10 Best ECN forex brokers in 2021

The Electronic Communication Network (ECN) is designed to provide traders and investors with direct automated access on a platform where trading orders are sent between clients and liquidity providers. The idea is to limit the number of intermediaries between two market players.

ECN brokers are popular with traders and investors who are interested in making larger transactions. It allows traders to trade outside of traditional trading hours and is a useful platform for traders who aren’t full-time traders and can’t actively trade when financial markets are open. ECN require higher initial deposits but they provide greater transparency, a level of anonymity and have lower commissions and fees with direct access to liquidity providers.

10 FCA-regulated ECN forex brokers in 2021 * in alphabetical order

These ECN forex brokers are regulated by the Financial Conduct Authority (FCA) in the United Kingdom. The FCA is a top-tier authority and is regarded as the gold standard of regulated authorities in the world.

The FCA is an independent public body that regulates about 60 000 financial services firms and financial markets in the UK, independently of the UK government. It serves to protect consumers, maintain the integrity of the industry and promote competition.

FCA register

Check what these ECN brokers are registered to do and your protections when doing business with them.

ActivTrades

Founded 2001

Regulated FCA, SCB

Headquarters United Kingdom

Tradeable assets Currencies, commodities, indices, stocks, futures

Trading platform ActivTrader, MT4, MT5

Trading desk ECN, MM, NDD

Minimum deposit $500

VISIT BROKER

Infinox

Founded 2009

Regulated FCA, SCB

Headquarters United Kingdom

Tradeable assets Currencies, commodities, indices, stocks, bonds, crypto, futures

Trading platform MT5

Trading desk ECN, STP

Minimum deposit $0

VISIT BROKER

ETX Capital

Founded 1965

Regulated CySEC, FCA

Headquarters United Kingdom

Tradeable assets Currencies, commodities, indices, stocks, bonds, crypto, futures

Trading platform MT4, Proprietary

Trading desk ECN

Minimum deposit $100

VISIT BROKER

FXGiants

Founded 2016

Regulated ASIC, FCA

Headquarters United Kingdom

Tradeable assets Currencies, commodities, indices, stocks, crypto, futures

Trading platform MT4

Trading desk Bank, DD, ECN, STP

Minimum deposit $100

VISIT BROKER

FXOpen

Founded 2005

Regulated ASIC, CySEC, FCA

Headquarters Charlestown, Nevis

Tradeable assets Currencies, Commodities, Indices, Stocks, Crypto

Trading platform MT4, MT5

Trading desk ECN

Minimum deposit $100

VISIT BROKER

HotForex

Founded 2010

Regulated CySEC, DFSA, FCA, FSA(SC), FSCA

Headquarters Cyprus

Tradeable assets Currencies, commodities, indices, stocks, bonds, crypto, futures

Trading platform MT4, MT5

Trading desk DMA, ECN, STP

Minimum deposit $5

VISIT BROKER

IronFX

Founded 2010

Regulated ASIC, CySEC, FCA

Headquarters Cyprus

Tradeable assets Currencies, Commodities, Indices, Stocks, Crypto, Futures

Trading platform MT4

Trading desk STP, ECN, Bank

Minimum deposit $100

VISIT BROKER

USG UK

Founded 2017

Regulated FCA

Headquarters United Kingdom

Tradeable assets Currencies, commodities, indices

Trading platform MT5

Trading desk ECN, STP

Minimum deposit $1

VISIT BROKER

Pepperstone

Founded 2010

Regulated ASIC, BaFin, CySEC, DFSA, FCA, SCB

Headquarters Australia

Tradeable assets Currencies, commodities, indices, stocks, crypto, futures

Trading platform cTrader, MT4, MT5

Trading desk Bank, DMA, ECN, NDD, STP

Minimum deposit $150

VISIT BROKER

Price Markets

Founded 2013

Regulated FCA

Headquarters United Kingdom

Tradeable assets Currencies, commodities, indices, crypto, futures

Trading platform MT4

Trading desk ECN, NDD, STP

Minimum deposit $5 000

VISIT BROKER

What is an ECN forex broker?

ECN forex brokers use the Electronic Communication Network which provides traders with direct access to liquidity providers via interbank trading prices. Liquidity providers include banks, large brokerages, hedge funds and investment corporations.

The ECN platform issues orders entered by Market Makers directly to third parties and individual traders. It effectively cuts out the traditional ‘dealer middleman’ in the over-the-counter forex market.

Traders with an ECN account benefit from the best pricing because they get different prices from a variety of market participants. This is because as the integration of orders increases, so does the overall pool of orders in the network.

ECN forex brokers charge a small fixed commission on every trade, regardless of the size of the trade. They don’t make profit on the spread difference. Instead, ECN traders are shown the best bid and ask price on the ECN platform and the matching and execution of orders takes place automatically. ECN account holders can always be sure that the forex broker never trades against them.

Why should you trade with an ECN forex broker?

Best bid and ask prices available

Traders using an ECN trading account receive the best bid and ask prices available. This is because a variety of market participants are involved in the trade. Prices are instantly consolidated and the execution of trades is seamless.

Very low/tighter bid-ask spreads

A major benefit of an ECN trading account is the spreads are very low during times of high market volatility. This is because the ECN provides deep liquidity from multiple providers and merely act as hubs for various players in the forex market.

Due to the fact there are so many participants in the ECN hub, it’s expected that there will be both higher and lower bid-ask prices. There will always be liquidity providers who have a lower bid price and higher ask prices which results in large spreads; and there will always be those who have higher bid and lower ask prices which results in tighter spreads.

The good thing about the ECN system is you can buy currency pairs from one liquidity provider at a lower price and sell to another provider at a higher price. This is what makes the ECN so popular among traders and investors who prefer to trade large amounts of capital.

ECN brokers don’t trade against their client

An ECN broker can only match trades between its clients and other market participants. It cannot trade against the client. As a result, ECN spreads are often narrower than those used by Market Maker brokers and ECN brokers make money by charging clients a fixed commission per transaction.

Transparency

ECN accounts offer full transparency because the ECN platform connects orders directly to other market participants. This limits price manipulation because all ECN brokers have access to the same feed and a certain amount of the price history is readily available to all parties. No ECN trader has a particular advantage over other ECN traders because everyone has equal access to the information.

No Dealing Desk (NDD)

The ECN system does away with the dealing desk. The benefit of this is there are no re-quotes which can negatively impact your trading performance and increase costs. You deal directly with the interbank market without any dealer intervention.

Trade outside of traditional trading hours

Trading with an ECN account means you can trade outside of normal market hours.

Why many traders don’t use ECN accounts to trade forex

For as much as there are numerous benefits to using an ECN account through an ECN forex broker, there are a few disadvantages that put many beginner and intermediate traders off using them. Higher service prices and higher initial deposits are the two main reasons why many traders opt for other types of trading accounts.

Higher deposit requirements

ECN accounts require higher initial deposits. This makes an ECN account less suitable for beginner traders who should not be trading with large amounts of capital. The trade-off to higher deposit requirements is ECN account holders benefit from tighter spreads.

Very high commission

ECN forex brokers charge a commission on each trade and it is higher than the commission charged by STP brokers. The per-trade-based commissions on ECN accounts can be costly and can affect a trader’s bottom line and profitability.

No micro lots

ECN account holders are subject to minimum requirements from liquidity providers and typically have to take a minimum position of 0.1 lot (10 000 currency units). ECN traders cannot open positions for 0.01 lot (1 000 currency units) which is available to traders using Market Maker forex brokers.

FOREX TRADING AFRICA DISCLAIMER

Forex is a complex instruments and trading forex involves a high risk of losing money rapidly due to leverage. You need to understand how forex trading works and decide whether you can afford to take the risk of losing money on trade orders that do not go your way.

Forex Trading Africa annually reviews brokers regarded as the best in the world and provides information on the products, fee structure, market analysis and service they offer. We aim to provide important information for you to base your decisions on when choosing the right forex broker for your needs.

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