A forex banking license lends higher credibility. You can also enjoy various advantages when you join forex brokers with banking licenses.
Forex brokers with banking licenses have been all the rage recently. A forex banking license lends higher credibility to a financial institution, providing it with better brand recognition and trustworthiness in the eyes of potential clients.
Here are some of the best forex brokers with banking licenses:
- Barclays: Provides cross-asset trading through an exclusive trading platform, BARX.
- Dukascopy: The most popular forex broker with a banking license.
- Citibank: One of the main choices for retail traders since 2009.
- IG Group: One of the biggest brokerage companies in the UK.
- Saxobank: A fully licensed bank that is better known as a forex broker.
Decoding the So-called "Forex Banking License"
Banking institutions play a vital role in the forex market. Banks by themselves are licensed to serve as a middleman between the buyer and the seller in forex trading. Banks traditionally also provide their customers with a variety of services, such as currency exchange, forex saving deposits, and custodians of forex trading accounts.
Following the development of advanced financial technology, many investment banks seek additional licenses to offer their own proprietary forex trading platforms. On the other hand, forex brokers may seek banking licenses to complement their group's businesses and in order to expand their customer base.
There are very few forex brokers with banking licenses compared to the ones without this prestigious status. Nevertheless, each has different circumstances.
We can classify the so-called "forex banking license" into three categories:
- Traditional investment banks provide services for their clients through proprietary trading apps while maintaining regular banking services, such as Barclays and Citibank.
- Financial institutions initially licensed as banks but then became popular as forex brokers instead, such as Dukascopy and Saxobank.
- Financial groups initially operated as forex brokers but then obtained banking licenses through acquisition or other means, such as Finam and IG Group.
Overview of the Best Forex Brokers with Banking Licenses
Here is further information on brokers with banking licenses. Each of them is carefully picked to represent all three categories that have been previously discussed.
1. Barclays
Through its cross-asset electronic trading platform, BARX, Barclays provides access to 450+ currency pairs (including exotics). The platform also offers cutting-edge features, including real-time market data, innovative pricing models, charting tools, advanced algos, and customizable trading techniques. BARX does not specify certain amount of minimum or maximum deposit requirements, but maximum leverage is restricted up to 1:100, and the minimum position size is 50,000 (0.5 standard lot).
2. Dukascopy
Dukascopy might be the most popular forex broker with banking licenses, because they have been providing services for retail traders since 1998. While other banks mainly work with corporate clients and high-cap individuals, Dukascopy offers trading services with minimum deposit requirements of $100.
Founded in 2004, Geneva-based Dukascopy Bank offers trading spots, including forex, metals, binary options, CFDs on bonds, commodities, indices, stocks, ETFs, and cryptocurrencies through the same platforms. After the development of the Swiss FX Marketplace, Dukascopy acquired a Swiss banking license in 2010 and launched Dukascopy Bank.
They try to provide trading services based on the following main principles: equal trading rights and a transparent pricing environment. Dukascopy is licensed in Switzerland through the Swiss Financial Market Supervisory Authority (FINMA) and in the EU through the Financial and Capital Market Commission of Latvia (FCMC).
This ECN-Marketplace represents the advanced generation of liquidity aggregators in the industry. Dukascopy has a unique technology to hedge instantly any clients' trades directly with other liquidity providers. The company is currently connected to Bank of America, Commerzbank, Nomura, Barclays, Currenex, Deutsche Bank, JP Morgan, and other liquidity providers.
All trades are usually executed in milliseconds. Dukascopy offers the deepest source of liquidity in the industry resulting in tight spreads.
Opening an account in Dukascopy would allow you to trade in its proprietary platform called JForex, which can be accessed by desktop and mobile. In desktop experience, traders can get several features including hundreds of indicators, advanced charting, historical testing, real-time news, and embedded customer support.
On the other hand, customization is weak as there are no pop-out charts or built-in complex desktops and watchlists. The web version of the Java-based software triggers security warnings in Chrome and other browsers, while JForex mobile versions allow easy syncing between platforms.
Not only JForex, trading in Dukascopy also offers access to MetaTrader 4 platform that is appreciated by many traders around the world. It has main features such as expert advisors and customizable templates.
Furthermore, Dukascopy provides two types of accounts including Mobile Current Account (MCA) and Standard Current Account (SCA). For private use, traders can choose both account types. But for business use, SCA is more suitable. The minimum acceptable order size is 1,000 units of the primary currency.
Depending on Dukascopy services used by the clients, commissions may apply. Commissions and spreads are calculated through a declining tier system, with clients categorized by monthly trading volume and net deposit.
Dukascopy has won several awards including Best Forex Trading Apps 2019, Best Platform & Tools 2018, and Best Mobile Trading. Besides, the company also gets awarded as Best Forex Bank 2018 by China (Shenzhen) Forex Expo, Best Forex ECN/STP Broker 2018 by London Forex Show, and Best Provider of Liquidity 2017 by IAFT Awards.
Traders will get multiple ways of funding account, including credit and debit cards, wire transfers, and bank transfers. Each client is protected up to CHF100,000 against the insolvency risk of Dukascopy Bank. However, Dukascopy charges a $20 fee in addition to possible bank or credit card charges for withdrawals.
Dukascopy's clients have the opportunity to get more profit through bonus programs, including Equity Bonus, Discount Program, Experience Sharing, and Anniversary Bonus.
The minimal deposit size of the account with Dukascopy Europe is $100, while the minimum for Dukascopy Bank SA is $1,000. Deposits accepted in 23 currencies. Several additional features are available depending on the clients' profile and the type of account.
Dukascopy Bank provides a wide range of free financial information and other attractive resources through its website, Dukascopy TV online television, Freeserv products, and its active online Dukascopy community that hosts over 130,000 members. Based on the review of their clients, product sections and trading platforms point to limited "how-to" articles and videos about forex, CFD, indices, and cryptocurrency trading venues.
The members of Dukascopy may exchange in several languages on trading experiences, market views, trading strategies, may win prizes in various contests, and freely communicate through advanced and secure chat and video conference systems developed by Dukascopy.
The company provides a 24/6 support team through phone and live chat. Traders also can send questions via email. They maintain active social media portals as well as a dedicated support forum for JForex and automated trading.
Overall, Dukascopy is suitable for the highly experienced and high-volume traders. Higher than average trading costs could undermine beginner and retail accounts, who may have to look elsewhere for building skill levels due to weak educational resources.
3. Citibank
Citi was one of the biggest forex dealers worldwide several years ago. They rank lower recently, but the CitiFX Pro platform has been one of the leading choices for retail and small institutional traders since 2009. CitiFX Pro provides access to at least 130 currency pairs with settlement in the customer's base currency, advanced order management tools, and one-click trading. A standard account requires a deposit of at least $10,000.
4. IG Group
IG Group started as a spread betting business in 1974 and grew to be one of the largest brokerage firms in the UK. It is listed on the London Stock Exchange and is well-regulated with multiple licenses from various regulatory bodies. IG Group currently consists of various subsidiaries, including IG Bank, which is authorized and regulated by FINMA (Switzerland). IG Bank has no minimum deposit requirement.
IG Markets is an online trading provider with decades of experience in the financial market. Founded in 1974, the world-leading company has gathered more than 178,000 clients worldwide with over 16,000 markets reached as of 2019. IG Markets is authorized and regulated by the Australian Securities and Investment Commission (ASIC). It is also important to note that being established in 1974 makes IG Markets one of the forefront online CFD brokers. Their service has expanded to 15 countries across five continents.
Aside from famous for its reliable experience, IG Markets is also known for its truly broad range of trading instruments. In fact, the broker has long been regarded as one of the most accomplished companies in offering the most trading assets to clients. The wide choice of instruments includes forex pairs, 26 indices, over 12,000 shares, hard and soft commodities, cryptocurrencies, as well as other markets such as bonds, rates, and options.
Forex trading in IG Markets is provided in two ways: CFD and DMA (Direct). Here are the conditions for each type of trading:
Forex CFD
- Minimum spread: 0.6 pips
- Commission: None
- Platforms: Web, mobile apps, MT4, ProRealTime, L2 Dealer, terminals and APIs
- Trading size: Contracts
- Demo account: Yes
Forex DMA
- Minimum spread: No details
- Commission: from $10 per $1 million traded
- Platforms: Web, mobiles apps, L2 Dealer, terminals, and APIs
- Trading size: Lots
- Demo account: No
Both ways of trading are available for all clients. However, DMA does not enable trading in MetaTrader 4. Clients are also not allowed to trade in a demo account for virtual trading. It is essentially a type of trading reserved for experienced traders with high necessity for the best pricing in the market, as DMA offers market depth from a range of exchanges (including full market depth from the LSE).
Trading platforms in IG Markets are accessible via web, mobile app, and desktop. They are offered with 2 main varieties: Core Platforms and Specialist Platforms. The core platform is meant for all types of trading with the add-ons of DMA, ProRealTime access, and Forex Direct. Meanwhile, Specialist Platforms consist of L2 Dealer, ProRealTime, and MetaTrader 4.
The first two platforms charge fees that include minimum $2000 balance and monthly fees for shares data and level 2 prices (for L2 Dealer), as well as platform fees amounting to $40 per month and monthly fee for shares data (for ProRealTime).
IG Markets does not require a minimum balance to open an account. It also provides a swap-free account that frees clients for any interest, rollover, or swap charges on overnight positions. Yet, All costs and charges are built into the spread. This account suits well with long-term traders who need to keep their positions open for days or even weeks.
For beginners, IG Markets builds an IG Academy that gives interactive education and online trading courses. This way, clients can get a grip on the financial markets with the essentials of trading provided in infographics, video explainers, and end-of-course quizzes. Even better, the IG Academy is already integrated into its mobile app so clients can always learn about financial markets in much more efficient ways.
In conclusion, IG Markets is a client-friendly broker with more than 40 years of experience to back up its credibility. Their efforts and commitments to provide the best varieties of trading platforms are proven in the unique Core and Specialist Platforms.
Traders with little experience can apply to Forex CFD account in either Core Platforms or MetaTrader 4, while professionals can achieve the best experience in the financial market with IG Market's DMA trading and L2 Dealer or ProRealTime platforms.
5. Saxobank
Saxobank is incorporated in Denmark as a fully licensed bank. However, they are better known as a forex broker and liquidity provider. Some of the most popular forex brands were established as white-label products of Saxobank, including certain services from CitiFX Pro. Saxobank requires a minimum deposit of $2000 for an entry-level trading account.
Saxobank was founded in 1992 in Denmark, which began as a brokerage business. At present, they have penetrated the online banking and forex trading business internationally. The company is known as one of the best in the industry.
Their innovative platforms have been used by Microsoft's global institutions, Barclays Stockbrokers Ltd, and TD Waterhouse. The platforms include SaxoTraderGO, an award-winning trading platforms and is offered as Saxobank's flagship. Two other platforms are SaxoTraderPRO and SaxoInvestors. Each platform has advantages and functions.
SaxoTraderPRO is suitable for use by advanced traders and institutional clients, which trade faster via quick-close all features and view exchange order books and execution reports in real-time. On the other hand, Saxo TraderGO is a platform for retail traders. This type of platform offers easy portfolio management from a single account. For example, traders can get live and historic reports of net holdings.
As for Saxo Investors which is a user-friendly case-product platform tailored to retail investors, there are several advantages including browsing curated themes and pre-made screenings. Also, clients can choose between diversified investment portfolios. It is a responsive platform accessible from any device.
The Saxobank website accommodates the needs of international clients, with dozens of languages available on the Saxobank website. Besides English, there are also Japanese, Mandarin, French, Italian, Indonesian, and many more.
When clients choose Saxo, clients are choosing to trade with a fully regulated industry leader, who adheres to strict regulatory requirements in 15 financial centers around the world, including the UK, Singapore, Hong Kong, and Denmark.
Another advantage is traders have so many choices of instruments that can be traded on Saxo, covering 40,000 instruments across 184 forex pairs, 9,000 CFDs, 19,000 shares, 200 Stock options, 2,500 ETFs, Futures, Gold, Silver, and many more.
Since the company also serves as a bank, the speed of execution at Saxo can be guaranteed. However, some traders may feel that Saxobank is not suitable for individual trading, as the minimum capital is too large and the spreads and commissions are considered burdensome for so many clients. The spread which is charged by Saxobank for each pair is quite large, so it is not suitable for scalpers. Meanwhile, the commission that must be paid by traders to this broker starts from USD1.
Furthermore, Saxobank often stops trading for a few seconds before the release of important news and only activates it again after the news is released. This makes news traders do not have the best opportunity to act on Saxobank.
Actually, The deposit value can be adjusted according to the level of account chosen by the clients. There are three levels in Saxo Accounts, including Classic (minimum funding is 500 Pounds), Platinum (minimum funding is 50,000 Pounds), and VIP (minimum funding is 1,000,000 Pounds). Clients can use leverage 1:200 and a minimum lot of 0.05.
Traders are spoiled with various kinds of facilities provided by Saxobank. Each aaccount level has its own facilities offering that can be adjusted to the needs of traders. The higher the level, the more complete the facilities provided.
For example, traders who have VIP accounts will get personal relationship managers, and direct access to trading experts 24 hours. These facilities are not found when traders choose Classic and Platinum accounts.
For Corporate Clients, Saxobank provides 40,000 instruments, with 1: 1 support from expert account managers and the security that comes from their 25+ year experience.
If clients meet professional criteria, they can join Professional Accounts at Saxobank. The criteria in question include having a financial portfolio that exceeds around 500,000 Euros, having placed at least 20 relevant trades in significant sizes over the last four quarters, and having worked in the financial sector for at least one year.
Moreover, Saxobank provides more than 100 institutional specialists operating from offices in key financial centers, including Denmark, London, Singapore, Shanghai, Hong Kong, Switzerland, and Dubai. The client can choose the location closest to their area. With this kind of support, Saxobank is optimistic for delivering the right solution for the business of clients.
From the explanation above, it can be concluded that Saxo is more suitable for deep-pocket forex traders who are interested in forex trading as an investment portfolio. The broker's business focus is also more towards institutional clients rather than retail clients.
Advantages of Forex Brokers with Banking Licenses
There are a number of advantages when you join any forex broker with banking licenses, including:
- You can avoid dubious entities because offshore companies are not usually formally authorized as both a bank and a forex broker at once. To be a forex broker with a banking license, one usually has to be registered in the US, UK, EU, or Russia.
- Banks are required by law to disclose all information about their capital, organizational structures, assets, and debts. They also had to safely pass a stress test set by the central bank. As such, your funds are relatively more protected from second-party risks. Banks can go bankrupt and deceive you just like other financial institutions, but the existence of a banking license significantly reduces the likelihood of financial insolvency and fraud.
- Banks themselves are key participants in the forex market. They do not have to rely on other entities as liquidity providers, so they can offer the best trading conditions and minimum spread for forex traders.
So, are you interested in opening an account with this type of forex broker? Take your time to think it through, because there are also several drawbacks, such as higher initial deposit requirements, lower maximum leverages, and relatively more complex registration and transfer payment procedures.
Make sure that you are ready to fulfill all the terms and conditions. Carefully prepare all the documentation you may need for account registration. Feel free to request a consultation with their customer support department whenever you need it.
Aside from brokers with banking licenses, you could also find other prominent brokers to trade with in "Top 10 US Brokers for Day Trading".