The best Over-The-Counter (OTC) Forex brokers, according to our research, are:
- XM
- IG Markets
- AvaTrade
- Pepperstone
- Saxo
- CMC Markets
- FP Markets
- FXTM
- HF Markets
- FXCM
To make this choices, we considered many factors, including:
- The number of OTC forex pairs;
- The total number of OTC derivatives;
- The regulation of the broker;
- The overall quality of the service.
Round-up
| BROKERS | OTC DERIVATIVES | REGULATED BY |
|---|---|---|
| XM | 1.000+ | ASIC, CySEC, DFSA, FSC |
| IG Markets | 17.000+ | FCA, ASIC, BaFiN, DFSA, FSCA, MAS, FMA, FINMA, JFSA, NFA, BMA |
| AvaTrade | 200+ | ASIC, CBI, FSCA, JFSA, FFAJ, BVI |
| Pepperstone | 180+ | FCA, ASIC, CySEC, DFSA, CMA, SCB |
| Saxo | 40.000+ | FCA, ASIC, MAS, FINMA, UAE Central Bank, JFSA |
| CMC Markets | 10.000+ | FCA, ASIC, BaFiN, MAS, FMA, IIROC |
| FP Markets | 10.000+ | ASIC, CySEC,SV |
| FXTM | 250+ | FCA, CySEC, FSCA, FSC |
| HF Markets | 1.000+ | FCA, CySEC, DFSA, FSCA, FSC |
| FXCM | 100+ | FCA, ASIC, CySEC, FSCA |
Warning
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
What are the best OTC forex brokers?
Below our cureated list of the best OTC forex brokers, with details about features and characteristics.
XM
XM offers trading in over 1000 OTC derivatives. XM provides access to 57 forex pairs, as well as stocks, commodities, and indices with competitive spreads.
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Regulations:
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Avg. EUR/USD Spread:
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Platforms:
About XM
XM is a global forex and CFD broker founded in 2009, offering trading on currencies, commodities, indices, stocks, and cryptocurrencies. XM provides MetaTrader 4, MetaTrader 5, and proprietary platforms. XM is regulated by multiple authorities including CySEC, ASIC, and IFSC. XM is known for competitive spreads, extensive educational resources, and multilingual customer support. XM serves over 5 million clients from 196 countries. XM offers various account types and a no-requote policy.
XM Features
The features of XM are listed below.
- With XM you can trade over 1000+ OTC derivatives in total from different markets.
- Among the markets available there is forex, stocks, commodities, and indices.
- There are 57 forex pairs available to be traded.
- With XM spreads on EUR/USD start from 0.1 pips.
XM Pros and Cons
Advantages of XM
The advantages of XM are listed below.
- There’s a wide range of account types
- The demo account at XM is unlimited
- Wide range of educational resources
Disadvantages of XM
The disadvantages of XM are listed below.
- No social trading features available
- The account availability changes depending on the location of the trader
- High minimum deposit to invest in securities ($10000 for the XM Shares account)
IG Markets
IG Markets offers 17,000 OTC derivatives on forex, indices, shares, and commodities. IG Markets provides 80 forex pairs with low spreads.
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Regulations:
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Avg. EUR/USD Spread:
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Platforms:
About IG Markets
IG Markets is a global online trading provider founded in 1974, offering access to over 17,000 financial markets including forex, stocks, indices, commodities, and cryptocurrencies. IG Markets provides proprietary trading platforms alongside MetaTrader 4 and ProRealTime. IG Markets is regulated by multiple top-tier authorities worldwide, including the FCA and ASIC. IG Markets is known for competitive spreads, extensive educational resources, and innovative features like weekend trading. The IG Markets’ parent company “IG Group” CEO is Breon Corcoran.
IG Markets Features
The features of IG Markets are listed below.
- IG markets offer over 17,000 derivatives in total. The amount can be slightly lower depending on where the trader is based.
- These include markets such as forex, indices, shares, commodities, interest rates, bonds, turbo warrants, and other assets for professional traders.
- There is a good number of tradable forex pairs (80 in total), and spreads on forex start from 0.6 pips.
- UK forex traders can also have access to spread betting.
IG Markets Pros and Cons
Advantages of IG Markets
The advantages of IG Markets are listed below.
- Low spreads from 0.6 pips on Forex
- Wide range of financial instruments
- 40 years of experience in the Forex industry
Disadvantages of IG Markets
The disadvantages of IG Markets are listed below.
- No copy trading features
- No social trading features
AvaTrade
AvaTrade facilitates OTC forex trading with fixed spreads. AvaTrade offers over 200 OTC derivatives on forex, indices, stocks, bonds, and cryptocurrencies.
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Regulations:
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Avg. EUR/USD Spread:
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Platforms:
About AvaTrade
AvaTrade is a global forex and CFD broker founded in 2006 and headquartered in Dublin, Ireland. AvaTrade offers trading on currencies, commodities, indices, stocks, bonds, ETFs, and cryptocurrencies. AvaTrade provides proprietary platforms alongside MetaTrader 4 and 5. AvaTrade is regulated by multiple authorities including CySEC, ASIC, and FSA. AvaTrade serves over 300,000 clients worldwide. AvaTrade is known for competitive spreads and extensive educational resources. The AvaTrade CEO is David Dryzin since 2016.
AvaTrade Features
The features of AvaTrade are listed below.
- With AvaTrade you can engage in OTC forex trading with fixed spreads.
- Spreads with this broker start at 0.9 pips, but they are even lower for professional traders.
- Apart from 60 forex pairs, you can also trade over 200 OTC derivatives which include indices, stocks, bonds, and cryptocurrencies.
- UK AvaTrade traders can spread bet on forex as well.
AvaTrade Pros and Cons
Advantages of AvaTrade
The advantages of AvaTrade are listed below.
- Tight fixed spreads from 0.6 pips (0.9 pips for retail traders)
- The mobile apps are well designed
- Can be connected to ZuluTrade and Duplitrade
Disadvantages of AvaTrade
The disadvantages of AvaTrade are listed below.
- High inactivity fees
- The demo account is limited to 30 days
Pepperstone
Pepperstone provides trading in over 60 OTC forex pairs. Pepperstone features low spreads starting from 0 pips and includes additional instruments in varied markets.
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Regulations:
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Avg. EUR/USD Spread:
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Platforms:
About Pepperstone
Pepperstone is a global forex and CFD broker founded in 2010 in Melbourne, Australia. Pepperstone offers trading on currencies, commodities, indices, stocks, and cryptocurrencies through MetaTrader and cTrader platforms. Pepperstone is regulated by multiple authorities including ASIC, FCA, and CySEC. Pepperstone is known for competitive spreads, fast execution, and extensive educational resources. Pepperstone serves clients in over 160 countries worldwide. The Pepperstone CEO is Tamas Szabo.
Pepperstone Features
The features of Pepperstone are listed below.
- Pepperstone is known for their extremely low spreads across the derivatives they offer.
- Spreads start from 0 pips, with an average of 0.09 pips on the EUR/USD pair.
- More than 60 OTC forex pairs are available to trade, with more than 100 additional instruments across different markets.
Pepperstone Pros and Cons
Advantages of Pepperstone
The advantages of Pepperstone are listed below.
- Stable raw spreads (0,09 pips on EUR/USD on average)
- Caters for algorithmic trading
- Has won over 30 Forex industry awards
Disadvantages of Pepperstone
The disadvantages of Pepperstone are listed below.
- The demo account is not unlimited
Saxo
Saxo offers 40,000 OTC derivatives. Saxo provides access to commodities, indices, stocks, bonds, options and forex CFDs with over 200 pairs.
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Regulations:
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Avg. EUR/USD Spread:
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Platforms:
About Saxo
Saxo is a Danish investment bank and online trading platform founded in 1992. Saxo offers trading in forex, stocks, CFDs, futures, options, and other financial instruments across global markets. Saxo provides proprietary trading platforms and white-label solutions for institutional clients. Saxo is regulated by multiple authorities including the Danish FSA and UK FCA. Saxo serves retail and institutional clients in over 170 countries. The Saxo CEO and co-founder is Kim Fournais.
Saxo Features
The features of Saxo are listed below.
- Saxo has a wide range of OTC derivatives of 40,000 tradable instruments, including commodities, indices, stocks, bonds, options, and mutual funds.
- Forex CFDs are also available with over 200 tradable pairs.
- Spreads on forex are kept very low starting at 0.6 pips.
Saxo Pros and Cons
Advantages of Saxo
The advantages of Saxo are listed below.
- Regulation and Trust
- Extensive Product Range
- Advanced Trading Platform
Disadvantages of Saxo
The disadvantages of Saxo are listed below.
- High Minimum Deposits for Premium Accounts
- Lack of Spread Betting Options
- Custody Fees in Certain Regions
CMC Markets
CMC Markets offers 330 forex pairs as CFDs with low spreads starting from 0.3 pips. CMC Markets features over 10,000 OTC derivatives.
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Regulations:
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Avg. EUR/USD Spread:
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Platforms:
About CMC Markets
CMC Markets is a global online financial trading company founded in 1989 and headquartered in London. CMC Markets offers trading on forex, indices, commodities, cryptocurrencies, and shares through CFDs and spread betting. CMC Markets provides proprietary and MetaTrader platforms for desktop, web, and mobile. CMC Markets is regulated by multiple authorities including FCA, ASIC, and BaFin. CMC Markets is listed on the London Stock Exchange. The CMC Markets CEO is Lord Peter Cruddas.
CMC Markets Features
The features of CMC Markets are listed below.
- CMC Markets is a broker known for offering a huge number of forex pairs traded as CFDs. These are 330 in total, and are traded with low spreads starting from 0.3 pips.
- There are also other over 10,000 tradable OTC derivatives at CMC.
- For UK forex traders who want to engage in spread betting, it is available.
CMC Markets Pros and Cons
Advantages of CMC Markets
The advantages of CMC Markets are listed below.
- Regulatory Trust
- Low Trading Costs
- Extensive Trading Platform
Disadvantages of CMC Markets
The disadvantages of CMC Markets are listed below.
- Complex Fee Structure
- Limited Funding Options
FP Markets
FP Markets offers trading in over 4,000 OTC derivatives including 70+ forex pairs. FP Markets provides competitive spreads starting from 0.2 pips.
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Regulations:
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Avg. EUR/USD Spread:
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Platforms:
About FP Markets
FP Markets is an Australian-based global forex and CFD broker founded in 2005. FP Markets offers trading on over 10,000 instruments including forex, stocks, indices, commodities, and cryptocurrencies. FP Markets provides MetaTrader 4, MetaTrader 5, and proprietary platforms. FP Markets is regulated by multiple authorities including ASIC, CySEC, and FSA. FP Markets is known for tight spreads, fast execution, and extensive educational resources. The FP Markets CEO is Craig Allison.
FP Markets Features
The features of FP Markets are listed below.
- With FP Markets you can trade OTC derivatives with extremely low spreads and very fast order execution of 66 ms on average.
- Over 4,000 derivatives are made available in total, and among these, you can find 70+ forex pairs.
- Spreads on forex start from 0.2 pips.
FP Markets Pros and Cons
Advantages of FP Markets
The advantages of FP Markets are listed below.
- Broad Instrument Offering
- Competitive Spreads
- Multiple Trading Platforms
Disadvantages of FP Markets
The disadvantages of FP Markets are listed below.
- High Fees for International Withdrawals
- Outdated Platform Design
FXTM
FXTM offers OTC derivatives with 250 instruments. FXTM provides trading in 60 forex pairs featuring spreads from 0.3 pips.
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Regulations:
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Avg. EUR/USD Spread:
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Platforms:
About FXTM
FXTM, also known as ForexTime, is a global forex and CFD broker founded in 2011. FXTM offers trading on currencies, commodities, indices, stocks, and cryptocurrencies through MetaTrader 4, MetaTrader 5, and proprietary platforms. FXTM is regulated by multiple authorities including CySEC, FCA, and FSC Mauritius. FXTM is known for low spreads, fast execution, and extensive educational resources. FXTM serves over 2 million clients worldwide. The FXTM CEO is Nicholas Defteras.
FXTM Features
The features of FXTM are listed below.
- FXTM is an OTC derivatives broker regulated in many countries. In the EU, however, they accept professional traders only.
- They offer a limited amount of tradable derivatives of around 250 instruments across different markets.
- When it comes to forex, they offer 60 tradable pairs with spreads from 0.3 pips.
FXTM Pros and Cons
Advantages of FXTM
The advantages of FXTM are listed below.
- User-Friendly Platform
- Fast Customer Support
- Low Minimum Deposit
Disadvantages of FXTM
The disadvantages of FXTM are listed below.
- Withdrawal Fees
- Limited Product Range
- Inactivity Fees
HF Markets
HF Markets provides trading in 1000 OTC derivatives. HF Markets includes 50 forex pairs with spreads from 0.1 pip on EUR/USD.
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Regulations:
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Avg. EUR/USD Spread:
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Platforms:
About HF Markets
HF Markets, formerly known as HotForex, is a global multi-asset broker founded in 2010. HF Markets offers trading on forex, stocks, commodities, indices, and cryptocurrencies through MetaTrader platforms. HF Markets is regulated by multiple authorities including CySEC, FCA, DFSA, and FSCA. HF Markets serves clients worldwide and is known for competitive trading conditions and extensive educational resources. HF Markets recently rebranded to emphasize its expanded product range. The HF Markets Group CEO is George Koumantaris.
HF Markets Features
The features of HF Markets are listed below.
- HF Markets offers a good range of over OTC derivatives, including 50 forex pairs.
- Among these, you can also trade other 1000 derivatives from different markets: indices, stocks, commodities, bonds, and cryptocurrencies.
- Spread on EUR/USD from 0.1 pip.
HF Markets Pros and Cons
Advantages of HF Markets
The advantages of HF Markets are listed below.
- High Leverage Options
- Low Minimum Deposit
- Wide Range of Trading Instruments
Disadvantages of HF Markets
The disadvantages of HF Markets are listed below.
- Higher Trading Costs
- Limited Educational Resources
FXCM
FXCM offers over 100 tradable OTC derivatives on forex, shares, and commodities. FXCM provides more than 30 forex pairs.
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Regulations:
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Avg. EUR/USD Spread:
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Platforms:
About FXCM
FXCM is a global forex and CFD broker founded in 1999, offering trading on currencies, commodities, indices, stocks, and cryptocurrencies. FXCM provides MetaTrader 4 and proprietary trading platforms. FXCM is regulated by multiple authorities including FCA, ASIC, and CySEC. FXCM is known for competitive spreads, extensive educational resources, and copy trading services. FXCM recently launched a sister platform called Tradu. The FXCM parent company “Stratos Group” CEO is Brendan Callan.
FXCM Features
The features of FXCM are listed below.
- Over 100 tradable derivatives which include: forex, shares, indices, commodities, bonds, and cryptocurrencies.
- More than 30 tradable forex pairs in total with spreads from 0.2 pips.
- UK traders have access to spread betting.
FXCM Pros and Cons
Advantages of FXCM
The advantages of FXCM are listed below.
- Regulation and Trust
- Advanced Trading Tools
- Competitive Spreads for Active Traders
Disadvantages of FXCM
The disadvantages of FXCM are listed below.
- Limited Range of Instruments
- Average Pricing Structure
What is an OTC (Over-The-Counter) Forex broker?
An Over-The-Counter (OTC) Forex broker refers to a dealer or broker who facilitates the trading of foreign currencies directly between two parties, without the need for a centralized exchange. These transactions are conducted via an electronic network, usually referred to as the “Interbank Market.”
In today’s global landscape, referring to a ‘forex trading brokerage’ necessarily implies referring to an OTC forex broker. They are synonymous in essence.
In the OTC forex market, dealers and brokers negotiate directly with each other, which can lead to a wide variety of prices on the same currency pairs. This is different from trading on a centralized exchange like those of stock trading, where every participant has access to the same pricing.
OTC forex brokers can offer their clients a range of services including spot trading, forward contracts, and options contracts. They make their money through the spread, which is the difference between the buying and selling price of a currency pair.
What is the difference between the OTC forex market and traditional exchange trading?
The OTC forex market refers to a decentralized trading environment where forex transactions are not routed through a central exchange. Instead, OTC trading is done directly between two parties, typically enabled by a network of banks, brokers, and dealers. Over the counter trading is often associated with flexibility due to its 24/7 operation, wide range of currency pairs, and possibilities for customization of contracts.
On the other hand, traditional exchange trading operates through centralized exchanges where all trades are conducted. This trading system offers more transparency as the exchange provides all the market participants with the same price information. It is regulated and standardized, providing traders with certain legal protections but it usually limits the trading hours and the range of tradable instruments.
These differences between the OTC market and traditional exchange trading represent unique advantages and considerations for traders, depending on their specific needs and trading strategies.
What are the pros and cons of OTC forex brokers?
Pros:
- 24/7 trading flexibility across different time zones.
- Decentralized Over The Counter markets with a continuous trading environment.
- Wider range of currency pairs.
- Customizable trade sizes and leverage.
Cons:
- Different brokerages might quote slightly different prices for the same forex pair.
- Market makers brokers may be the counterparty to your trade.
- Not all OTC brokers are regulated equally.
How do I choose the best broker for over the counter markets?
- Choose a regulated OTC forex brokerage: Choosing a regulated broker providing OTC markets should prioritize brokers with recognized regulatory credentials. This step ensures two main benefits. Firstly, it validates the broker’s permission to provide forex trading within your jurisdiction. Secondly, it provides you with a direct channel to the financial industry regulatory authority, enabling support mechanisms. Therefore, aligning with a regulated entity enhances trading security and recourse options.
- Choose a forex brokerage with low fees: In OTC trading, cost-monitoring remains paramount. Typically, Over The Counter brokers levy fees based on the forex spread, which represents the differential in the buy and sell prices in the fx market. Additionally, there are other fees not directly related to OTC trading to keep in mind such as swap fees, deposit/withdrawal fees, and inactivity fees that can hinder your profitability.
- Choose an educational forex brokerage: It is a foundational requirement for the brokerage to provide you with a demo account. This allows you to simulate and refine your otc trading methodologies in a risk-free environment. Additionally, the broker should supply timely news and analysis focused on the OTC markets, in order for you to remain informed and abreast of market dynamics.
How do OTC forex brokers make money?
Commonly, forex brokers earn through the forex spread, which signifies the differential between the buy and sell prices of OTC markets. Additionally, some might charge commission fees or other transactional charges in the over the counter markets.
The spread is often variable in OTC trades, influenced by financial markets dynamics, liquidity, and broker-specific policies. Furthermore, brokers might also gain from overnight interest differentials, known as the swap or rollover rates, when traders hold OTC trades overnight.