Comparison of Best STP Brokers in the UK

Note: The spread data is the average spread as per information on these brokers’ websites in November, 2023. Trading CFDs is risky.

Best STP Brokers in the UK

Here is the list of best STP forex brokers in the UK as per our research:

1. IG Markets – Overall Best STP Broker in the UK
2. eToro – Best STP Broker with Copytrading
3. Plus500 – STP Broker with Zero Commission
4. Skilling – Low Spread STP Broker
5. Libertex – STP Broker with Temporary FCA Regulation

#1 IG Markets – Overall Best STP Broker in the UK

You can trade CFDs or place a spread bet with IG Markets. There is no enforced minimum deposit via bank transfer. It is higher via credit/debit card or PayPal (£250).

Instruments: IG Markets offers forex, indices, shares, commodities, options, and futures. All of these are available as CFDs. There is also maximum leverage of 30:1 for retail traders. The average spreads for CFDs are high and you will pay swaps as well.

As an STP broker, IG Markets does not make profits from your losses. Their business model, as seen on their website, states that clients offset each other’s position. What does this mean?

If you buy a standard lot of EUR/USD and another client sells a standard lot of EUR/USD, both sides of the trade are covered. So IG Markets do not have the conflict of interest issue. In addition, if it happens that a good number of clients open the same position on a certain instrument, IG Markets will purchase the futures of that instrument to hedge their risk.

This is why IG Markets are in this review.

Furthermore, your orders are filled at your desired price or at a better price. If it happens that there is a low period of liquidity, your order will be rejected instead of it being filled at a worse price. However, this is occasional. According to data found on their website, only 0.62% of orders were rejected due to liquidity (January-March 2021).

Still, on the filling of orders, IG Markets will also reject your trades if the market moves to a worse price compared to your desired price (even if there is liquidity). How is this done? If the price moves at a better price for you, they have a technology that makes sure you receive that price.

But if the price is worse, it is rejected and you will be asked to submit your order again at a new price. This ensures that IG Markets offers negative slippage. All of this is possible because of IG Markets’ deep liquidity.

#2 eToro – Best STP Broker with Copytrading

So, why did eToro make our list?. Let us start with the minimum deposit which is $10. This is one of the lowest you will find in this review.

There is just one account with the following CFDs offered: currencies, commodities, indices, ETFs, and stocks. No commissions are charged on these CFDs except for the spreads and overnight charges. The spreads are quite high.

You can read our eToro review for more on their trading conditions.

We reviewed an official eToro document on their execution. In this document, we were able to confirm that the CFD broker sources for price from third-party reference sources. This also includes independent financial market data providers.

This is important because STP brokers do not quote the price of CFDs themselves. eToro executes your orders instantly except during unique market conditions (e.g rapid price fluctuations). it also proves that eToro does not operate a dealing desk.

The instant execution does not mean there will not be slippage. But you are guaranteed to get the best prices as stated in their execution document.

#3 Plus500 – STP Broker with Zero Commission

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% 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.

You get one account type with access to multiple CFD markets. Forex, indices, commodities, shares, options, and ETFs are offered on the account.

Typical spreads are low with zero commissions on forex.

Refer to our Plus500 review for more on their trading conditions.

We reviewed two of Plus500 UK’s official documents. The first is called ‘Conflict of Interest’. We found that Plus500 Group hedges its net risk with third-party counterparties. This policy ensures that the STP broker is not in a position to make a profit from your trades. They make their money from the spread.

The second document we reviewed is the Order Execution Policy. The first thing we noted is that price quotes are supplied to Plus500 UK by Plus500 Ltd via third-party reference sources. However, their execution model still reflects that of an STP broker.

How?

According to the document, when you open a trade, an identical hedge trade is opened between Plus500 UK and Plus 500 Ltd. This means they are not operating a dealing desk. However, you cannot be sure that your trades will be executed at the best price available.

According to the ‘Order Execution Policy’, there may be instances when it will be obvious the best execution was not provided.

#4 Skilling – Low Spread STP Broker

Account: Skilling offers four account types – Standard, Premium, MT4, and MT4 Premium Accounts. These accounts differ in some ways but we will focus only on the minimum deposits. The Standard and MT4 accounts have a minimum deposit of £100. For the other accounts, you will need £5000 to open them.

As for CFD instruments, Skilling has a good range of currency pairs, indices, commodities, and equities. These CFDs are not available in the same number across all account types. Skilling charges spreads, commissions, and swaps. These fees also differ by account type.

After reviewing Skillings’ legal documents on order execution, here is what we found. They source prices from third parties and a pool of liquidity providers. That is one necessary criterion for being an STP broker. Also, your orders are executed quickly and their policy demands they try and get the best price for you.

There is just one issue. According to the document, a part or all of your trades are covered within the company or related entities. Some of these entities may act as market makers for some instruments.

What is the implication of this? It is that there is the risk of conflict of interest where these entities can profit from your losses. This is an imperfect STP condition.

#5 Libertex – STP Broker with Temporary FCA Regulation

Libertex has a £100 minimum deposit. They offer stocks, forex, metals, indices, agriculture, ETFs, oil, and gas. All of these are available as CFDs. Their trading fees include spreads, swaps, and commission.

The forex broker gets their price quotes from third-party references (price feeders). This is just one part of an STP condition. Libertex obviously acts as a principal as far as your orders are concerned. So they fulfill the second condition of executing your orders via third parties.

As we reviewed their legal documents, however, we found that they have a system for managing the company’s risk. What we could not confirm is how they do it. But we can confirm to you that there is no dealing desk from Libertex or their third-party execution venues.

What is a STP Broker?

STP means Straight-Through-Processing. It is a price quoting and execution model where the CFD broker does not take the opposite sides of your trade. Unlike market makers, STP brokers facilitate the execution of your trades via a counter-party in the market.

For example, if you open a buy position for EUR/USD at 0.1 lot, a Market Maker (MM) will balance the trade by opening a sell position on EUR/USD at the same lot size. If the trade goes against you, the MM broker makes money.

Unlike market makers, STP brokers facilitate the execution of your trades via a counter-party in the market. The counter-party could be financial institutions, liquidity providers, or both. A true STP broker has no interest in your trade results. They make their money via spreads and commissions. This way, they avoid conflict of interest. STP brokers are also transparent about how they manage their risks.

In addition, STP brokers strive to make sure your orders are executed at the best price possible. With the kind of technology they use, slippage is rare.

ECN vs STP Broker -What is the Difference?

Both types of brokers are non-dealing desks (NDD) with few human errors because they process trades electronically. However, they have their own differences.

ECN brokers provide you with direct access to the interbank market environment. The pricing and execution of your trades are carried out in this environment via an electronic communication network. They display real-time prices. They fluctuate as the exchange rate does. Since ECN brokers do not mark up the spreads from the interbank prices, they tend to charge an extra commission per standard lot

On the other hand, STP brokers process trades electronically too. But they do not give direct access like ECN brokers. Instead, they process and pass on your trades to liquidity providers. The liquidity providers then execute your trades at the most competitive price. With STP brokers, there is more liquidity for the execution of your trades. This is because most STP brokers use multiple liquidity providers which increases the likelihood of execution.

Benefits of Trading with an STP Broker

Here are some specific advantages that come with STP brokers:

1) Faster Processing: STP brokers usually act as agents. They process your trades directly. This is possible because they do not take the opposite side of your trades. Your trades are purely automated and electronically transferred to buyers or sellers in the market. In addition, you do not need to wait for a matching order before your trades are executed. All of these make your makes your trading process quicker.

2) Lower risks: Market makers act as a counterparty to your trades. Consequently, there is always the issue of conflict of interest. Why? Because market makers benefit and make money if your trade fails. Market makers are considered to pose a risk to traders because of this.

On the other hand, STP brokers do not have this conflict of interest. They process your trades and make their money from spreads/commissions or both. This way, there is no conflict of interest.

3) Tight spreads: STP brokers often provide tighter spreads and better pricing. From their pool of liquidity providers, they are able to offer you competitive bid/ask prices. This can lead to a reduction in your trading cost.

In addition, STP brokers will charge a commission per standard lot instead of widening spreads. Consequently, spread costs is consistent and prices are transparent. This can result in more cost-effective trading, especially for frequent traders or those engaging in strategies that require tight spreads.

How to Choose an STP Broker

At this point, you should be well informed about the best STP brokers and their execution models. The next thing you need to know is the factors to consider when choosing an STP broker. This section is a systematic guide on how to check these factors by yourself.

1. License and Regulation: UK-based brokers are regulated with the FCA. You should always check if your STP broker holds a license from the regulatory body. There are a few reasons why you should.

First, choosing a FCA regulated broker guarantees that your deposited funds are safe. Such brokers are under the watchful eyes of the FCA so the risk of being defrauded is low.

The second reason is that licensed brokers are under the Financial Services Compensation Scheme (FSCS). This scheme ensures that retail traders get their money back should a broker go bankrupt. Funds are protected up to £85,000. Can you see why you should only choose a licensed broker?

Now to how you check the regulation. We will use Plus500 as our example broker. First, go to plus500.com/en-gb and scroll to the bottom of the website. There, you will find their registered name and reference number. Here is how it looks like

You can see from the image that the registered name is Plus500 UK Ltd with reference number 509909.

Hold on. We are not done yet. You need to verify these details with the FCA. Go to https://register.fca.org.uk/s/. Scroll down till you get to the image below. Enter the broker’s registered name, select firms (in the yellow box), and click on ‘search’.

Your result should be displayed as shown below.

Do you notice that the registered name and the reference number match? This is how you verify your broker’s FCA license.

In addition, forex trading comes with the risk of cloned brokers. These are not real brokers but fraudulent firms. They try to deceive traders to sign up with them before eloping with their capital. They do this by using names similar to licensed brokers.

When you verify an FCA’s broker license, you will also find the names of firms attempting to clone the true broker. Here is an example with Plus500.

The brokers in the screenshot above are clones of Plus500. Can you see how their names are almost similar to Plus500? This is another reason to verify your broker’s license. It helps you spot clone firms.

2.Segregation of Funds: Before choosing an STP broker, you need to ensure that your money is separated from the company’s money. In other words, your money is kept in a separate account. This ensures that your money is not used to conduct business or hedge trades. In addition, it also guarantees that your money is safe should your broker become bankrupt or face financial hardship.

Segregation of funds is mandatory for all FCA regulated brokers. However, it is important to confirm with your broker. Here is how you can check for it. We’ll use IG Markets as our example. On IG’s homepage, click on ‘About us’. In the dropdown options, click on ‘What we do your money’.

On the result page, scroll down to the image below.

As you can see, IG keeps clients’ money in a separate account. If you cannot find this on your broker’s website, you can always speak to their support.

3. Pricing and Execution: You need to take your time, as we did in this review, to research the pricing and execution of your preferred STP broker. You need to know the intricate details. It is important because some brokers are not true STP.

Furthermore, there are some brokers with third-party providers that act as market makers. Never assume a broker is a true STP till you have seen the in-depth information on how they execute your trades. Here is how you can carry out this research on your own. We will use IG Markets as our example.

On their homepage, move your cursor to ‘About us’. You will see a dropdown with different options. Click on ‘best execution’ (in the yellow box).

This will bring you to a page full of detailed information about what goes on behind the scene. In the image below, you can see a highlighted area (red box). It states how IG Markets sources the prices they give from multiple venues. . Not just that. It also shows how orders are rejected to make sure you get the best price from their liquidity pool.

The presence of multiple liquidity pools, plus a system that offers the best price, shows that a broker is a true STP.

4. Spreads: What you should look out for here is not necessarily high or low spreads. Your main focus should be if the spreads offered are fixed or variable. True STP brokers always try to offer the best of prices offered by their liquidity providers.

Because of this, their spreads are always fluctuating. It is important you confirm this because you might end up with a market maker if you don’t. One way to check this is to look for live price data on the broker’s website.

The image below shows live price data from IG. Can you see how the little arrows beside the prices point up and down? This confirms a fluctuation in price. As a result, spreads cannot be fixed.

For brokers that do not have live price data on their websites, you can speak to their customer support.

5. Funding/Withdrawal: You need to be able to get your money in or out effectively. Convenient payment methods should be supported by your forex broker. Apart from your bank, you should be able to pay and withdraw online via your credit/debit cards. Most brokers accept cards from Visa and MasterCard.

You can also check if your broker accepts payment via e-wallets. Skrill and Neteller are the commonest e-wallets accepted by brokers in the UK.

How to Open an Account with an STP Broker

Opening an account should not take too long. Here are the simple steps

Step 1) Go to the broker’s website and sign up. You will be required to submit your email and password here.

Step 2) You will also need to give more personal details. Your name, residential address, mobile number, date of birth, and nationality will be demanded. Make sure these details are correct and correspond with your ID documents or passport.

Step 3) The next step will be to verify your identity. Your passport or driver’s license will be required. You will also have to submit a document as proof of address. It could be your light bill, water bill, or bank statement.

Step 4) You will also have to choose a trading platform.

Step 5) Once your account is verified, you can deposit funds and start trading.

FAQs on Best STP Brokers in the UK