Over-the-counter (OTC) forex brokers connect you with a network of liquidity providers using ECN or STP that can lead to spreads as low as 0.0 pips. OTC Brokers also offer the benefit of 24-hour trading as hours.
Pepperstone is among the best OTC forex brokers based on:
Pepperstone sees on average USD 9.2 billion worth of client trades every single day that can speculate on 180 OTC derivatives, with spreads starting from 0.0 pips and trades executed under 30ms. Pepperstone is a true global FX and CFD broker with over 110,000 clients worldwide and licenses in tier-1 jurisdictions (ASIC, FCA, CySEC, BaFin and DFSA).
OTC trading means there is no central exchange, instead, trading is done using a network of liquidity providers such as dealers banks and brokers with STP, ECN or DMA execution. Pepperstone uses deep pool liquidity providers who compete with each other to bring you the lowest spreads. As these providers are spread across the world, it also means 24-hour trading is possible.
Based on the latest statistics from the Bank of International Settlements (BIS), the size of the OTC market grow to USD 15.5 trillion from USD 11.6 trillion at the end-June 2020. The gross market value of the over-the-counter derivatives is huge. At the same time, the forex market reached USD 6.6 trillion in daily turnover.
Learn more about the different aspects of OTC trading with our experts’ review here: 2021 Forex Trading Statistics + Industry Guide.
Pepperstone a global leader in online trading services handles USD 9.2 billion in daily turnover. Only IC Markets handles larger trading volumes of over USD 15 billion of trades processed daily.
Pepperstone uses one of the most advanced trading technologies, which allow retail traders to enter and exit the market with ultra-fast execution speeds. With Pepperstone, market orders are submitted in under 30 milliseconds, without any manual intervention which reduces latency and slippage.
We evaluate the order execution speed across multiple forex brokers by testing the time it takes for a market order to travel from the desktop terminal (MetaTrader 4) to the broker’s server and found that Pepperstone is leading with split-second execution.
Pepperstone can boost 85ms execution speed closely followed by FP Markets with 95ms execution speed. On the other hand, FXCM is the slowest brokerage trading firm with a 150ms execution speed.
At Pepperstone, all retail investor accounts can access over 180 financial instruments and over 60 currency pairs with spreads starting from 0.0 pips – accessible through the Pepperstone Razor account. Pepperstone directly connects forex traders to dozen of liquidity providers and financial institutions increasing your opportunity to receive lower spreads.
The average EUR/USD spread has been lowered to 0.09 pips down from 0.10 pips from a year ago. See how Pepperstone’s spreads compare to other industry-leading forex brokers in the table below.
Data taken from broker website. Accurate as at 02/04/2021
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The same as with forex trading, CFDs are derivatives that are also traded in the over-the-counter market. This means that the CFD provider is using the market maker model to settle trades. Pepperstone offers CFDs on 7 asset classes: Spot Indices, Shares, Commodities, Cryptocurrencies, Currency Indices, Spot Metals and Spot Energies
Overall, Pepperstone comes in as the most reliable OTC forex broker. You can start trading today with a minimum deposit of USD 200 or give Pepperstone a drive-test on their free demo account available on the most popular trading platform – MetaTrader 4 (MT4).
View Pepperstone Review >>Visit Pepperstone >>
IC Markets is the best online OTC broker for the range of trading platforms based on:
With more than a decade of business history, IC Markets is the largest Forex CFD provider globally in terms of Forex volume. With IC Markets, traders are able to access the OTC market through a variety of powerful trading platforms, including MetaTrader 4, MetaTrader 5 and cTrader.
The two main regulators that oversee IC Markets online trading activities are the Australian Securities and Investments Commission (ASIC) and the Cyprus Securities and Exchange Commission (CySEC).
IC Markets offers its services and features on two of the industry’s leading trading platforms – MT4 and MT5. MetaTrader 4, already a standard for Forex trading, brings an array of features and benefits for IC Markets clients.
Trading on MetaTrader 4 comes with:
The IC Markets trading accounts can also give you access to 20 exclusive advanced trading tools, previously unavailable on MetaTrader 4, including Correlation Matrix, Sentiment Trader, Tick Chart Trader, Stealth Orders etc.
IC Markets MetaTrader 5 software offers even more in terms of charting technology and order management tools, as clients can take advantage of an expanded set of technical indicators, drawing objects, time frames as well as order types.
CFD and Forex traders who crave to have advanced analytics combined with high-speed performance and deep liquidity will probably find IC Markets’ cTrader trading platform as a solution best suiting their preferences.
With its unique design and user-friendly interface, this trading platform brings a number of key benefits, including:
IC Markets trading servers are collocated in the world’s largest financial hubs New York and London. The MetaTrader 4 and MetaTrader 5 servers are located in the Equinix NY4 data centre. At the same time, cTrader servers are located in the LD5 IBX Equinix Data Centre in London. IC Markets dedicated servers can boast low latency and ultra-fast order execution of 40 ms.
Overall, IC Markets offers the best online trading platforms for beginner and professional clients. IC Markets clients have flexible deposit and withdrawal options – 15 different payment options, including credit and debit cards, Skrill, bank wire transfer etc. Click the button below and fund your trading account today by using one of the 10 different base currencies (USD, EUR, GBP, AUD etc.).
FP Markets is the best online OTC broker to save with low spreads based on:
FP Markets is an award-winning, global Forex and CFD provider, regulated by some of the most respected industry regulatory bodies – ASIC and CySEC. With FP Markets, traders can choose from two live trading account types to gain access to global financial markets:
Since the brokerage aggregates pricing from a deep pool of top-tier liquidity providers, it is able to offer extremely low spreads across its entire product list, which is a huge advantage for clients, as they can save on trading costs and optimize their overall trading results.
FP Markets grants access to the Forex market through several trading platforms (MetaTrader 4, MetaTrader 5 and Iress) without charging any trading commissions on its Standard trading account. Clients need to pay an all-inclusive spread only, which starts from 1.0 pip on major currency pairs.
The average spreads offered also tend to be quite competitive (see table below).
The broker will charge a small commission for trading Forex and Spot Metals on its Raw account depending on the base account currency chosen. Forex trading on a USD-denominated Raw account will incur a charge of $3.00 per side ($6.00 per round turn) per 1 Standard Lot. MetaTrader charges for other base currencies are presented below.
The Raw account grants access to ultra-thin spreads on currency pairs and Spot Metals, which can fall to as low as 0.0 pips during the most liquid times. But what is more, the broker’s diverse liquidity mix allows it to keep the average spreads very low as well.
FP Markets also offers competitive spreads on other OTC products such as Commodity, Cryptocurrency or Stock Index CFDs (see table below).
Overall, FP Markets offers the most competitive trading costs on over 10,000 financial markets including, forex, indices, shares, commodities and cryptocurrencies. Click the button below to drive test FP Markets via their free demo account with USD 100,000 in virtual funds.
View FP Markets Review >>Visit FP Markets >>
ThinkMarkets offers the best mobile trading App based on:
ThinkMarkets is a global Forex and CFD provider, authorized to offer OTC trading services in two tier-1 jurisdictions, including the Australian Securities and Investments Commission (ASIC) and the Financial Conduct Authority (FCA).
ThinkMarkets’ ThinkTrader Mobile represents innovative proprietary software, which allows seamless access to OTC products such as CFDs at any time at any location. What makes this mobile trading platform unique is a set of valuable features.
Clients can trade the OTC market with the help of a full suite of technical analysis tools including:
Single multi-device login is also available so ThinkMarkets clients can use a single login and similar interface on their mobile phone or tablet.
ThinkTrader is a fully functional mobile charting app available on iPhone and Android. One of the best analytical features is the Quad Screen Display feature, which allows traders to analyze four real-time charts simultaneously on any mobile device.
The intelligent TrendRisk Scanner – a market scanner that will automatically search a number of tradable assets across several time frames to find the most promising trading opportunities.
Cloud-Based Alerts and Triggers – clients can set up to 200 alerts and triggers, which will notify them of particular developments in the OTC market even when they are logged out of their trading account.
Additional real-time news from FX Wire Pro and the multi-touch functionality complements the app to offer one of the best mobile trading experiences.
Our review has found that ThinkMarkets deserves admiration for its unique mobile trading app. If you want to enjoy access to customizable trading history reports or have the ability to close active positions in a particular trading instrument all from a single tap, give ThinkTrader a try and click the button below.
View ThinkMarkets Review >>Visit ThinkMarkets >>
IG Markets offers the best range of OTC financial markets based on:
With over 17,000 OTC markets, IG is a leading CFD and Forex brokerage with several decades of business history, regulated in 9 jurisdictions worldwide, including the UK’s FCA, Australia’s ASIC and in the United States by the CFTC and NFA.
Our review has found that IG offers the widest and most diverse range of OTC products among the top brokerages we took into consideration.
Disclaimer: Derivatives such as CFDs are complex instruments that involve a high level of risk for clients to incur rapid capital losses due to leverage. Therefore, traders need to be fully aware of how these derivative instruments work before they start trading CFDs on retail investor accounts with the use of leverage.
With IG, clients can access more than 17,000 financial instruments grouped in multiple asset classes as follows.
IG offers over 90 major, minor and exotic currency pairs with a tiered margin system for retail traders. Professional clients can access leverage of up to 1:200. The minimum spread offered on EUR/USD and AUD/USD is 0.6 pips, while that on USD/JPY is 0.7 pips.
The average bid-ask spread is 1.04 pips – based on price data “for the 12 weeks ending 8th January 2021.” In addition, financial spread betting is also available to IG clients.
IG stock index trading allows you to access 37 contracts traded with a tiered margin system for retail clients, while professional traders can access max leverage of 1:200. The minimum spread offered on AUS 200 Index and UK 100 Index is 1.0 point, while that on S&P 500 is 0.4 points.
IG offers over 13,000 individual Stocks across multiple regions of the world, with trading commissions on US shares being 2 cents per side and 0.18% per side on Hong Kong shares. The minimum margin requirement for most markets is 10%.
Cryptocurrencies – 8 digital currencies (Bitcoin, Ethereum, Litecoin, Ripple, Bitcoin Cash, Stellar (XLM), NEO, and EOS) plus the Crypto 10 Index traded with a tiered margin system for retail clients, while professionals can access max leverage of 1:20. The minimum spread on Bitcoin is $38.0, while that on Ethereum is $1.2.
CFDs on Soft Commodities, Metals and Energies – 39 contracts traded with a tiered margin system for retail clients. The typical spread on Spot Gold is $0.3, while that on US Crude Oil is $2.8.
IG clients can also trade CFDs on Bonds (13 contracts), Interest Rates (6 contracts), Sectors (35 UK and Australian sectors such as banking, mining, general retailers etc.), Options as well as Index, Sector, Commodity and Currency ETFs.
Overall, IG Markets comes at the top of our list based on the huge selection of OTC markets. IG clients are also offered extended trading hours and 24/7 trading on selected instruments. Click the button below and start practising trading on a risk-free demo account.
View IG Markets Review >>Visit IG Markets >>
eToro offers the best copy trading platform based on:
Founded in 2006, eToro has become renowned for its global social trading network. Our review has found that eToro offers the best social trading conditions on its platform among OTC Forex brokers.
Clients with little or no trading experience who feel insecure with a trading strategy of their own as well as those who simply do not have the time to closely keep track of market developments are able to earn a passive income by following other traders.
eToro accommodates over 13 million active traders, which trade in multiple asset classes (forex, cryptocurrencies, ETFs, stocks, indices and commodities.)
eToro’s CopyTrader, the broker’s most popular feature allows retail traders to connect and directly replicate the trading activity of top-performing traders on eToro’s network.
To do so, clients need to choose a trader on eToro’s platform, input the amount from the account balance they wish to allocate to that trader and click on “Copy”. The selected trader’s positions will be replicated automatically in real-time and in direct proportion.
Clients can filter through users on the broker’s platform with the help of criteria such as risk score, return for the past 12 months, number of copies etc.
What is important to note is that clients will never have to pay any management fees or other hidden costs when copy trading. They only need to ensure a minimum deposit of $200 to enter the OTC market and also to make sure they meet the minimum required value of every copied position ($1.00).
eToro’s CopyTrader technology allows users to copy up to 100 traders simultaneously, with clients also being able to pause or stop the copy, to add or to remove funds at any time.
On the other hand, traders with a proven strategy are able to earn a second income with eToro’s Popular Investor program. To join the program, they have to meet certain requirements:
The program features four different tiers, each with its requirements and benefits. To become eligible for a Champion rank and start earning a monthly income paid by eToro, every trader will need to ensure minimum equity of $5,000, to have at least 10 copiers and to ensure the minimum value of allocated funds by copiers (Assets under Management) of $50,000.
Overall, it’s safe to trade with eToro as it’s regulated in 4 tier-1 jurisdictions including NFA, ASIC, FCA and CySEC. Click the button below and start copy trading today with a minimum deposit of USD 1,000.
Plus500 offers the best range of OTC risk management tools based on:
Founded in 2008, Plus500 is a trusted CFD and Forex provider, listed on the London Stock Exchange (LSE). The main regulators that supervise Plus500’s trading operations are UK’s FCA, Australia’s ASIC and Cyprus’ CySEC – all tier-one regulatory agencies.
Since trading OTC products such as CFDs carries a high level of risk of losing money due to an array of factors, retail clients require proper risk management tools to safeguard their active positions. One such tool is the guaranteed Stop Loss, which sets an absolute limit on potential losses and also reduces the risk of slippage.
We should note that not every OTC Forex broker offers this tool. Among the leading OTC brokers we reviewed, Plus500 clearly stands out when it comes to managing risk in CFD trading.
Along with the traditional Stop Limit and Stop Loss orders, the brokerage has also provided tools such as Trailing Stop and Guaranteed Stop for clients to use on its trading platform. By using a Guaranteed Stop, if clients have made an incorrect prediction of market movement, their active position will be automatically closed by Plus500’s software at the specified price level. This way, clients will know in advance what their (potential) maximum loss can be.
The Guaranteed Stop tool is available on a selection of trading instruments only and Plus500 will apply an extra spread, which will be clearly visible before the order is confirmed.
Note* Plus500 doesn’t charge any fees for the GSLO, but their remuneration comes in the form of a wider spread.
Traders can place a Guaranteed Stop only on new positions/pending orders, while they will not be able to use this tool on existing positions. We should also note that once a Guaranteed Stop order has become active, clients will not be able to modify or remove it, unlike the traditional Stop Loss order.
In addition, with Plus500, CFD and Forex traders are able to take advantage of negative balance protection, another risk management feature not available with every OTC broker.
Overall, Plus500 offers powerful risk management tools that enable retail traders to limit their losses. The GSL order is also complemented by additional risk tools like real-time alerts. Click the button below and test drive their risk management tools with a risk-free demo account.
View Plus500 Review >>Visit Plus500 >>
*Your capital is at risk ‘76.4% of retail CFD accounts lose money’
Interactive Brokers is the best online OTC broker for professional traders based on:
With more than 40 years of business history and multiple industry awards, Interactive Brokers Group is a global brokerage that provides direct access to asset classes such as Stocks, Options, Futures, Foreign Exchange, Bonds, Mutual Funds, ETFs and Spot Commodities. With IB, clients can also access derivatives such as CFDs on some of the above mentioned underlying assets.
What makes IB a good choice for advanced traders are, first, the broker’s transparent low commissions, which allow professionals to maximize their returns. With the IBKR Pro plan, professional clients can take advantage of ultra-low Foreign Exchange spreads that start from 0.1 pips, since the broker’s pricing is aggregated from 16 leading liquidity providers. Additionally, sophisticated traders will be charged very competitive commissions for:
Second, the IBKR Pro plan allows professional clients to receive the best price execution due to IB’s SmartRouting technology. The latter ensures a $0.47 per 100 shares price improvement compared to the industry overall.
Third, with IB, professionals can take advantage of the lowest margin loan interest rates on the market, according to Barron’s 2020 online broker review. The following table compares the annual percentage rates on USD margin loan balances between IB and some of its major competitors.
Fourth, professional clients can access 135 markets by using more than 100 order types and algos (from limit orders to complex algorithmic trading) and comprehensive trading tools on IB’s powerful flagship desktop platform, Trader Workstation. The software also allows real-time access to news, research, fundamentals as well as market data on specific exchanges.
Last but not least, IB offers flexible trading API solutions for professionals.
Overall, Interactive Brokers has a lot to offer for advanced traders. When we’re looking at Interactive Brokers from the advanced trader perspective, it’s all about low commissions, SmartRouting technology, Trader Workstation and API solution. Click the button below to enjoy a fully-featured trading experience.
View Interactive Brokers Review >>Visit Interactive Brokers Markets >>
Yes. The foreign exchange market is one of the most popular OTC markets. All forex trading activities are conducted off exchanges via a dealer network. Check out more interesting facts about the OTC market here: 2021 Forex Statistics.
OTC is an acronym that stands for over-the-counter. OTC trading is also known as off-exchange trading because all trading activities take place between two parties directly as compared to a formal stock exchange. In the over-the-counter market, all trades are facilitated by broker-dealers or market makers.
Pepperstone is one of the most reliable forex brokers based on pricing and spreads, trading platform options, professional customer support service, deposit methods, execution speed, overall service and prestige in the industry.
Compare the best forex brokers in the world here: Best Forex Brokers in the World.
Over-the-counter Forex brokers (OTC) are the most common providers of online trading services. OTC Forex brokers act as market makers for bid and ask prices for all financial instruments, while trading itself is conducted between the two parties (OTC brokers and their clientele) with no supervision of a formal exchange. In other words, trading is decentralized and depends on OTC brokers’ electronic quotation system, which in some cases acts as a counterparty to your trades.
To ensure smooth and reliable trading, such brokers need to be strongly regulated by a respected industry regulator, as this is a key factor that controls brokers’ operations and helps minimize the risk of fraud.
Shares CFDs, along with CFDs on other asset classes, are usually traded on the OTC market, because many OTC brokers are unable to get official exchange listing due to strict requirements, including high capital adequacy.
Justin Grossbard has been investing for the past 20 years and writing for the past 10. He co-founded Compare Forex Brokers in 2014 after working with the foreign exchange trading industry for several years. He also founded a number of FinTech and digital startups including Innovate Online and SMS Comparison. Justin holds a Masters Degree and an Honours in Commerce from Monash University. He and his wife Paula live in Melbourne, Australia with his son and Siberian cat. In his spare time, he watches Australian Rules Football and invests on global markets.