Investing in derivatives – such as CFDs, futures contracts, options, and swaps – is a complex endeavour. The added leverage from these instruments can increase their risk and reward profiles. But, if you feel you have sufficient financial expertise, investing in derivatives can be a great way for risk management, hedging, arbitrage between markets, and speculation on the value of various underlying assets from stocks and commodities to fixed income products and foreign exchange.
Finding the best derivatives brokers can be challenging, since there are plenty of brokers offering a variety of services with different fee structures. Important factors to consider are the number of derivative products you will have access to, fees you might incur, and which regulatory bodies supervise each broker.
To help you on your investing journey, we’ve conducted thorough research to find the best derivatives brokers . So, without further ado, please keep reading to discover more about the five best derivatives brokers you could use today.
Best Derivatives Brokers
| Derivatives Broker | Derivatives fees | Minimum deposit | Range of derivatives | Regulators |
| eToro | CFD fees (other fees apply)
Currencies: From 1 PIP Commodities: From 2 PIPs Indices: From 0.75 points Stocks & ETFs: 0.15% Crypto: See full details here |
$50 in the UK
For other countries, see full details here |
CFDs across currencies, commodities, indices, stocks, ETFs, and crypto
Options are available for US account holders only. |
FCA, CySEC, ASIC |
| Interactive Brokers | Varies by exchange with tiered Pricing:
0.05% of Trade Value (min: £1) |
£0 | Options, futures, crypto futures, and CFDs across a range of assets | FINRA, SIPC, SEC, CFTC, IIROC, FCA, CBI, AFSL, SFC, SEBI, MAS, MNB |
| Pepperstone | CFD commissions ranging from $0.02 per share to 0.2%
Minimum commissions apply (e.g. £7 for UK shares) |
£0 | CFDs across commodities, indices, currencies, crypto, shares, and ETFs | FCA, ASIC, DFSA |
| XTB | Zero commission | £1 | CFDs across indices, commodities, stocks, ETFs, and crypto | CySEC, FCA, KNF, and IFSC |
| Plus500 | Zero commission | $100 | CFDs across crypto, indices, forex, commodities, shares, options, and ETFs | FCA, CySEC, MAS, ASIC, FMA |
In the following detailed reviews, we discuss the features of each broker in terms of pricing, accessible markets and instruments, and other special features.
eToro
76% of retail CFD accounts lose money.
eToro in a nutshell
eToro, a global online broker, makes the cut as one of our top five derivatives brokers. The company has gained a keen following thanks to its ‘copytrading’ service which allows you to replicate the investment moves of other traders in real time, automatically. Founded in Israel in 2007, eToro has attracted over 30 million investors to its platform.
eToro operates an intuitive trading platform, which is easy to fund through a variety of methods. Regarding its derivatives offering, eToro allows traders to access CFD products across a range of asset classes including: currencies, commodities, indices, stocks, ETFs, and crypto. Options are available for US-based investors, but unfortunately not for UK investors at present.
eToro is regulated and supervised by multiple prestigious regulators, such as the Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC). In line with the European Securities and Markets Authority (ESMA) regulation, eToro also provides negative balance protection for Forex and CFD trading on a per-account basis to retail clients from the EU.
One negative aspect to note is the $5 fee per withdrawal. For UK traders, a currency conversion fee will be applied. In addition, eToro’s customer support may take more than two business days to reply to customers’ requests.
eToro has an average rating of 4.4 out of 5 on Trustpilot.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Interactive Brokers
Interactive Brokers in a nutshell
Interactive Brokers is also in our top five derivatives brokers. Founded in 1978, it is the most established broker in our list. The company operates the largest electronic trading platform in the US, but its footprint is truly international.
This broker has the broadest derivatives offering of all the brokers we have reviewed in this article. Not only do clients have access to CFDs across a range of assets, but Interactive Brokers also allows you to trade options, futures, and crypto futures too. Accordingly, this platform is particularly well-suited to advanced traders who want to access a wide variety of products.
Due to its considerable global operations, Interactive Brokers is regulated and supervised by a range of leading regulators around the world, including: FINRA, SIPC, SEC, CFTC, IIROC, FCA, CBI, AFSL, SFC, SEBI, MAS, and MNB.
One downside of Interactive Brokers compared to other platforms in our list of the best derivatives brokers is the fact that it charges commissions on its CFD trades. This may be a particular concern for frequent traders. In addition, the broker’s customer service has received mixed reviews, with some users full of praise but others disappointed with the time taken.
Interactive Brokers has an average rating of 3.7 out of 5 on Trustpilot.
Pepperstone
74-89% of retail CFD accounts lose money.
Pepperstone in a nutshell
Next in our list of the best derivatives brokers, there’s Pepperstone. The company was founded in 2010 and is headquartered in Australia. Used by over 400,000 traders worldwide, the platform has developed a stellar reputation particularly in forex and CFD trading. Pepperstone has won a variety of awards for its customer service and trading offering.
Regarding the derivatives on offer, Pepperstone allows traders access to commodities, indices, currencies, crypto, shares, and ETFs. Pepperstone also offers UK investors access to a spread betting account. The broker has three trading platforms – MT4, MT5, cTrader – to suit a variety of trading styles. Each platform is available on mobile, desktop, tablet and the Pepperstone web app.
Pepperstone has a wide range of educational resources available for traders, including trading guides, video tutorials, regular webinars, an economic calendar, and market insights. The broker is regulated by multiple established regulators, including the FCA in the UK, ASIC in Australia and the DFSA in the UAE.
One downside of Pepperstone compared to other platforms in our list of the best derivatives brokers is the fact that it charges commissions on its CFD trades. This may be a particular concern for frequent traders.
Pepperstone has an average rating of 4.5 out of 5 on Trustpilot.
XTB
80% of retail CFD account lose money.
XTB in a nutshell
XTB is another broker on our list of the best derivatives brokers. The company was founded in 2002 and is listed on the Warsaw Stock Exchange. The company has attracted over 400,000 clients worldwide and has developed an excellent reputation for affordable pricing (variable by account type) and its highly-regarded customer service, accessible by live chat, phone support, and email.
Regarding the broker’s derivatives offering, XTB allows traders access to CFDs across indices, commodities, stocks, ETFs, and cryptocurrencies. Once you open an account, you’ll have access to XTB’s two trading platforms, the xStation 5 and the xStation Mobile. These platforms allow for a high level of customisation. However, they are fairly complicated for novice traders.
XTB is regulated by several leading regulators, including the Financial Conduct Authority (FCA). The fees depend on the account type (standard or pro) and the company generally offers competitive spreads.
This broker has a more limited range of derivatives than some of the others in our list. In addition, XTB charges a £10 monthly inactivity fee (which kicks in after more than a year of inactivity with no deposits in the previous 90 days).
XTB has an average rating of 4.3 out of 5 on Trustpilot.
Plus500
86% of retail CFD accounts lose money.
Plus500 in a nutshell
To complete our list of the best derivatives brokers, we have Plus500. The company was founded in 2008 and is a constituent of the FTSE 250 index. Plus500 has a particularly strong reputation in CFD trading, with competitive spreads and a wide product range. The platform is available in over 50 countries, including the UK.
Regarding the broker’s derivatives offering, Plus500’s CFD products cover a wide range of assets, including indices, forex, commodities, crypto, shares, options and ETFs. Plus 500’s trading platform, WebTrader, offers a stable trading experience and easy access from multiple devices, including a mobile app. The company also offers a demo account.
Plus500 is regulated by several leading regulators, including the FCA and ASIC. The company does not charge commissions for CFD trades, but instead makes most of its money via spreads. In addition, there are overnight fees, currency conversion fees, and inactivity fees, which could be a negative for infrequent traders.
Plus500 has an average rating of 4.0 out of 5 on Trustpilot.
Methodology
At moneygrower.co.uk, we aim to offer investors fair and unbiased reviews of online brokers. Our team thoroughly examined each of the brokers mentioned above to produce this list, taking into account several variables, including:
- Regulation
- Derivatives offering
- Low trading and non-trading fees
- Easy deposit and withdrawal methods
- Good customer service
Finally, we ensured that all brokers give you access to other financial products if you want to expand your trading beyond derivatives.
What Makes a Good Derivatives Broker?
A good derivatives broker should be a safe broker. Accordingly, it should be regulated by at least one of the top-tier financial authorities. Deposit and withdrawal of funds should be available by traditional payment methods such as bank transfer, debit, or credit card, as well as other quick and simple methods.
Regarding fees, many derivatives offer commission-free trading. However, non-trading fees such as inactivity fees, deposit fees, and withdrawal fees should also be low. In addition, many derivatives brokers make money through markups in their spreads, so these should be competitive too. Finally, a good broker will ideally offer a demo account for customers, allowing you to test the broker’s trading platforms before you start putting your hard-earned money to work.
The bottom line
To summarise here’s the list of “Best derivatives brokers in 2023”:
Best derivatives brokers in 2023
| #1 | eToro | Best for social trading |
| #2 | Interactive Brokers | Best for the largest offering of various derivatives products |
| #3 | Pepperstone | Best for competitive spreads |
| #4 | XTB | Best for customisable trading platforms |
| #5 | Plus500 | Best for a wide CFD product offering |
Finding the best derivatives broker is a challenging exercise due to the high number of brokers available, each with different features and different pricing structures. We examined the tools offered by major derivatives brokers and produced this list to assist you in choosing the best derivatives broker. This list includes brokers that provide access to a wide variety of CFDs across a variety of asset classes, and for those seeking a broader range of derivatives, Interactive Brokers’ offering covers a greater range of products, including options and futures.
We hope that this post helps you in finding a suitable derivatives broker to meet your investment needs. Before making a final decision when selecting the best derivatives broker, we advise opening a demo account and exploring its features.
Other FAQs
What are derivatives and how do they work?
Derivatives are a type of financial security that are tied to an underlying asset. The asset in question will determine the derivative’s risk, pricing, and term structure. Examples of derivative contracts include options, swaps, and futures.
Is derivatives trading risky?
Derivatives can greatly increase a trader’s exposure to leverage, which accentuates the potential risk and reward of the trade. Trading on margin can result in the total loss of capital and the vast majority of retail clients in the UK lose money when doing so.
Charlie formerly worked at the Bank of England and is a qualified lawyer with expertise in intellectual property and technology disputes. He currently writes on about financial markets and investing.
