The latest report from the Bank for International Settlements (BIS) showed that the daily turnover in FX markets had jumped 30% from $5.1 trillion in April 2016 to $6.6 trillion in April 2019. This is a huge difference, so we at Top Brokers thought it might be a good idea to look at the changes among individual brokers. In particular, we were interested to know if there has been any difference in ranking among the top Forex brokers globally, and these are the top 5.
A quick note
Before we get to the list, it is important to realize that there are many different ways to rank Forex brokers to determine the ‘biggest’ of them.
In finance, a company’s market cap represents the total value of its shares. Therefore, the only brokers that can be ranked by market cap are those that are public and listed on a stock exchange. Many popular brokers like Plus 500, IG Group, etc. are listed, but there are many more popular brokers who aren’t. For this reason, we didn’t consider any broker’s market cap in this list. (Check out the best US forex brokers in 2020)
Profits and revenue
Ranking FX brokers by the revenue they generate would be better than by market cap, but this measure has certain problems. For instance, one broker can produce more revenue than another, but only because trading costs are higher in terms of spreads and commissions. Thus, the latter may have lower revenue but more clients and perhaps even market cap. Besides, there are many huge global companies that produce very little profit, or even losses in cases such as Uber.
Assets under management (AUM)
Hedge funds, mutual funds, ETFs and the like are usually ranked by AUM, but this measure is once again lacking when it comes to Forex brokers. One reason is that, unlike the aforementioned funds, FX brokers do not all offer the same services. For example, one broker may offer pure retail FX services while another complements this business with CFDs for stocks, commodities, indices, etc. There are even some brokers that offer actual assets like stocks and cryptocurrencies. As you would expect, the latter FX broker would have a higher AUM than the pure FX broker. But it wouldn’t be fair to compare the two as competing FX brokers, would it?
In addition, some trading conditions can change a broker’s AUM dramatically such as the amount of leverage provided. Since ESMA lowered the leverage cap to 30:1, EU-based brokers still have a huge AUM, but that’s because they now focus on institutional investors. This way, a broker can have a few thousand clients, but still have a similar AUM, if not higher, than a broker who works with individual traders. (Read to know the: Main Features of Canadian, US, Australian and UK Forex Industries)
Average volume of daily transactions (AVDT)
Of all the measures we could think of, we found this to be the most reliable one because it represents a picture of a broker’s day to day activities. A legitimately ‘big’ broker should be one who consistently records a high AVDT, proving that there is a lot of trading activity by its clients. An average is calculated by tallying the volume of daily transactions over a long period of time (at least 3 months) to account for fluctuations in market volatility. (What is a: Trade War and How It Affects Forex Markets)
Let’s get on with it
The brokers listed below are ranked by the AVDT produced by their clients. Keep in mind that location matters a lot, though. This is because of regulatory differences by the different FX regulators. US residents, for example, cannot work with offshore brokers, so these traders are restricted to US-based brokers. That being said, we still feel this is the most accurate way to rank FX brokers around the world.
At the top of this list is Australia-based IC Markets, which is no surprise given the fast-growing pace of the broker’s popularity around the world. What’s a bit of a surprise is that it has only been around for about 13 years since it was started in 2007. According to the broker’s own website, there are over $15 billion worth of transactions conducted daily by this broker, with some sources placing the number at $18.9 billion AVDT. (Learn: Why ESMA Regulator Bans Forex Bonuses)
IC Markets’ success can be attributed to a combination of retail and institutional clients. As of now, there are over 60,000 clients signed on to IC Markets. Granted, there are some brokers below with a higher number of clients, but as we said, IC Markets attracts both retail and institutional investors. As you would expect, the institutional investors give the broker a huge boost in AVDT, which explains the huge number.
This huge number of clients did not come by accident but by providing excellent services at great trading conditions. Speed of execution at IC Markets is remarkable because of the company’s high-speed order matching algorithms. It is important to offer quick execution especially to institutional traders to whom every millisecond matters. As for retail investors, they are attracted by the low trading fees given the narrow spreads and zero commissions on most trading accounts. For those who prefer, IC Markets also offers a commission-only account, if that is what one prefers. That kind of inclusiveness is precisely what makes IC Markets a global FX broker since the company caters to the needs of all traders regardless of their location or specific needs. (Forex Trading in Singapore: Laws and popular FX brokers)
It is also worth mentioning that IC Markets had a jump in client numbers recently after ESMA placed strict restrictions on FX trading. Many european clients fled to Australian FX brokers where regulations were still favourable and the regulator’s (ASIC) reputation solid. ASIC provides clients with the security of their funds while maintaining excellent trading conditions. However, things may change in 2020 following a recent proposed regulatory change that would bar Australian brokers from signing up overseas traders. Perhaps legislators in Australia also noticed the spike in new clients and moved to curb the growth.
This broker doesn’t need much of an introduction considering it has perhaps the largest client base in the world. XM Group has over 2.5 million clients from across the globe, which explains the enormous AVDT of about $13.4 billion. XM was founded in 2009, and in just over a decade has managed to build a stellar reputation all over the world (except the US).
In many ways, XM is built on the same principles as IC Markets. Some of these similarities can be seen through the attractive trading conditions offered by the broker. For one, XM has always tried to keep trading costs low and leverage high. These are important considerations for any retail trader without a huge trading capital, explaining the huge number of clients. In addition, XM also has several unique advantages such as attractive bonuses. At the moment, new clients can enjoy up to a 100% trading bonus with many more once they are signed on. (You should know these: Top 5 Forex Traders Who Became Millionaires)
But XM’s main advantage over the rest has been its inclusiveness of clients. While most brokers focus on developed nations, XM has been going around the world and visited over 120 cities to hold seminars, training, etc. That is why its clients come from 196 countries, and why the company prides itself as a ‘human’ company. This inclusiveness can also be seen in other aspects like providing islamic accounts, micro and mini accounts, and other unique account features. All these help to include every individual regardless of their skill level or capital.
While IC Markets has the reputation and XM Group has the numbers, Saxo Bank has the money. It also has a longer history dating back to 1992 in Denmark, even before the retail FX market was known, and the AVDT has grown to $12.3 billion. It was started to be a brokerage in Denmark, but since then it has grown significantly to become a global presence in major financial centres like Singapore, Tokyo, London, Zurich, Paris and even India. Such a huge presence has grown the company’s assets to €45 billion and 2,100 employees. (Trading Stocks in Forex Brokers: Commissions, Swaps, Spreads Research)
As you might expect, Saxo is very popular among institutional investors because of its reputation and products. For instance, the minimum deposit at Saxo is $600, maximum leverage is 1:200 and there is no MetaTrader trading platform. For most retail traders with limited trading capital, these are huge obstacles that lead them away. But for those who choose Saxo, there are a lot of things to be happy about. For one, the broker’s global presence means there are over 35,000 instruments to trade compared to just 1,000 by XM, spreads are tight due to the close relationship between Saxo and liquidity providers, and trade execution is excellent. (Check out the best UK Forex brokers in 2020)
Of course, there are tradeoffs as you can see, but Saxo still makes it to the top 3 in this list. This is the kind of broker you choose if you feel confident in your trading and would like to focus on long-term goals.
This broker was founded in 2010, and to date there have been over 2 million live accounts opened by clients from around the world. Sources report that the company’s AVDT currently stands at over $11.5 billion, which is understandable considering all the company’s subsidiaries around the world. To be accurate, Hot Forex is a subsidiary of HF Markets Group, and this company has numerous subsidiaries based in Mauritius, Cyprus, St. Vincent and the Grenadines, Johannesburg and Seychelles. (Legalization of Forex Trading in the US: Facts and Trends)
Hot Forex has been successful not by becoming outstanding in one way, but by finding a balance in what clients need. Because retail clients need favourable trading conditions, Hot Forex and its subsidiaries are all licensed by regulators with attractive conditions in terms of leverage. This also places HotForex strategically around developing nation economies where there are many individuals ready to join the FX industry. Indeed, Hot Forex is a favourite in Southeast Asia and Africa, both regions that were previously untapped by major global FX brokers. These clients have grown HF’s client base rapidly to the 4th biggest FX broker in the world by AVDT. (Forex in USA: Myth or Reality?)
But HotForex knows that it is not enough to give people the best conditions, you need to back that up too. Many features like negative balance protection and great reputation means that clients can be comfortable in the security of their funds. It is for this reason that HF has received accolades severally over the years for its services.
Except for Saxo Bank, AvaTrade has a longer history than the other 3 brokers going back to 2006 when it was founded in Dublin, Ireland. Taking advantage of the rapidly growing retail FX market, AvaTrade has become one of the most notable and reputable FX brokers in the world with over 200,000 clients and trading volume of over $60 billion every month. The number of clients may be less than those registered by most of the other brokers, but that usually means institutional traders make up the bulk of its customer base. That is why AvaTrade has offices in Tokyo, Sydney, Milan and Paris, all significant financial centres in the world. (WhatsApp, Telegram, Facebook: Who is Going To Be The Next Global Payments Leader?)
The 200k clients who work with AvaTrade are mainly attracted by the broker’s reputation. In the 15 years it has existed, AvaTrade has received several awards for providing excellent services and the broker has not been on the wrong side of the law. That and the licenses from reputable regulators around the world gives investors and traders peace over their funds’ security. (Central Bank Regulation: What is happening with the Forex Industry in Russia in 2020?)
Although one might assume that AvaTrade is focused on high net worth individuals, such an assumption would be wrong. In fact, the broker has been making significant steps to allow every individual a chance to trade with them. This has been done by lowering minimum deposits, lowering margin even further, providing MT4 trading platform and even adding crypto to its product line. All of these changes, combined with the already excellent trading conditions and execution means that AvaTrade is a truly great broker.
To see what other FX market experts think, watch this video to see other suggestions: