceeding their deposit. The sudden volatility triggered by that event and effective freezing of the entire global market in Swiss Francs for about an hour resulted in traders leveraged by more than 1:3 seeing instant losses exceeding their account equity with no ability to immediately exit the trade. This is now a danger which belongs to the past if you trade with an ESMA regulated Forex/CFD brokerage. However, it is also true that many brokers who are not regulated by ESMA offer negative balance protection as it has come to be seen as a fair practice.

Now that you have considered ESMA-related issues, you can consider what the broker has to offer. Is the cost of trading there competitive or not? Check spreads, commissions, and other incidental fees. Remember that some brokers can offer very competitive fees on certain asset classes, such as Forex, while the cost of trading commodities might be high, for example, so check the fees section in the reviews carefully depending upon what instruments you intend to be trading the most. Traders who are planning to keep trades open over the New York rollover at the end of the trading day there should also consider the overnight swaps typically offered. Unfortunately, some brokers abuse this typically “hidden” fee.

Finally, examine the “nice to have” elements, such as the range of tradable instruments, quality of customer support, and trading platforms. Going through the process in this order should ensure you end up opening an account with the best ESMA regulated Forex broker for you.

Main ESMA Forex Regulations

  • The maximum leverage which can be offered in Forex is 30 to 1. That applies to major currency pairs such as EUR/USD, GBP/USD, USD/JPY, etc.
  • Other currency pairs, major equity indices, and gold will be subject to a maximum leverage of 20 to 1.
  • Individual equities cannot be offered with leverage greater than 5 to 1.
  • Cryptocurrencies are subject to a maximum leverage of 2 to 1.
  • Brokers are required to provide negative balance protection, meaning it will be impossible to lose more money than you deposit.
  • Brokers are required to close a client’s open positions when the account equity reaches 50% of the required minimum margin by all open positions. This “margin call” provision can be tricky to understand, so will be explained in more detail later.
  • Bonuses or any other form of trading incentives may not be offered.
  • Brokers will be required to display a standardized risk warning which will include the percentage of their clients who lose money over a defined period.

Understanding the “Margin Call” Regulation

The best way to understand the 50% margin call provision is to use an example. Imagine a client opens an account with a Forex broker, depositing €100 in total. The client opens a short trade in EUR/USD, by going short one mini-lot (one tenth of a full lot). One full lot of EUR/USD is worth €10,000, meaning one mini lot is worth €1,000. To find out the minimum margin required to support that trade, we divide the size of the trade (€1,000) by 30, which comes to €33.33. This is the minimum required margin to maintain the trade. Half of that amount is €16.67. Now assume the trade goes against the client, with the price of EUR/USD rising above the entry price. As soon as the price rises far enough to produce a floating loss of €83.33 (€100 - €16.67), the broker must close the trade out, even if the trade has no stop loss or has not yet reached the stop loss. In theory, this means that a client’s account can never reach zero. Examples involving multiple open trades will be more complex but will operate according to the same principles.

Who is a Retail Client?

The regulations detailed above only apply to “retail clients”. However, to get a broker to classify you as anything other than a retail client, you must show you have financial qualifications, a large amount of liquid assets, plenty of experience trading, and usually that you also trade frequently. Most traders will be unable to qualify.

Impact of 2018 ESMA Forex Regulations

The major impact these regulations have had since 2018 is simple – the maximum trade size that can be traded with brokers regulated in the European Union has shrunk.

Beyond having to deposit more margin, and automatic margin calls, the other major change for traders has been the post-2018 guarantee of negative balance protection. This is a positive development which hopefully makes brokerages focus more heavily on the risks they are taking with their business model in the market.

Two final notes: brokerages must report on their websites the percentages of clients who are losing and making money. Additionally, bonuses and promotions are banned.

Final Thoughts

Now that you have considered ESMA-related issues, you can consider what the broker has to offer. Is the cost of trading there competitive or not? Check spreads, commissions, and other incidental fees. Remember that some brokers can offer very competitive fees on certain asset classes, such as Forex, while the cost of trading commodities might be high, for example, so check the fees section in the reviews carefully depending upon what instruments you intend to be trading the most. Traders who are planning to keep trades open over the New York rollover at the end of the trading day there should also consider the overnight swaps typically offered. Unfortunately, some brokers abuse this typically “hidden” fee.

Finally, examine the “nice to have” elements, such as the range of tradable instruments, quality of customer support, and trading platforms. Going through the process in this order should ensure you end up opening an account with the best ESMA regulated Forex broker for you.

FAQs

What is ESMA in Forex trading?

ESMA is an acronym referring to the European Securities and Marketing Authority. It is a European Union-wide financial watchdog and regulates Forex and CFD brokerages within the European Union.

How do you check if a broker is regulated?

You can check to see whether a broker is regulated by looking at the registry of the regulator in the country where it should be regulated: a list of relevant sites can be found here.

What is the role of ESMA?

ESMA is an independent European Union Authority tasked with maintaining the stability of the European Union’s financial system. It performs this function by protecting investors and taking measures to ensure orderly capital markets.

What is ESMA Regulation?

The main regulatory rules imposed by ESMA on Forex and CFD brokers under its jurisdiction are:

  • Maximum leverage which can be offered to retail clients is 30 to 1.
  • In individual equities cannot be offered at leverage higher than 5 to 1.
  • The maximum leverage on cryptocurrencies is 2 to 1.
  • Retail clients enjoy negative balance protection.
  • Bonuses and binary options may not be offered.
  • Brokers must display a standardized risk warning showing the percentage of clients losing money in recent history.
Huzefa Hamid

I’m a trader and manage my own capital. I trade the major Forex pairs, some Futures contracts, and I rely entirely on Technical Analysis to place my trades. Today, I am also a Senior Analyst for DailyForex.com. I began trading the markets in the early 1990s, at the age of sixteen. I had a few hundred British pounds saved up (I grew up in England), with which I was able to open a small account with some help from my Dad. I started my trading journey by buying UK equities that I had read about in the business sections of newspapers. The 1990s were a bull market, so naturally, I made money. I was fortunate enough in my early twenties to have a friend that recommended a Technical Analysis course run by a British trader who emphasized raw chart analysis without indicators. Having this first-principles approach to charts influences how I trade to this day.