Despite hosting some of the worst financial bubbles like Tulipmania, the European retail market never reached the levels of interest of their American counterparts. The European financial brokering services remained relatively modest and expensive through the years. But as the popularity of retail investing has spread worldwide, investing trends have shifted in Europe. Read on to learn more about the best European brokers according to Benzinga.
Quick Look at the Best European Brokers:
The Best European Brokers
While retail investing is not as popular as in some other markets, the offer on the European market has been improving over the last several years. Here are a few of the most popular options.
DEGIRO is the largest discount execution-only broker in Europe. In early 2021, the company formed after a merger of the Netherlands-based DEGIRO and German flatexDEGIRO Bank AG. It is regulated by the German Federal Financial Supervisory Authority (BaFin) and the Netherlands Authority of Financial Markets (AFM).
It currently offers service to a number of European Union countries: Czech Republic, Spain, Ireland, Poland, Sweden, Denmark, Greece, Italy, Portugal, Germany, France, Netherlands, Finland, as well as the United Kingdom, Switzerland and Norway.
DEGIRO works as a direct market access broker (DMA), meaning it executes trades based on the availability of over 50 stock exchanges around the world. Customers can choose between various traditional asset classes: stocks, bonds, futures, options and exchange-traded funds (ETFs). Forex, cryptocurrencies or contract for differences (CFDs) are not available.
As a discount broker, DEGIRO’s fees and commissions are fairly competitive. The broker offers commission-free trading on equities from the top U.S. and European exchanges, as well as hundreds of ETFs. Futures and options incur a fee of €0.75 per unit, foreign exchange conversions a 0.25% charge, while margin borrowing fee is set at 3% annual charge. As of December 20, 2021, the broker will use a handling fee set at €0.50 for each transaction in all products — excluding the above-mentioned commission-free trading.
DEGIRO offers an intuitive trading platform that offers easy access on any device. Its mobile application was selected as the best mobile trading app by Investment Trends in 2018. It provides all the functionality of their desktop application, including advanced charting features, stock-specific news and high security through 2-factor authorization and touch and facial recognition logins.
There is no minimum deposit, and it’s important to note credit and debit cards are not accepted as payment options.
Since 2007, eToro has been a social trading pioneer, known for its user-friendly platform and cryptocurrency trading.
eToro is regulated in the U.S., UK, Australia and Cyprus, and the offer in the U.S. is currently limited to cryptocurrencies. Stock investing is presently in beta testing, but it should become available in the near future. Note the service is unavailable in Nevada, Minnesota, Tennessee and New York.
eToro is a multi-asset broker offering a variety of asset classes, including equities, commodities, forex, CFDs, ETFs and cryptocurrencies. It doesn’t offer bonds, options or futures.
The fees are slightly higher than average for forex, with the spread on EUR/USD (highest liquid forex pair in the world) at 1 pip. For cryptocurrencies, eToro charges a percentage spread that varies between 0.75% and 2.5%, depending on liquidity.
Along with its popular proprietary platform, the broker also offers mobile apps for both Android and iOS platforms.
Unfortunately, eToro supports only 1 currency – the U.S. dollar. Depending on the jurisdiction, the minimum deposit can be anywhere between $50 and $200, with the broker offering various payment options — from debit cards, bank transfers to payment services like PayPal or Skrill.
IG Group is among the largest and most respectable European brokers. Founded in 1974, it has been trading on the London Stock Exchange since 2000, under the ticker IGG. On the European market, its primary regulators are the UK's Financial Conduct Authority (FCA) and Germany's Federal Financial Supervisory Authority (BaFin).
While U.S. traders are limited to forex, European customers have a variety of choices, including CFDs, cryptocurrency CFDs and U.S. and international stocks (non-CFDs). Options trading is also available, although only to a small number of EU member countries.
Spreads are on par with the competition, ranging from 0.9 pips for EUR/USD to 1.4 pips for GBP/USD on average. Margin trading is available, with European customers having access to leverage of 30:1.
Although there is no minimum account requirement, it is worth noting that IG has hefty hidden fees. If you don't make a trade for 2 years, you'd be charged $12, while failing to submit a valid W-9 form (a tax form in the U.S.) would cost you $50.
When it comes to market access, IG has a highly-customizable, web-based proprietary platform and MetaTrader 4, which is a forex industry standard. Additionally, the company offers access to the third-party professional platform ProRealTime for UK customers. Mobile apps are available for both Android and iOS.
IG supports 6 base currencies: USD, GBP, AUD, EUR, SGD and HKD. There is no minimum deposit for bank transfer. For credit or debit cards and PayPal, the minimum is set at $300.
X-Trade Brokers is a leading European broker, operating since 2002. Although now based in London, it started in Poland. It is a publicly-traded company on the Warsaw Stock Exchange, under the ticker XTB.
Along with the quarterly reports that guarantee business transparency, it is regulated by the Financial Conduct Authority (FCA). The broker covers a variety of financial assets, including forex, indices, commodities, stocks, ETFs and cryptocurrencies.
XBT has average forex spreads, with EUR/USD spread around 1.1 pips during peak trading hours. On the good side, stock and ETF trading is free up to €100k in monthly volume.
Beyond that, stock CFD index fees are low, but individual stock CFDs can be expensive. Margin trading is available with leverage at 30:1 for forex, 20:1 for stock index CFDs and 5:1 for stock CFDs.
XBT offers 2 platforms: xStation 5 and MetaTrader 4. MetaTrader is a forex industry standard, and xStation 5 is a user-friendly, customizable proprietary platform. It is also available as a mobile app for iOS and Android.
When it comes to non-trading fees, XBT is average. It doesn’t charge account fees, deposit fees for bank transfers or withdrawal fees for bank transfers above the threshold of $50 to $200, depending on your country of residence.
XBT also accepts a variety of electronic payment providers like PayPal, Paysafe, Skrill, Neteller and many others. Unfortunately, the only withdrawal option is bank transfer — which is a significant weakness.
What to Look For in Online European Brokers
While they might all look similar on the surface, not all brokers are equal. Here are some of the key features you might consider when selecting your online broker.
- High regulation: There are no guarantees in the world of finance, just odds. When it comes to regulation, that is true as well. Although the regulation doesn’t guarantee that everything will be by the book, it improves the odds — especially for top jurisdictions like the U.S. or the UK.
- Transparent fee structure: Zero-cost brokers took over the market by the storm until the moment when the public learned about concepts like payment-for-order flow, showing the hidden cost of free. A good broker should list a transparent cost structure, including any spreads, commissions or fees related to the client’s actions on the platform.
- User-friendly platform: Certain brokers owe their popularity almost exclusively to their high-quality, highly-intuitive platforms. While functionality is important, running a complicated product that is hard to use will only discourage the users. Look for brokers that offer user-friendly platforms and at least 2 of the following: mobile app, web-based or stand-alone platform.
- High product selection: You might find the best broker out there, but if it doesn’t have the financial instrument you’re looking to trade – it is useless to you. A good broker should have a wide selection of asset classes available.
- Reliable customer support: Clients usually don’t pay attention to customer support until they need it. A good broker should have dedicated customer support, preferably available 24/5. Customer service should support issues with transfers, deposits or withdrawals.
- Rich knowledge library: Finally, a good broker should provide basic clarification on a variety of topics concerning the markets. This includes an in-depth explanation of financial instruments and elaborate frequently asked question databases. The best will provide up-to-date market commentary and analysis.
European Market on the Rise
For many years, Europeans have not been as interested in financial markets as their American counterparts. While the U.S. market loved equities, Europeans mainly invested in fixed income.
Yet, times are changing. In an environment with historically low interest rates and bond yields in negative, it is necessary to seek other opportunities to generate returns.
Luckily, the market is quickly catching up and between these brokers, European traders and investors have a choice to operate in a highly-regulated, safe and innovative environment.
Frequently Asked Questions
Can I open a brokerage account in Europe?
For the most part, opening a brokerage account will be the question of your residence. For example, if you reside within the European Union for more than 183 days per year, you’re considered a tax resident of that country.
However, if you’re a U.S. citizen, you should seek tax counseling as you’re subject to U.S. income tax regardless of where you reside.
Is DEGIRO better than eToro?
This highly depends on the type of trader you are. Long-term investors, as well as short-term stock speculators, might prefer DEGIRO for low commissions and access to fixed income markets.
Degiro will also be a pick for socially responsible investors, as the company is not making the market (taking the other side of the trade). As a result, its investments make a measurable change in the world.
On the other hand, traders who engage in social trading or enjoy trading contract for differences (CFDs) might find eToro a better choice.
What are the best European brokers?
Check out Benzinga’s list of the best European brokers in the articles above.