All you need to know about top Forex brokers in Luxembourg

Luxembourg is a shining example of the fact that a small country can be successful, regardless of its population, or possession of natural resources. This city-state is located in between some of the most major players in Europe, such as Germany, France, and Belgium, and its overall territory only amounts to a little over 2,586 sq. km. Despite its size, Luxembourg is definitely regarded as an important player in the international political arena. The country was among the founding members of the EU, NATO, OECD, United Nations, and Benelux – and it is, without a doubt, a pivotal member of every single one of those organizations.

The country’s economy is also quite impressive, as with a population of only over 0.6 million people, Luxembourg maintains one of the biggest GDPs per capita globally. The country is home to some of the highest standards of living, both in Europe, and in the entire world, and the national economy contributes a lot to the global market. Luxembourg is a financial hub in Europe and investing in financial markets is conducted professionally.

In the guide, we will take a closer look at the main regulatory body that oversees the safety of Forex trading in Luxembourg, as well as provide you with our top picks of the best Forex brokers that offer their services to the residents of Luxembourg.

Best Forex brokers in Luxembourg – our top picks

Forex and CFD (Contracts for Difference) trading in Luxembourg is very popular. There are many trading institutions in the country that are on a constant head-hunt for the best Forex traders. To become a trader, one of the very first steps to make is choosing a Forex broker. Which is not an easy task, as there are so many brokers nowadays. Traders have to compare the trading conditions and regulations of different brokers to find the one that best fits their needs. To make the job easier for you, we’ve evaluated various brokers and picked the ones that offer the best trading conditions.

Forex trading regulations in Luxembourg

The main regulatory body in Luxembourg is called Commission de Surveillance du Secteur Financier (CSSF). The CSSF is completely independent, and it has an extensive list of responsibilities including: managing and overseeing the safe and smooth functioning of investment, pension funds, securities, and Forex brokers in Luxembourg. The regulator issues license to brokers and makes sure that the regulations are followed.

Obtaining the CSSF license is not easy. A broker will have to meet a long list of requirements, as well as provide sufficient proof of their qualifications to be considered eligible to offer their services in Luxembourg. The entire procedure is extremely time-consuming and takes a lot of effort to complete.

Luxembourg is an EU member-state, which means that it is also subjected to the rules, laws, and guidelines issued by the Markets in Financial Instruments Directive (MiFID) and the European Securities and Markets Authorities (ESMA).

According to those regional regulatory authorities, brokers who are based in one of the countries in the Eurozone, and licensed by one of the European legal entities, have permission to operate in any of the EU member states without having to obtain a license from every single one.

Most of the European regulatory bodies are known for their demanding standards and efficient regulatory bodies, thus, if the brokers possess an official license from them, it, by definition, means that it is qualified and trustworthy enough for you to consider signing up with them.

Account segregation

Forex and CFD brokers are required to keep clients funds in segregated bank accounts from their own funds. This is an important safety feature, as even if a broker gets bankrupt and gets liquidated, traders will have access to their money.

Investor compensation fund

In a follow-up to the regulation discussed previously, the CSSF has gone to an extra length to make sure that the traders are fully protected from significant losses that are caused by circumstances beyond their control. Investor compensation fund (ICF) exists for that exact reason, and all the regulated Forex brokers in Luxembourg are required to offer one.

One should, however, note that there is a cap on how much the trader can receive, and it varies depending on the regulatory body that demands it. For example, the UK’s FCA raises the maximum compensation bar up to 85 000 GBP per trader, while the ICF keeps it at 20 000 EUR. Moreover, a trader will not be eligible for compensation if their losses resulted directly from their bad judgment during a trading session.

Bonuses and promotions are banned

In accordance with the guidelines issues by MiFID and ESMA, the provision of bonuses and promotions in Luxembourg is strictly prohibited as a form of aggressive marketing, and any violation of this law immediately results in legal punishment.

Nevertheless, this tool often used by various brokers across the world to expand their customer base, and, it is equally beneficial for the traders who end up receiving them. However, bonuses and promotions can promote wrong attitude to trading among beginners. A trader’s main goal should always be to trade the right way, and not to trade for a competition or promotion. Typically, brokers urge traders to over trade to earn the bonuses before they are able to withdraw.

Audits and reviews

In order to ensure that all the brokers are strictly following the standards imposed upon them, the CSSF is carrying out a periodic examination of their activities via the careful examination of the audit reports and performance reviews that the brokers have to submit.

Such reports usually consist of a breakdown of all financial operations that the broker has conducted prior to submitting the review, as well as information such as the success rates of its traders, and many more.

Summary

Overall, A seemingly small European country, Luxembourg is a financial center in Europe. Forex trading is legal and well regulated in the country, however, due to the country’s small size, there are only a few local brokers available. In our top brokers list, we have picked the best international brokers that offer their services to the residents of Luxembourg, such as XM, AvaTrade, EagleFX, and others. Make sure to read detailed reviews by clicking on their icons from the list above before opening an account.

FAQs on top Forex brokers in Luxembourg