All you need to know about top Forex brokers in Luxembourg

Luxembourg is a shining example of the fact that a country can be successful, regardless of its actual size, 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 626, 100, Luxembourg maintains a GDP of over 66 848 billion USD. 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. One should not, therefore, be surprised that Luxembourg’s FX market can offer a handful of opportunities to the Forex traders in Luxembourg.

In the guide below, we will have a closer look at the state of the country’s national economy, 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 the country has to offer.

Best Forex brokers in Luxembourg – our top picks this year

Trading Forex in Luxembourg can ultimately become the best financial decision that you have ever made. If approached wisely, it can translate into a strong source of additional income, or, in some cases, even a substitute for a full-time job.

However, one of the most important decisions that you will have to make in terms of getting started with the Luxembourg trading market is finding the broker that best suits your needs, and we regret to inform you that this is hardly an easy task.

The process usually consists of a detailed examination of the variety of brokers available, an assessment of an overall state of the country’s Forex market, and making the ultimate choice of joining the local brokerage. On top of being extremely time-consuming, this procedure becomes very stressful, as making a mistake at this stage can really hamper your ability to gain profits, or even lead to some devastating losses.

Our team of experts decided to make this task a bit easier for both the beginners and the experienced traders alike by coming up with a comprehensive list of the best brokerages available in Luxembourg today. Below, you will be able to discover everything you need to know about the country’s most reputable brokerages, the success rates of their respective traders, and the trading tools that they can offer.

XM Group

XM Group Forex Review

Minimum deposit

5 USD

Licences

CySEC, IFSC, ASIC

Maximum leverage

1:30*

US Clients

No

Exness

An in-depth review of Exness Forex broker

Minimum deposit

1 USD

Licences

CySEC, FCA, FSA

Maximum leverage

1:Unlimited

US Clients

No

IQ Option

IQ Option Review – can the broker be trusted?

Minimum deposit

10 USD

Licences

CySEC

Maximum leverage

1:1000

US Clients

No

BlackBull Markets

BlackBull Markets Review – What Does This FX Broker Offer?

Minimum deposit

$200

Licences

FMA

Maximum leverage

1:500

US Clients

No

Forex.com

Forex.com Review

Minimum deposit

100 currency units

Licences

CIMA, FCA, NFA

Maximum leverage

1:200

US Clients

Yes

RoboForex

RoboForex Broker

Minimum deposit

100 USD

Licences

CySEC

Maximum leverage

1:200

US Clients

No

What’s the Luxembourg national economy like?

The success testimony of the national economy in Luxembourg is quite a peculiar one for many reasons.  As mentioned above, the country is definitely not rich in natural resources, and can hardly be listed among the world’s major exporters. So how did the tiny country surrounded by economic giants on every side manage to elevate itself to the level of one of the most respected economies in the world?

The key to Luxembourg’s success lies in its ability to market itself properly. The country named itself as the financial center of Europe, and, miraculously became one. The truth is, the current state of the national economy is so good that many go as far as to call it an exploiter.

The reason for such a harsh incentive is that Luxembourg, with a population of a little over 600 000, is home to more than 1.5 million workers. While such numbers seem impossible at first sight, the mechanism behind it is actually quite simple. Many people from other countries choose to work in Luxembourg remotely, however, they do end up paying taxes there. Moreover, since most of those workers choose not to reside in the city-state, the government there is not obliged to provide them with any social benefits.

If the extreme success of the Luxembourg financial sector is still not enough to convince you, we are happy to report that the country is doing very well in developing many other sectors of its economy, ranging from cutting-edge technology and green energy solutions to exploring space and producing some high-quality pharmaceuticals.

All things considered, it is easy to see how anyone interested in the FX could really benefit from choosing some of the best Forex brokers in Luxembourg.

Who can get started with FX trading in Luxembourg?

Before jumping deep into the country’s regulatory environment, it is necessary to provide some clarity on who is eligible to start trading Forex in Luxembourg. The good news is that getting started with Forex trading here is no rocket science – all you need to do is to be of the age of 18 or older, and successfully meet the requirements put forward by the broker of your choice. If you manage to do that, you will be able to start trading in no time.

When it comes to the costs associated with this process, there is little to say too. You will not be charged a dime for merely joining a brokerage, and the only financial input required from you will be the deposit that you will later use for your consequent trading.

When it comes to making the deposit, the best advice to follow is to only deposit what you are comfortable losing. However, more often than not, this is easier said than done. What one should definitely consider is that the brokers will most likely have their own requirement for the minimum amount that the trader can deposit, which means that that’s an additional factor that one should consider before joining a brokerage.

In doing that, you should remember that the size of the minimum required deposit is in no way an indicator of how good or how bad the brokerage is. If you explore the previous section a bit closer, you might find that the requirements range from as little as 5 USD and all the way up to 500 USD, yet, every single brokerage on this list is well deserving to be listed down as one of the Luxembourg best Forex brokers.

Luxembourg’s regulatory environment

The main regulatory body in Luxembourg is called Commission de Surveillance du Secteur Financier (CSSF). The CSSF is completely independent, and the extensive list of responsibilities that it performs include managing and overseeing the safe and smooth functioning of investment, pension funds, securities, and, of course, the Forex trading brokers in Luxembourg.

As we have already learned, Luxembourg’s trading market is quite developed, which means that the body is mainly tasked with maintaining its sustainable growth and reinforcing customer protection at all times.

In the upcoming sections, we will have a more detailed examination of what are the main regulations that the CSSF imposes upon the local brokers, and what makes them so efficient for the Luxembourg Forex market.

Licensing of brokers

One of the most important functions that every single regulatory body across the world has to perform is licensing of the Forex brokers and making sure that the traders are only joining the ones that are included in the top Forex brokers list.

When it comes to Luxembourg,  one cannot say that the process of obtaining the CSSF license is easy. On the contrary, the 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, yet there is no way to avoid it.

With that being said, one should not automatically assume that only the Luxembourg-based and locally licensed brokers are allowed to operate within the country. Luxembourg is the 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.

Luxembourg is no exception, and one may find that many of the brokers operating there are not physically based in the country. But does this mean that those brokers should not be trusted and are better off being avoided altogether? Absolutely not!

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.

Now, we will have a look at some of the more specific measures that Luxembourg brokers have to meet in other to gain a license from the CSSF.

Account segregation

The first measure that we are going to address, as well as many other regulations that we will be examining here, is a part of a common practice that one can witness across many regulatory bodies across Europe.

Demanding brokers to keep their operating funds separate from the accounts of traders is a good way to both provide traders with some additional layer of security, and, make sure that best Luxembourg’s brokers are well prevented from either accidentally harming the former, or committing an illicit act, whether on purpose or not.

By keeping the traders’ funds segregated, the CSSF ensures that in case the brokerage goes bankrupt, its clients do not end up with frozen funds, or losing them completely. On top of that, this measure significantly reduces the possibility of the traders’ funds being misused by their respective broker.

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. The fund should be kept intact at all times, and, should the broker go bankrupt, it is used to repay the traders who lost their money as a result of this event.

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 the 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. The issue of bonuses is a way for a broker to show their appreciation for either the new trader signing up with them ( in a form of a welcome bonus) or the returning trader who decided to stick with the particular broker ( which is what refill bonuses are mainly for).

While choosing a brokerage for themselves, many traders are actively seeking such bonuses, however, as we have just mentioned, they are not available to the traders in Luxembourg. Having said that we should also note that there are many other advantageous trading instruments that the best online trading platforms in Luxembourg have to offer – with leverage being the most prominent among them.

Audits and reviews

In order to ensure that all of 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.

Every single one of the best brokers in Luxembourg, that possesses a license form the CSSF has to go through this process multiple times a year, and if any illicit activity is detected, has to face the appropriate measures.

Minimum required capital

The final regulation that we will address here refers directly to whether or not a broker is considered to be eligible to offer their services in Luxembourg. According to the CSSF policy, before being granted an official license, the broker has to prove the possession of minimum operating capital, that has to be maintained at all times.

The amount of this capital is determined by a specific body that the trader is applying for. For example, the popular Cyprus-based CySEC is demanding its brokers to maintain 750 000 EUR at all times.

Is Forex trading in Luxembourg worth exploring? Our ultimate verdict

The main outtake of our review is never to judge a book by its cover. A seemingly small European country, with no specific boosters of the national economy, is home to one of the strongest financial sectors in the region, and by extension, to one of the strongest FX markets. This city-state offers some of the best opportunities to traders currently residing there, and its efficient regulatory environment means that there are some of the region’s top Forex brokers in Luxembourg today.

If you are currently based in Luxembourg and seriously consider getting into trading Forex, we do not see a single reason for you not to do that.