Foreign exchange market
The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies.
This market determines the foreign exchange rate. It includes all
aspects of buying, selling and exchanging currencies at current or
determined prices. In terms of trading volume, it is by far the largest
market in the world, followed by the Credit market.
A lot of traders think that a big broker is better than a smaller one because a larger company has many advantages such as economies of scale,
a better liquidity position and is the subject of higher scrutiny from
the public and the regulators. While this basic assumption has some
merit and to some degree "bigger is better", it is not a total
correlation between size and quality of forex brokers. This means that
the largest broker is not necessary the best, although all good brokers
are sufficiently large in order to be competitive.
If you want to find out which are the biggest forex
companies in the world, you should continue reading this article.
However, if you want to know which are the best forex brokers in the
world when it comes to trading conditions and customer satisfaction, you
should check our special forex brokers ranking.
How to measure the biggest forex companies
When it comes to measuring the size of a company,
there are several criteria that are generally used. The most common
criteria used in ranking companies by size are market capitalization,
revenue and profits. Also, when it comes to financial companies such as
banks or insurance companies, another way to measure size is by
comparing the total assets under management. While these values can be
relevant in some situations and industries, they are totally irrelevant
when it comes to forex brokers. Here is why:
Market Capitalization - The only
companies that can be ranked by market capitalization are public
companies (those listed on a stock exchange). This would leave most
forex brokers out of the ranking. It is also important to note that
market capitalization represents the value investors give to a specific
company. A small but profitable company can have a higher market value
than a large company unable to generate profits.
Revenue - While ranking forex
brokers by revenue will render more accurate results, this criteria is
still far from being relevant in this particular case. A broker's
revenues will come from the commissions it charges and the spreads the
traders have to pay. A broker with higher commissions and spreads will
generate more revenue than a similar sized broker with lower spreads.
There is also the problem of integrated products offered by the
companies. A company offering stocks trading, options and futures along
with forex trading will generate revenue from more sources as compared
to a pure forex broker. If the stocks business generates most of the
revenue, the company can be very large but the forex division can still
be small compared to others.
Profits - Ranking forex brokers by
profits is totally irrelevant, as this criteria includes the same
problems we identified when discussing about revenues, and many more.
Just think about a large company with a bloated business that has huge
operating costs. It can be a really big company but generate no profit.
Assets Under Management (AUM) - In
the case of forex brokers, the closest thing to AUM are the client
funds. While they are not managed by the brokers, they represent the
total value of the client accounts. This measure is much more relevant
than the previous ones, but it still lacks the differentiation between
the forex business and the other services offered by the company. If you
mix stocks trading with forex, it is very likely that the largest part
of the client funds will be used in trading stocks, not forex. Another
thing that makes clients funds less relevant is the different leverage
used by brokers. Lower leverage needs more funds in the broker's custody
for the same operations. Also, it is possible to have large forex accounts with very little trading activity.
Considering the above mentioned criteria are
irrelevant when judging the size of forex brokers, we must come up with a
measure that is more relevant to this specific business. In this case,
we think that the most relevant criteria to rank forex brokers is by the
average volume of daily transactions.
Average Volume of Daily Transactions (AVDT)
- The daily transactions of a forex broker can vary a lot, but the more
active clients the broker has, the less volatile the value of daily
transactions will be. In order to get a better idea about the real
volume of a broker, it is better to calculate the average volume for a
larger period of time, as daily and seasonal fluctuations will be less
relevant. We think the AVDT becomes relevant when at least the last
three months are being taken into consideration when calculating the
average. In order for a forex broker to be considered large it must have
an AVDT of at least one billion dollars (more than 10,000 standard lots
traded daily).
We noticed that all the high quality forex brokers
are also large ones and have their AVDT of at least three billion
dollars. This is why, in this article we will list only brokers with
daily transactions exceeding three billion US dollars.
Largest forex brokers by volume
Below you will see the biggest forex companies in
the world by volume of daily transactions. We have separated the
companies based on their location, as we have identified four major
regions when it comes to forex brokers: United States of America,
Europe, Australia and the Rest Of The World. The regions we identified
have different regulation and the brokers in each region must abide by
specific rules. The data presented on this article was compiled from
different sources such as company presentations and other information
found on the internet. The data is not audited and we cannot guarantee
it is accurate. Please take the information about AVDT with a grain of
salt as it may contain errors and inaccuracies.
In order to make it easier for you to identify the
best forex brokers from the rest, we have also added our rating next to
each broker. The ratings vary from A+ (best) to C- (Worst). We have a
dedicated page where you can read more information about our forex broker ratings.
Largest forex brokers in the United States
The United States is one of the largest forex
markets in the world, but due to very restrictive regulation it has been
declining in recent years. It is also the most isolated market since US
traders are unable to open account with offshore forex brokers because the FATCA regulations imposed on foreign financial institutions has made it too expensive for anyone to accept US clients.
The strict rules and protection from outside
competition had led to consolidation among local brokers, with the most
important development being the acquisition of FXCM client base by Gain
Capital (also known as Forex.com). Right now there are only three forex
brokers in the United States, and one of them is mostly an institutional
broker (Interactive Brokers), so retail clients have basically only two
choices (Forex.com and Oanda). Because the CFTC and NFA
regulation greatly limits leverage and has the unpopular FIFO rule, the
US based brokers have been unable to get traction in foreign markets
and the vast majority of their clients are from the US.
Below is the ranking of the biggest US forex brokers by volume:
| AVDT* | Rating | Broker |
| 15.5 | B- | Forex.com (GAIN Capital Holdings Inc) |
| 10.7 | B+ | Oanda (Oanda Corporation) |
| 3.9 | B | Interactive Brokers (Interactive Brokers LLC) |
* Average Volume of Daily Transactions in Billion USD
Largest forex brokers in Europe
This is where most of the large forex companies are
located. Because of Europe's cultural and linguistic diversity, local
brokers had to adapt early to very different markets and stiff
competition, but this has proven to be a great asset when they expanded
globally. European brokers are based in different countries and have
multiple trading licenses, but the hot spots of forex trading in Europe
are Cyprus (CySEC) and the United Kingdom (FCA).
This is where most brokers are located thanks to the world leading
regulation, and even brokers located in other countries such as
Denmark's Saxo Bank use a CySEC license for their forex trading
division. While European regulation varies from country to country, they
are all compliant with the MIFID legislation of the European Union which adds another layer of protection for traders.
Some of the European brokers have gone global, and
their operations are spread on different continents. European brokers
are used by many traders in Asia, Africa, The Middle East and Latin
America, and their total volumes are greatly boosted by their
international operations. Some brokers may have the bulk of their
activity from non-European clients attracted by the safety of European
regulations and the excellent trading conditions offered by some of the
world's leading brokers.
Here you can see the largest forex brokers in Europe:
| AVDT* | Rating | Broker |
| 13.4 | A | XM.COM (Trading Point of Financial Instruments Ltd) |
| 12.3 | B+ | Saxo Bank (Saxo Bank A/S) |
| 8.3 | A- | FX Pro (FxPro Financial Services Limited) |
| 7.8 | B- | IG Markets (IG Group) |
| 6.5 | A- | Exness (Exness Limited) |
| 4.9 | B+ | Ava Trade (Ava Trade Ltd) |
| 4.7 | B+ | Swissquote (Swissquote Group Holding SA) |
| 4.5 | B | Etoro (Etoro Europe Ltd) |
| 4.4 | B- | Plus500 (Plus500 Ltd) |
| 4.2 | B- | Markets.com (Safecap Investments Limited) |
| 3.9 | B | Dukascopy (Dukascopy Bank SA) |
| 3.8 | B | Iron FX (IronFX Global Limited) |
| 3.3 | B- | FXDD (FXDirectDealer LLC) |
| 3.2 | C+ | Admiral Markets (Admiral Markets Group AS) |
| 3.0 | C | Easy Markets (EF Worldwide Ltd) |
* Average Volume of Daily Transactions in Billion USD
Biggest forex brokers in Australia by volume
We have a separate section for Australian brokers
because they have their own regulation under the Australian Securities
and Investments Commission (ASIC).
Australian brokers are well represented outside Australia's borders as
well, because the jurisdiction is very solid and some of the brokers are
offering top notch conditions and liquidity. The major forex brokers in
Australia are also very successful in other English speaking countries
as well as in China and Southeast Asia.
There are three major Australian forex brokers that
generate very high average daily volumes, and all of them are
experiencing good growth rates. Below you can find the largest forex
brokers in Australia:
| AVDT* | Rating | Broker |
| 8.6 | A+ | IC Markets (International Capital Markets Pty Ltd) |
| 5.9 | A | Pepperstone (Pepperstone Group Limited) |
| 5.4 | B | Direct FX (Direct FX Trading Pty Ltd) |
* Average Volume of Daily Transactions in Billion USD
Largest forex brokers from other jurisdictions
There are several high volume forex brokers located in
other jurisdictions than the ones presented above (Australia, Europe and
United States). Since the remaining big brokers are spread around the
world and are not concentrated in a smaller region, we have included
them in the "rest of the world" category. The brokers listed here come
from very different jurisdictions such as St. Vincent and The Grenadines
in the Caribbean, Hong Kong or Russia.
The brokers in this category abide by different
regulation and can vary a lot when it comes to reliability. However,
this does not mean that such brokers cannot be good, as you will see
that the ratings they received are very different, from very good to
very bad.
Here is the list of the largest forex brokers from the rest of the world:
| AVDT* | Rating | Broker |
| 9.5 | A- | Hot Forex (HF Markets Ltd) |
| 7.1 | B | GMO Click Securities (GMO Click Holdings Inc) |
| 4.2 | C+ | Instaforex (InstaForex Group) |
| 3.6 | B | 24 Option (Richfield Capital Limited) |
| 3.1 | B- | FX Open (FXOpen Markets Limited) |
| 3.1 | C- | Alpari (Alpari Limited) |
* Average Volume of Daily Transactions in Billion USD
Which large forex brokers are truly global?
While US traders will have to settle with a US based
broker since they are not allowed to open accounts with foreign
companies, people from the rest of the world are free to trade using an offshore forex broker account.
In most cases, Europeans will settle for an European broker and
Australians will choose a local one as well, but what about people from
the rest of the world? What about people in Canada, Central and South
America, The Caribbean, Africa and Asia? They make up more than 85% of
the world population, and they must choose a foreign forex broker to
trade with. What are their best options?
All forex brokers will accept people from most
countries, but only a small number of brokers are truly able to handle a
diverse client base. In order to better serve people from various
countries and continents, a broker must be able to easily handle
deposits and withdrawals with a vast number of internationally used
payment methods. The brokers must also allow for accounts denominated in
different currencies, have multilingual websites and dedicated
customer support for many countries and languages. While many of the big
forex companies are specialized in serving more than one demographic,
we have identified a set of brokers which have a truly global presence
and are well suited to handle traders from any corner of the world.
Here are the largest truly global forex brokers:
| AVDT* | Rating | Broker |
| 13.4 | A+ | XM.COM (Cyprus) |
| 12.3 | B+ | Saxo Bank (Denmark) |
| 9.5 | A- | Hot Forex (St. Vincent and The Grenadines) |
| 8.3 | A | FX Pro (United Kingdom) |
| 4.9 | B+ | Ava Trade (Ireland) |
| 4.2 | C+ | Instaforex (Russia) |
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