6 Best MiFID Regulated Forex Brokers for 2024

List of Top MiFID-Compliant Forex Brokers

MiFID Explained: The Pillar of EU Financial Regulation

MiFID, an acronym for the Markets in Financial Instruments Directive, is a pivotal regulatory framework by the European Union, primarily focusing on financial markets within the EU and the European Economic Area (EEA). Originating in 2004 and subsequently updated with MiFID II in 2018, this directive is key in promoting transparency, safeguarding investors, and fostering competition in the financial sector.

Central to MiFID’s role is the regulation of forex and CFD brokers. It acts as a regulatory guardian, enforcing fair trading, client protection, and market integrity. MiFID’s stringent standards offer traders reassurance against fraud and malpractice, enhancing trust in financial activities.

Regarded by European regulators as a fundamental element of financial legislation, MiFID sets a high bar for market conduct. Key regulatory bodies, including the UK’s FCA, Germany’s BaFin, and Italy’s CONSOB, not only endorse but rigorously implement MiFID’s principles, reinforcing its status as the gold standard in financial regulation.

How Did FX Empire Select the Best MiFID Regulated Forex Brokers?

• EU Regulation. We only selected brokers that are authorized by a national regulator of an EU member state and complied with MiFID II as mandated by ESMA.
• Trustworthiness. We checked each broker’s legal documents and evaluated its transparency based on whether important information was readily available on the website.
• Trading Software. We picked brokers with user-friendly and feature-rich trading platforms and a wide range of analytical and supporting tools.
• Trading Costs. We looked for brokers that offer low floating spreads and round-turn commissions per traded volume.
• Trading Instruments. We picked brokers that offer a wide selection of tradable instruments from different asset classes.
• Account Types. We only considered brokers with a good choice of account types that can serve traders with different preferences, experiences, and trading strategies.

Our team of experts has identified each broker’s strengths and weaknesses using FX Empire’s comprehensive methodology. Here’s how we test.

Now let’s dive into the selected brokers.

How to Choose a MiFID Regulated Forex Broker?

Now, it’s time to go over the specific considerations traders in Italy must make when choosing a forex broker:

What does MiFID compliance mean for a trader?

Below, I have broken down the most important safety mechanisms for retail traders under MiFID II:

• Clear Disclosure: MiFID requires brokers to disclose all associated trading costs, terms, and potential conflicts of interest. This ensures that traders are well-informed before making any trading decisions.
• Segregated Accounts: MiFID mandates brokers to separate client funds from their own operational funds. This measure is in place to protect traders’ capital in case the broker faces financial difficulties.
• Negative Balance Protection. MiFID-regulated brokers are often required to offer negative balance protection which ensures that traders cannot lose more money than they’ve deposited into their trading account.
• Maximum Leverage Caps: MiFID imposes restrictions on the amount of leverage that brokers can offer. This is aimed at reducing the high risk associated with leveraged trading. For example, for major currency pairs, the maximum leverage might be capped at 1:30 for retail traders.
• Investors Compensation Fund (ICF). MiFID-regulated brokers often participate in an Investor’s Compensation Fund. Should the broker become insolvent, traders could be entitled to compensation, up to a certain limit, through the ICF.
• Best Execution Policy: Brokers must execute client orders under the most favorable conditions available, which can mean better prices and more efficient trades for traders.

Read more about Best regulated forex brokers.

What is the role of ESMA in protecting a trader?

The European Securities and Markets Authority (ESMA) is the legislative body responsible for setting the rules under which market participants, financial institutions, brokers, and others interact. That is why your first task is to determine whether the broker you are interested in is listed in the Markets in Financial Instruments Directive (MiFID) register. You can check that here. This is the only way to confirm its compliance with the most rigorous safety policies in the industry.

By imposing MiFID II upon national regulators, ESMA seeks to increase transparency and investor protection in financial markets. Adhering to MiFID II guidelines standardizes broker practices across Europe, thereby boosting market participants’ confidence in the system. Additionally, it makes it easier for brokers to offer their services to traders from all EU member states.

Check out our guide on Best European-regulated brokers.

Which European regulators enforce MiFID II?

National regulators in the European Union work in tandem with ESMA to ensure MiFID II compliance within their respective jurisdictions. Some of the notable national regulators include:

• Financial Conduct Authority (FCA) in the United Kingdom (although post-Brexit, the UK has its own version of MiFID). Find Best FCA-regulated forex brokers
• Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) in Germany. Find Best BaFIN-regulated forex brokers
• Cyprus Securities and Exchange Commission (CySEC) in Cyprus. Find Best CySEC-regulated forex brokers
• Commissione Nazionale per le Società e la Borsa (CONSOB) in Italy. Find Best forex brokers in Italy
• Autoriteit Financiële Markten (AFM) in the Netherlands. Find Best forex brokers in the Netherlands.

How to verify if a broker is regulated?

• Check the Broker’s Website: Legitimate, regulated brokers typically display their license number and the name of their regulator on their website, often in the footer or “About Us” section.
• Visit the Regulator’s Website: Every country’s financial regulator has a website that lists all the brokers they regulate. Search for the particular broker’s name to see if they’re authorized.
• Contact the Regulator: If you can’t find the information you’re looking for, you can contact the regulator with the broker’s name and any other identifying information you have.

What is the difference between retail and professional traders in Europe?

Under the MiFID II regulatory framework, brokers must categorize traders into two groups: professional and retail. These classifications significantly affect trading conditions, leverage, and risk management.

Leverage Differences

• Professional traders can access higher leverage up to 1:200, enabling them to amplify their profits – or losses – on the same trades. This comes with a heightened risk of experiencing more substantial financial setbacks.
• Retail traders face a maximum leverage cap of 1:30, reducing their potential for outsized gains but also limiting their exposure to high losses.

Explore Best forex broker with high leverage.

Risk Management

• Professional traders are not entitled to negative balance protection, making them solely responsible for stringent risk management practices to avoid incurring negative balances.
• Retail Traders benefit from negative balance protection, safeguarding them from owing more money than they have deposited in their accounts.

Eligibility Requirements

• To be classified as professional, traders usually need several years of experience in trading leveraged products and must be prepared to deposit a minimum of €100,000 into their accounts.
• Retail traders can open an account with little to no trading experience, often with a minimum deposit as low as a few hundred euros.

Check out our list of Best forex brokers for professional traders.

How to check if a broker’s fees are competitive?

Choosing the right broker account type, such as STP or ECN, can impact your trading costs significantly. While STP accounts often offer commission-free trading with floating spreads, ECN accounts charge a fixed commission but offer raw spreads, usually starting from 0.1 pips. Some brokers inflate the spreads on STP accounts, making them less competitive than they appear.

Read more about Best STP forex brokers and Best ECN forex brokers.

To evaluate which account is better for you, consider the total trading cost. Take the EURUSD pair as an example. If the STP account has a spread of 0.9 pips and the ECN account has a spread of 0.1 pips with a $6 commission per 1 lot, you can calculate the overall cost with the formula: value of a trade = spread x pip value + commission. In this example, an ECN account would have a net cost of $7, compared to $9 for the STP account.

In conclusion, always do your due diligence to understand the cost structures when choosing an account type. Our comprehensive broker reviews can also help you make an informed decision.

Check out our list of Best lowest spread forex brokers.

Why does liquidity matter?

The deeper the liquidity pool that a broker has access to, the better the order execution conditions it can serve its clients. That is why high-frequency traders should always check the speed and quality of order execution. The easiest way to do that is to see whether the broker has a ‘best execution policy.’ It means that the company is committed to providing the best price quotes, given the underlying market conditions, when an order is placed.

Precision and speed of order execution are also likely to be enhanced when a broker provides Virtual Private Server (VPS) hosting. As a rule of thumb, look for brokers that can accommodate ultra-fast order execution speeds of no more than 50 milliseconds.

Check out our guide on Best forex brokers with VPS hosting.

You can confirm a broker’s performance by going to the Legal Documents section of its website and opening its latest execution statement/review. Keep in mind that not all brokers are mandated by their regulators to post such reviews yearly. However, the ones that do are more likely to afford you precise order execution and diminished risk of negative slippage.

How to choose a trading platform?

A trading platform is your window into the market. It allows you to observe price action behavior and study potential opportunities for placing orders. Technical traders use a platform’s array of indicators, drawing tools, and other features to examine various price patterns, changes in volatility, liquidity, and so on in order to gauge the most favorable times to enter or exit the market.

The best platforms are also the most versatile ones. They include a wide spectrum of technical indicators, such as Fibonacci retracement levels, oscillators, trend-based and range-based indicators, and others, as well as drawing tools, such as trend lines, channels, wedges, etc. They are also the ones that allow you to easily scale price action up and down.

In addition to these components, when looking for a suitable platform, you must also look for efficiency. Ask yourself: Does the platform facilitate easy and rapid order placement through one-click trading? Does it support algorithmic trading via Expert Advisors (EAs)? Can it handle market, limit, and stop orders? These factors, and more, contribute to a platform’s overall effectiveness.

The two most popular retail platforms in the industry are MetaTrader 4&5. Over the years, the two have become the benchmark for simplicity and reliability. The two entries in the popular franchise have a decent range of technical indicators and drawing tools and afford multi-timeframe analysis.

Read more about best MT4 brokers and best MT5 brokers.

However, despite MetaTrader’s easy learning curve, its rugged design becomes apparent when contrasted against newer and sleeker platforms. In my estimation, MetaTrader is a good choice for newbies wanting to learn the ropes, but to take your trading to the next level, you may need something more sophisticated.

The answer of some brokers is to develop their proprietary platforms. The advantage of most such platforms is their convenience. The ability to search for instruments by asset class, scale price action up and down with ease, or execute complex box orders are benefits you cannot find in MetaTrader. To summarise, the question of choosing the best platform for you is one of simplicity vs. practicality.

Check out our dedicated guide on Best forex trading platforms.

What to Avoid When Choosing a Forex Broker?

Here is a quick rundown of what traders must avoid:

• Unregulated Brokers. Trading with an unregulated broker exposes you to a higher risk of fraud or unethical business practices, as they are not bound by any regulatory standards or rules. Additionally, in case of any disputes or if the broker goes bankrupt, there might be no legal recourse or compensation schemes available to recover your funds.
• Lack of Client Protection. Avoid brokers that cannot ensure more than two of the following: segregated funds, negative balance protection, compensation scheme, and maximum leverage for retail traders no bigger than 1:100.
• Low Execution Quality. Try to avoid brokers that cannot ensure more than two of the following: best execution policy, regular quality execution statements, and average execution speed under 50 milliseconds.
• High Spreads and Commissions. Sidestep brokers with floating spreads from 1.8 pips or above on STP accounts and with round-turn commissions above $7 on ECN accounts.

How to Avoid Forex and CFD Scams?

Scammers rely on the gullibility of traders. A common tactic fraudsters employ is to promise quick and easy profits at no risk to the trader. Often scammers would use labels that closely resemble the brands of real and legitimate companies. That is why regulators like the FCA have registers where traders can read about such fraudulent companies pretending to be others.

The best and easiest way to protect yourself is to make sure you work with a trustworthy and transparent broker. You can find a comprehensive list of reliable brokers by jurisdiction here.

Another important consideration is online safety. Be cautious about where you leave your personal information. Registering your details on suspicious pop-ups that promise enormous profits could lead to your contact information landing on a scammer’s dialing list. Remember, no licensed broker would make unsolicited cold calls.

The next time you get contacted out of the blue with promises of becoming the next Warren Buffet, you must remember that you are most likely speaking to a scammer. I am of the opinion that nowhere is the “if something sounds too good to be true…” saying more accurate than in the world of trading. That is why you should do your due diligence before opening an account with any broker.

Our Methodology

Here at FXEmpire, we have pioneered a unique methodology for evaluating forex and CFD brokers worldwide. Our goal is to provide a comprehensive picture of a broker’s pros and cons so that our readers can make informed decisions. We understand their need to choose the best partner for their particular goals and needs.

Our team of dedicated professionals is working continuously to improve our system and keep it up-to-date with current market trends. We test each broker systematically by employing over 250 variables across nine categories:

• Trust
• Fees
• Account Types
• Tradable Instruments
• Platforms and Tools
• Deposits and Withdrawals
• Customer Support
• Research
• Education

We strive to be as objective as possible, which is why our rigorous examinations are devoid of any personal bias as much as possible. We review the licenses of all the subsidiaries of a broker and check the fine print in the Client Agreement. The reliability of a broker is further determined based on the website’s regulations, fees, and general transparency.

We collect essential information by opening a live account with a broker entity and testing its services in real time. We measure the spreads, swaps, and commissions on its most popular account type and compare our findings to the industry average. We also test the functionality of the available platforms, the number and types of tradable instruments, the reliability of customer support, and the quality of the research and educational materials.

For this guide, we only considered EU-regulated brokers that adhere to ESMA’s MiFID II and are authorized to provide financial services to traders who reside in Europe. We assessed each broker’s adherence to safety regulations and its maximum leverage. We measured spreads and commissions, comparing them to the industry average, and selected the brokers with the most competitive pricing.

We evaluated the usability of brokers’ platforms and confirmed whether they are integrated for implementing longer-term strategies, such as swing and day trading, or shorter-term, like intraday trading and scalping.

We abide by our strict guidelines for editorial integrity based on the objective standards we have set for our reviews. You can read more about our review process here.

Meet Our Writers

The team of forex and CFD analysts and editors at FXEmpire is composed of trading industry professionals and seasoned financial journalists. Our experts have been published on leading financial websites such as Investopedia and Forbes. In addition, they all have extensive trading experience.

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