We tested popular brokers for 10+ factors & listed the 5 best ECN brokers for South Africans regulated with FSCA, FCA or ASIC.
While searching for a regulated forex broker, you may have come across the term ‘ECN brokers’. These brokers are generally different in the way they deal with your orders.
Many brokers falsely advertise on their model of execution, so you must exercise caution before you choose a broker.
To understand the difference, forex brokers can be classified into two types based on how they process the orders; Market Makers (Dealing Desk), and NDD brokers (No-dealing desk) which includes ECN brokers, and STP brokers.
Market maker brokers, as the name indicates, create a virtual market for you & act as a counter party to fill your order taking the opposite side of your trade. There may be a conflict of interest with your orders with these brokers.
On the other hand, No Dealing Desks (NDDs) i.e. STP ECN brokers, don’t not take the opposite side of your order, instead they connect you with other market participants. They either charge a small commission per trade or apply a mark-up on the spreads for the revenue.
5 Best ECN brokers in South Africa for 2020
Here we have listed only the ASIC FCA, and FSCA regulated ECN brokers that have a transparent NDD model and offer STP or ECN accounts.
Below is our updated list of 5 best ECN brokers in South Africa based on our comparison factors i.e. broker’s regulation, trading commission, trade execution speed & some other factors:
Ranked #1 ECN Broker in South Africa
IC Markets is an Australian forex & CFD broker that offers raw spread trading accounts. They are our recommended choice if you are looking for a true ECN broker that offers low trading fees.
IC Markets is regulated with top-tier regulator ASIC, and they have recently also applied for regulation with FSCA (FSP no. 50715).
The trading fees at IC markets is very low. For ex: for EUR/USD, they offer 0.1 pips spread on average + $7 commission per standard lot ($3.5 per side for open & close of position) with their Raw Spread Account (Metatrader). IC Markets does not charge any other fees for inactivity, funding or withdrawal fees.
They offer market execution model, offering the current market price. The orders with them are filled at the best price without any re-quotes. They don’t offer any negative balance protection though.
IC Markets Pros
IC Markets Cons
Ranked #2 ECN Broker in South Africa
HotForex is a 100% STP broker that is regulated with multiple tier 1 regulators i.e. FSCA (South Africa), FCA (UK) & CySEC (Cyprus). They are a good STP broker if you are looking for a South African regulated broker.
HotForex claims to offer a ‘STP model’ for all the trades placed by its clients, and all the orders are placed directly in the live market. So there is no conflict of interest with the orders that you place with them.
HotForex has one of the lowest spreads with the accounts among the brokers that we have compared. With their Zero Account, the spreads for major pairs like EUR/USD average around 0.3 Pips with a commission of just $3 (per side i.e. $3 to open & $3 to close which makes it $6 per trade) for a standard lot.
Their order execution is also very quick & most of the orders that we placed were completed without any off-quote. Another attractive point, is no deposit and withdrawal fees, so you will get 100% of your amount.
Ranked #3 ECN Broker in South Africa
Tickmill is regulated with FCA (Register Number: 717270), FSCA & CySEC (Licence number: 278/15). They offer Pro account which has ECN execution model.
Tickmill offers very competitive fees with their Pro account that has a minimum deposit of $100. In our benchmark, the lowest spread for EUR/USD at Tickmill was 0.2 pips + $4 per Standard lot (i.e. $2 per side).
The execution at Tickmill is quick with no requotes. And they also provide negative balance protection with all their accounts. Moreover, they don’t charge any extra fees for funding.
You can trade on 62 currency pairs, which is higher than most other brokers. But on the negative side, other instruments are quite limited with 16 Stock Indices & CFDs on 2 metals.
ECN brokers & STP brokers, are brokers that pass your orders directly in the actual market. These brokers are classified as NDD (No Dealing desk) brokers, since they pass your orders directly into the market rather than trading against you.
The major benefit with ECN brokers is the lower fees per trade, and the fact that your broker is not trading against you.
We have explained below the models of ECN brokers & the STP brokers:
1. STP Brokers: Straight Through Processing (STP) is a technology that do not require a dealing desk. The STP broker typically connects traders with a network of liquidity providers that have access to interbank network. Therefore, they have variable spreads because the orders go through different providers which have their own Bid/Ask spreads.
For every order they get, they search for a counterparty internally among other participants and then look externally with liquidity providers. In this entire process, STP brokers do not assume counter-party positions, instead they connect the pool of participants together. STP execution is done directly in the market and hence no re-quotes. STP brokers earn their revenue through a small mark-up from the spreads quoted by liquidity providers.
2. ECN Brokers: Electronic Communication Network (ECN) broker allow the market participants to trade with each other, unlike STP where the orders are placed with liquidity providers. Your orders are placed in the market & matched against market participants like retail traders, banks, other brokers, financial institutions etc. that bring in liquidity to the forex market. ECN brokers earn their revenue/profits through a small commission per trade instead of mark-ups and spreads.
Let’s face it, the main reasons to choose ECN brokers over Market makers is the lower fees & more transparency.
Market maker brokers (Dealing Desks) are criticized many times for their role in trading malpractices, often taking the opposite side of its own clients’ trades to pocket profits instead of doing its own job of passing orders to a liquidity provider. Sometimes they even manipulate spreads/fees, thereby putting the retail trader at a huge disadvantage. This lack of transparency in their system makes them a poor choice for a retail trader.
In contrast, pure ECN/STP brokers (No dealing desk) have advanced technology which essentially eliminates the role of the middleman by offering a platform that places your orders directly in the real markets, and brings the market participants together. Not just that, ECN brokers allow clients to access real markets, thereby better quotes.
Most brokers these days offer a ‘Hybrid model’ which is usually a combination of both ECN/STP & as market maker. So it is important to check with the broker if they are pure ECN broker or not.
|ECN Broker||Regulation(s)||Fees||Leverage||Minimum Deposit||Forex Trading Platform(s)||Start Trading|
|IC Markets||ASIC, CySEC||Raw Spread Metatrader – Commission of $7 per lot + spread from 0 pips||up to 1:500||$200||MT4, MT5 & cTrader.||get started|
|Hotforex||FSCA (South Africa), FCA, CySEC||Zero Account – Commission of $6 per lot + spread from 0 pips||up to 1:1000||$200 (for Zero account)||Metatrader 4, MT5.||get started|
|Tickmill||FCA (UK), ASIC||Pro Account – Spread from 0.2 pips + $4 commission per standard lot||up to 1:500||$100||MT4 for web, mobile devices,||get started|
|FP Markets||ASIC (Australia)||Raw Spread from 0 pips + $3 USD commission per trade||1:500||$100||MetaTrader 4, MetaTrader, Webtraders||get started|
|FXTM||FSCA, FCA, Cysec||ECN Accounts- Lowest spread from 0.4 pips + $4 fees per standard lot.||1:1000||$200||Multi device MetaTrader 4, MetaTrader 5, Webtrader||get started|
|FxPro||FSCA||cTrader account – Floating spread from 0.37 pips + $4.5 USD per trade for standard lot.||1:500||$200||MT4, MT5, cTrader.||get started|
ECN & STP brokers offer you direct access to the live market by matching your orders against the other participants in the Forex market.
ECN brokers directly link you to the interbank market participants via their liquidity providers. This is unlike market maker brokers – which create the virtual market & match the traders via their internal order books or take position opposite your trade.
With transparent True ECN brokers there is no conflict of interest & generally the trading fees is also much lower. But, there may be a conflict of interest with market makers as they may be taking position against you, which means that with some broker that follow bad practices, it may be in their benefit that you lose.
You should directly ask the broker about their trading execution model. Most regulated & good brokers will be transparent about it, and also have page on their website for execution policy related terms.
Brokers that offer True ECN access accounts will mostly likely mention it openly. But this does not mean that an ECN broker is the best. Some brokers have hybrid model which can be a mix of STP & ECN, but still be a NDD (No dealing desk) forex broker, and are very transparent with good execution.
FxPro for example is a FSCA regulated NDD forex broker but they don’t have a direct ECN model. So, according to us what should matter most for beginner traders – is the broker is well regulated & does it have quick execution model at lowest possible fees.
There are 10+ FSCA (formerly FSB) regulated forex brokers that also offer ECN type trading accounts. These FSCA regulated brokers have good ECN/STP platforms: Hotforex, ForexTime and Tickmill as per our ranking factors & user reviews.
Hotforex offers lowest fees with their Zero Account. ForexTime offers multiple ECN account types, and some of them have good ECN environment. Tickmil is a NDD broker & has a Pro account which is an ECN type account.
IC Markets is the #1 ECN BrokerVisit