Forex Brokers with Institutional Trading Accounts

Forex brokers with institutional trading conditions can have access to better prices in the market and serve institutional traders who can directly influence the price movement of the assets they exchange due to the large volumes they process. Some institutional traders will even trade large volumes to influence the price and move it in their favour. Once the retail traders catch up on this, it can either add fuel to the fire or be too late and see them caught on the wrong side of an institutional trade. Regardless, institutional forex brokers can be important for anyone who is looking to trade large volumes with the best possible conditions available.

What is an institutional forex broker?

An institutional forex broker buys and sells securities for institutional investors such as banks, and mutual funds, pensions. Whenever you see large buy or sell volume of a particular currency pair or another asset class, then you can assume that there is perhaps an institutional investor behind that trade. Retail investors simply do not have the cash availability required to trade with such large volume. Institutional forex trading involves large amounts of money, which allows traders to have a great capacity to diversify their investments to avoid large losses.

What is institutional forex trading?

Institutional forex trading consists of the purchase and sale of currencies by institutions through their traders. Institutional forex trading is mostly practised by large companies who have dedicated teams that are divided into analysts and operators whose role is to conduct professional technical and fundamental analysis of the forex market. They will have spent countless hours studying the markets and put into practice the strategies and operations based on their foundation of expert knowledge.

Institutional trading vs retail trading

The main difference between these types of traders are that retail traders, often referred to as individual traders, buy or sell currencies for personal accounts. Institutional traders buy and sell currencies for accounts they manage for a group or institution.

Although retail traders now have access to financial instruments that were previously only reserved for institutional trading, there are still options far out of their reach, such as IPOs or some futures contracts that are only accessible to large investors.

Retail investors are afforded certain legal protection from regulated forex brokers whereas institutional investors can have the upside in terms of research and access to capital.

Institutional forex trading has some advantages in terms of commission fees and FX market prices when dealing with larger amounts of capital when compared to retailer traders.

API trading is available for institutional investors to connect the broker’s real-time data to their own front-end systems, allowing trades to be executed quickly at the best bid/ask prices in an in-house environment.

Institutional forex trading accounts

Institutions could in theory still trade on a standard retail forex account using a regular brokerage firm. However, you will find there are institutional forex brokers that have accounts which have been specifically designed with institutional clients in mind. IG and CMC Markets being a few examples. It is worth noting that although it may not always be advertised, there are many brokers who will also offer this service, or an elective professional service to individual professional traders with enough funds and the relevant trading experience.

Who are the best institutional forex brokers?

Whilst there are institutional brokers that will only work with large companies, the average retail forex trader can consider an ECN broker with API connectivity to trade large volumes and run demanding strategies that require the best possible conditions at all times.

That being said, the gap between institutional trading and retail trading, in terms of ease of access to financial markets, has narrowed thanks to technological advances. Please see a selection of our best forex brokers for institutional trading that welcome retail traders and investors in the table below.

Broker
Rating
Regulated
Min. Deposit
Founded
Max. Leverage
1.
IG Review

ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA

$250

1974

1:200

76% of retail investor accounts lose money when trading spread bets and CFDs with this provider.
2.
City Index Review

ASIC, FCA, MAS

$100

1983

1:200

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
3.
Forex.com Review

ASIC, CIMA, CFTC, FCA, FSA, IIROC, JFSA, NFA, SFC

$100

2001

1:50

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
4.
XTB Review

CySEC, DFSA, FCA, FSCA, IFSC

$1

2004

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
5.
Global Prime Review

ASIC, FSA, VFSC

$200

2010

1:200

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
6.
LMAX Review

CySEC, FCA, FMA, GFSC

$10,000

2010

1:30

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
7.
Interactive Brokers Review

ASIC, CFTC, FCA, IIROC, NFA, SFC

$1

1978

1:200

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
8.
CMC Markets Review

ASIC, FCA, FMA, IIROC, MAS

$1

1989

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
9.
Swissquote Review

DFSA, FCA, FINMA, MFSA, SFC

$1,000

1996

1:100

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
10.
Saxo Bank Review

ASIC, FCA, FINMA, JFSA, MAS, SFC

$500

1992

1:66

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.

Institutional forex brokers pros & cons

Pros

  • Can handle large trading volumes
  • Access to some of the best market prices
  • Quick execution even with big position sizes
  • Volume can even impact the currency market prices
  • Save on commission when trading large volumes

Cons

  • Require larger minimum deposits
  • Minimum trading volume requirements
  • Not as easily accessible to everyone

Conclusion: do I need to use an institutional forex broker?

To be honest, I don’t think that the average retail trader needs to worry too much about using an institutional broker. This is because they probably wouldn’t be trading enough volume to warrant it being a necessity. You can still get quick and easy access to excellent forex trading conditions by using an ECN forex broker with direct market access.

However, if you are an institutional trader that will be buying and selling currencies with significant funds, then you could certainly consider an institutional forex broker. This is because they can help improve on things such as spreads and slippage, which could perhaps save a lot of money in the long run. If you are running scalping strategies, HFT systems or trading robots, a FIX API forex broker can be another way to ensure superior trading conditions.


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