According to etoro review UK, eToro services UK clients via a unit regulated under the Financial Conduct Authority (FCA) and Australians through an Australian Securities and Investment Commission (ASIC)-a regulated entity. All other customers are served through a Cypriot unit regulated by the Cyprus Securities and Exchange Commission.
eToro does not list on any stock exchanges, does not publish its annual reports on its website, and does not have a parent bank. eToro is safe when ASIC and the FCA of the highest tier regulate it. What are the forex best pairs to trade?
HEADS-UP: Minimum deposit required for account activation and residency. A deposit is required to trade after you have uploaded your documents. Based on your residency, the amount of deposit required varies from $10 to $10,000. You can find more information in the Account opening section of the review. eToro USA LCC doesn’t offer CFDs. Only real Crypto assets are available.
Forex is complicated instruments that can lead to rapid losses due to leverage. 79% lose money trading CFDs with this provider. It is worth taking the time to understand CFDs and decide if you are willing to risk losing your money.
Products and markets
eToro is primarily a forex broker and CFD platform. You can trade real stocks and ETFs, as well as various cryptos. eToro has unique features such as CopyTrader and Smart Portfolios (previously known as CopyPortfolios).
Tradeable assets are all non-leveraged long positions, including those in stocks, ETFs, or cryptocurrencies. This means you can buy equities or ETFs, as well as cryptos, without using leverage. When leverage is set at one, you will only buy real stocks, cryptos, and ETFs.
- All positions other than those are CFDs
- All short positions, including leveraged long positions, in stocks, ETFs, or cryptos
- All positions for forex, commodities, and indices
Does that mean that eToro is a stockbroker? If you buy stocks, there’s no commission. There are some differences.
It is impossible to initiate a stock transaction between eToro (or vice versa). All positions opened by eToro have to be closed with eToro. Additionally, eToro holds stock on behalf of its users; users do not currently possess voting rights for stocks. You are permitted to own fractional shares.
We don’t recommend eToro to long-term investors primarily interested in collecting dividends from US stocks. Because eToro takes the default US dividend tax of 30% instead of the – often lower – tax treaty rates deducted by most brokers.
These are all signs that eToro may not be the best option for long-term investors. We are unsure how eToro will handle corporate events (e.g., a spin-off). Let’s move on to eToro’s Forex offering. CFDs offer an alternative to traditional trading.
Invest in a compiled portfolio. This is Smart Portfolios. Forex is complicated instrument that can lead to rapid losses due to leverage. 78% lose money trading CFDs with this provider. It is worth taking the time to understand CFDs and decide if you are willing to risk losing your money.
eToro has a greater selection of ETF and stock CFDs than any competitors. There are many cryptocurrencies that you can trade. Scalping is not permitted at eToro.
Is eToro regulated?
The Financial Conduct Authority (FCA) and the Australian Securities and Investment Commission (ASIC) regulate it in the UK. eToro was established in Israel in 2007.
How to be protected
eToro has three legal entities that serve customers based on where they live. This is important because which entity you are a member of determines the investor protection you receive. The FCA will protect citizens of the United Kingdom who open accounts at eToro UK Limited. eToro UK clients will be compensated if eToro goes under. This amount is guaranteed by the Financial Services Compensation Scheme (FSCS).
eToro AUS Capital Pty Ltd is responsible for serving Australian clients. ABN 66 612 791 803 AFSL 491139. It is regulated and supervised by ASIC, Australia’s financial regulator. ASIC, however doesn’t provide any mandatory investor protection for a predetermined amount.
Other investors will also have live trading accounts with eToro Europe Limited. This is regulated and supervised by CySEC, the Cypriot watchdog. Maximum EUR20,000 is the maximum amount of investment coverage offered by eToro Europe. The Cypriot Investors Compensation Fund sets this threshold.
All clients on boarded to the three above entities are eligible for eToro’s private insurance. This insurance is available for cash, securities, and CFDs at PS/$/EUR 1,000,000. This insurance is offered by Lloyd’s. It applies in the case of eToro’s bankruptcy. This is an excellent addition, as not all brokers offer additional protection beyond the regulatory one. It could be withdrawn at any time by eToro.