Financial Conduct Authority (FCA) Brokers 2024
The Financial Conduct Authority (FCA) is responsible for regulating financial services in the UK, from banks to day trading brokers. This guide will cover what a licence from the FCA means, as well as the trading benefits of registering with an FCA regulated brokerage. Along the way, we will also cover the group’s history, specific rules and regulations, plus key terms and current complaints. We have also compiled a list of the best FCA-regulated brokers.
The Best FCA Brokers
We have reviewed over 450 brokers as of March 2024 and have determined that these are the 4 best FCA brokers on the market:
#1 - Interactive Brokers
Why We Chose Interactive Brokers
Interactive Brokers (IBKR) is a premier brokerage for experienced traders, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.
"Interactive Brokers is one of the best brokers for advanced day traders, providing powerful charting platforms, real-time data, and customizable layouts, notably through the new IBKR Desktop application. Its superb pricing and advanced order options also make it highly attractive for day traders, while its diverse range of equities is still among the best in the industry."
- DayTrading Review Team
- Instruments: Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies
- Regulator: FCA, SEC, FINRA, CBI, CIRO, SFC, MAS, MNB
- Platforms: Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, eSignal, TradingCentral
- Minimum Deposit: $0
- Minimum Trade: $100
- Leverage: 1:50
Pros
- The TWS platform has clearly been built for intermediate and advanced traders and comes with over 100 order types and a reliable real-time market data feed that rarely goes offline.
- With low commissions, tight spreads and a transparent fee structure, IBKR delivers a cost-effective environment for short-term traders.
- While primarily geared towards experienced traders, IBKR has made moves to broaden its appeal in recent years, reducing its minimum deposit from $10,000 to $0.
Cons
- Support can be slow and frustrating based on tests, so you might find it challenging to reach customer service representatives promptly or encounter delays in resolving issues.
- TWS’s learning curve is steep, and beginners may find it challenging to navigate the platform and understand all the features. Plus500's web platform is much better suited to new traders.
- You can only have one active session per account, so you can’t have your desktop program and mobile app running simultaneously, making for a sometimes frustrating trading experience.
#2 - IG
Why We Chose IG
Founded in 1974, IG is part of IG Group Holdings Plc, a publicly traded (LSE: IGG) brokerage. The brand-US offers spread betting, CFD and forex trading across an almost unrivalled selection of 17,000+ markets, with a range of user-friendly platforms and investing apps. For 50 years, IG has maintained its position as an industry leader, excelling in all key areas for traders.
"IG continues to provide a comprehensive package with an intuitive web platform and best-in-class education for beginners, plus advanced charting tools, real-time data, and fast execution speeds for experienced day traders."
- DayTrading Review Team
- Instruments: CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting
- Regulator: FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA
- Platforms: Web, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral
- Minimum Deposit: $0
- Minimum Trade: 0.01 Lots
- Leverage: 1:30 (Retail), 1:250 (Pro)
Pros
- The ProRealTime advanced charting platform is free as long as certain modest monthly trading activity requirements are met
- IG is amongst the best in terms of its range of instruments, which includes stocks, forex, indices, commodities, and cryptocurrencies, providing ample diversification opportunities
- As a well-established broker, IG operates under strict regulatory guidelines in multiple jurisdictions, maintaining a high level of trust
Cons
- IG applies an inactivity fee of $12 per month after 2 years, deterring casual investors
- IG has discontinued its swap-free account, reducing its appeal to Islamic traders
- While there is negative balance protection in the UK and EU, there is no account protection or guaranteed stop losses for US clients
#3 - Kraken
Why We Chose Kraken
Kraken is a leading cryptocurrency exchange with a proprietary trading terminal and a list of 220+ tradeable crypto tokens. Up to 1:5 leverage is available with stable rollover fees on spot crypto trading and up to 1:50 on futures. The exchange also supports crypto staking and has an interactive NFT marketplace.
"Kraken will suit traders looking for a diverse list of cryptos including Bitcoin and a good security track record."
- DayTrading Review Team
- Instruments: Cryptos
- Regulator: FCA, FinCEN, FINTRAC, AUSTRAC, FSA
- Platforms: AlgoTrader
- Minimum Deposit: $10
- Minimum Trade: Variable
Pros
- Mobile investing
- 50x leverage on futures trading
- Excellent range of 220+ more established cryptocurrencies
Cons
- Low leverage on spot trading
- Slow verification process on Pro account
- Slow verification times
#4 - Gemini
Why We Chose Gemini
Gemini is a cryptocurrency exchange set up in 2014 by the Winklevoss brothers, known for their early involvement in Facebook. The exchange is among the world’s 20 largest and most popular. Gemini clients can trade and stake 110+ cryptocurrencies, with derivatives trading available in some jurisdictions, an advanced proprietary platform and additional features including an NFT marketplace.
"Gemini’s ActiveTrader platform and TradingView integration make it a good choice for serious crypto traders seeking a reliable charting environment, though we were disappointed by some unnecessary fees and previous security breaches."
- DayTrading Review Team
- Instruments: Cryptos
- Regulator: NYDFS, MAS, FCA
- Platforms: ActiveTrader, AlgoTrader, TradingView
- Minimum Deposit: $0
- Minimum Trade: 0.00001 BTC
Pros
- The trading app features a user-friendly, modern design and intuitive interface, with an excellent range of charting tools for day traders
- Crypto perpetual futures are available in many jurisdictions with up to 1:100 leverage
- The exchange ensures high security standards with 2FA a requirement for all crypto investors
Cons
- The exchange has a history of concerning incidents including the collapse of its Earn program and a phishing breach
- There are high fees for some funding methods including a 3.49% fee for card transactions
- Some larger coins by market cap are not available to buy through Gemini
What is the FCA?
Operating independently from the UK Government, the FCA is one of the most prestigious regulatory bodies in the world. In fact, the regulations of the FCA help govern over 56,000 financial services firms.
As their official website states, key objectives include:
- The supervision and enhancement of financial markets in the UK
- Encouraging healthy competition within financial services in the interest of consumers
- Using enforcement and investigation to ensure compliance with regulations aimed at treating customers fairly
These all fall under the overarching objective to ensure the functionality of financial markets within the UK. But while the definition and meanings may be simple, preventing market abuse and implementing new regulations can prove challenging, as will be shown below.
Note the agency has the authorisation to regulate both retail and wholesale financial services firms.
Structure
The FCA is a limited company by guarantee. The majority of its funding comes from charging fees to members of the finance industry. The amount regulated entities pay depends on the activities undertaken, the scale of those activities and the costs incurred by the FCA.
Note that the FCA must also keep in line with EU MiFID II regulations and guidelines. This means watch lists and regulated markets can change with notifications of new deadlines and outcomes from the EU framework. This can affect everything from short positions to commodity position limits.
See ESMA’s website for a summary of MiFID II regulations.
History
The FCA is a relatively new body that came to life on April 1st, 2013. Its predecessor was the Financial Services Authority (FSA). But when the Financial Services Act came into force, the FSA was abolished and a new regulatory structure was created, including the FCA.
There was then a merging of FCA/FSA legislation and regulations. Although the structure was to change, the approach to consumers and competition remained similar. In addition, the handbook, conduct rules and objectives all retained a likeness.
However, despite similarities, the Financial Services act brought in some significant changes to the scope of the FCA. This was to ensure the financial sector could better manage risk following the 2008 financial crisis.
A quick search online and you will see the FCA has made the news in recent years for several reasons. Firstly, because the body is particularly active and tougher than many similar regulatory agencies in Europe. In fact, the FCA has given out a number of substantial fines to forex brokers for price manipulations and acting without the interests of consumers in mind.
The regulatory agency has also made the news for attempting to implement checks and balances on binary options and cryptocurrency, such as Bitcoin. It has done this using 2017 and 2018 regulations, official warning lists and more.
Note in 2018 FCA headquarters were to move from Canary Wharf to Stratford, London. Having said that, they also have offices in locations such as Edinburgh, Scotland.
Responsibilities & Powers
So what powers and responsibilities do the FCA have? With ensuring the functionality of financial markets being such a broad objective, the body has extensive powers and duties.
Introducing forex regulations, principles for algorithmic trading businesses and blockchain companies could all fall under their remit. On top of that, ensuring data protection, removing financial promotions and protecting vulnerable customers all form part of the body’s role.
Specific examples of the latest and upcoming FCA regulations also include:
- An ability to ban products for up to a year as it considers a lifetime ban
- Implementing maximum leverage limits and ensuring appropriate risk warnings
- Using the Financial Services Compensation Scheme to afford retail clients up to £30,000 if an FCA regulated forex broker goes bankrupt. Customers may also get 90% of the next £20,000. However, it cannot promise compensation on more than £50,000, which is still greater than EU bodies.
The FCA has a range of measures it can take when a broker breaches compliance regulations. This can include warning notices and new reporting requirements, all the way up to hefty fines and the banning of products. Unsurprisingly, it is the latter measures that often hit regulated brokers where it hurts most. This is perhaps why the regulatory agency gave out a staggering £229,515,303 in fines during 2017.
The FCA also has more middle ground powers, such as the temporary suspension of trading accounts. A power they used when Plus500’s less than stringent documentation requirements failed to protect against customer losses and prevent money laundering.
Criticisms
Despite a whole host of sales, lending, accounts, data security and client money regulations, the FCA still faces criticism.
Inaction
In June of 2013, the Parliamentary Commission for Banking Standards said “The interest rate swap scandal has cost small businesses dearly. Many had no concept of the instrument they were being pressured to buy. This applies to embedded swaps as much as standalone products. The response by the FSA and FCA has been inadequate. If, as they claim, the regulators do not have the power to deal with these abuses, then it is for the Government and Parliament to ensure that the regulators have the powers they need to enable restitution to be made for this egregious mis-selling”.
Personnel
There have also been complaints about the choice of personnel at the top of the FCA. For example, there were numerous calls for the resignation of the chairman John Griffith-Jones as he was responsible for HBOS audit when chairman at KPMG during the 2007-2008 financial crisis.
In addition, many were unhappy about the choice of chief executive, Martin Wheatley. This is because of his role in the minibond fiasco in Hong Kong. In fact, there were no pre-appointment hearings for either of these placements, so people were unable to officially disapprove.
Price
There is an issue with fees. Obtaining an FCA license is relatively expensive compared to the likes of CySEC. As a result, many brokers pursue a CySEC licence so they can save money and meet lower entry requirements. What does it mean for consumers? Unfortunately, this results in less choice for consumers who want the extensive protections the FCA promises.
Lastly, it has also been said that the website and statutory regulations do not go far enough to ensure transparency and fair advertising.
FCA Responses
Despite the above, it’s worth noting the FCA has taken steps to address some of the issues above. For example, the regulatory body saw three new CEOs in the space of a year. It has also brought in new guidelines, listing rules and qualification requirements for brokers.
In addition, the regulatory body is making fewer exemptions and coming down hard on unauthorised firms. In fact, they publish public warnings and hold press releases to make consumers aware of fraudulent brokers and scams.
They have also sought to make it clear with what it stands for through its mission statement. At the same time, its employees are undertaking training to enforce effective banking and payment account rules, as well as transparency regulations.
So despite complaints on regulations, for the FCA to have achieved so much following the crisis of 2008 remains fairly impressive.
Final Thoughts
This page has given you an overview of FCA regulations and their meaning. One key point to take away is that the FCA is a benchmark in terms of regulations.
This is particularly the case when compared to other bodies, such as Cyprus’s CySEC. In fact, as one of the oldest and most reputable regulatory agencies, a huge number of brokers pursue an application for an FCA license.
Note you can connect with the FCA via their helpline or website if you have any complaints. Visit their website here.
Also, before you sign up with a new broker, check they are qualified and regulated by the FCA. You can do this by running their license number through the official FCA website.