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eToro Regulators
eToro Review
Updated May 31, 2022
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with eToro (Europe) Ltd. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
KEY TAKEAWAYS
- Great social trading App
- Access to thousands of markets
- No commissions on stocks trading
- Regulated in the EU, the UK and Australia
Regulations and Money Protection
5.0
| Entity Name | Licence & Regulation | Client Money Protection | Deposit Compensation Scheme | Negative Balance Protection |
|---|---|---|---|---|
| eToro AUS Capital Pty Ltd | Australia ASIC Licence | ✔️ segregated client money |
❌ | ✔️ |
| eToro (UK) Ltd | UK FCA Licence | ✔️ up to £85,000 |
||
| eToro (Europe) Ltd | Cyprus CySEC Licence | ✔️ up to €20,000 |
Entity/Regulation
The parent company of eToro is eToro Israel with registered address at Champion Tower, Derech Sheshet Hayamim 30, Bnei Brak, Israel. eToro Israel is the holding company of eToro AUS Capital Pty Ltd, eToro (UK) Ltd and eToro (Europe) Ltd.
- International customers: First of all, eToro is not available globally. There are quite a few restrictions regarding FX trading in several countries, and to comply with these restrictions, eToro does not offer its services globally. For example, eToro is not available to customers in Japan, China, Hong Kong, Canada, Namibia, Palau or Samoa. Still, this broker is strongly regulated in Europe, the UK and Australia. Let's look at each entity separetely:
- Australian customers: The eToro AUS Capital Pty Ltd entity, (ACN 621 283 369), with registered address at 10/2 Bligh St, Sydney New South Wales 2000, is licensed by the Australian Securities & Investments Commission (ASIC) under licence number AFSL 491139. The eToro AUS Capital Pty Ltd entity is registered to carry out financial services business in Australia, limited to the financial services covered by its AFSL license. The trading name, eToro, used by eToro AUS Capital Pty Ltd, is also used by the other entities.
- UK customers: The eToro (UK) Ltd entity is a company registered in England and Wales under number 07973792, with principal and registered office at 24th Floor, One Canada Square, Canary Wharf, London, .
- European customers: The eToro (Europe) Ltd entity with address at 4, Profiti Ilias Street, Kanika Business Centre, 7th Floor, Germasogia, CY-4046 Limassol, is a Cypriot Investment Firm (CIF) under number 200585 and is regulated by the Cyprus Securities and Exchange Commission (CySEC) under licence number 109/10. The eToro (Europe) Ltd entity is licenced to provide the investment services of reception and transmission of orders, execution of orders on behalf of clients, portfolio management and as an intermediary in the financial markets, respecting the MiFID obligations.
Client Money Protection
- eToro complies with the highest safety standards for client's funds. For this reason, eToro client's funds are kept in top-tier international banks, fully segregated from the company's funds.
- eToro also complies with the client money handling rules and employs strict policies and procedures regarding the maintenance and operation of these accounts. eToro holds client's money separately to the company funds and does not use these funds for any operational expenses or purposes.
Deposit Compensation Scheme
- The eToro (UK) Ltd entity is a member of the Financial Services Compensation Scheme (FSCS), an independent compensation fund of last resort for customers of authorised UK financial services firms. If eToro (UK) Ltd is unable to pay claims against it in the event the firm has stopped trading or has declared to be in default, clients might be entitled to compensation (up to the value of £85,000) per claim.
- The eToro (Europe) Ltd entity is a member of the Investor Compensation Fund (ICF), an investor compensation fund for CIF clients and its functions are regulated by the directive DI87-07 of the CySEC. If eToro (Europe) Ltd entity is unable to meet its obligations, clients might be entitled to compensation (up to the value of €20,000) per claim, irrespective of the number of accounts held, currency and place of offering of the investment service (within Europe).
Negative Balance Protection
For accounts opened via any entity of the eToro Group, there is a default Negative Balance Protection mechanism in place, for the sake of no negative balance. With NBP, eToro customers are protected from any losses bigger than their original investments, in cases of extreme market volatility.
Accounts, Instruments and Platforms
| Accounts | Instruments | Platforms | Social trading | Maximum Leverage |
|---|---|---|---|---|
| ✔️Retail ✔️Professional ✔️PAMM ✔️Islamic Accounts |
✔️Forex ✔️Indices ✔️Stocks ❌Futures ✔️ETFs ❌Bonds ✔️Commodities ✔️Cryptos |
❌MT 4 ❌MT 5 ❌cTrader ✔️eToro |
❌Myfxbook ❌ZuluTrade ✔️eToro ✔️Copy Trading |
30:1 Europe 30:1 Australia |
Account Types and Currencies
- eToro offers only two types of trading accounts; Retail and Professional accounts. eToro also offers swap-free accounts for traders of Islamic belief.
- eToro allows for social trading, including copy trading, via the eToro and Copy Trading platform.
- eToro also offers PAMM solutions for money managers.
- eToro maximum leverage is 30:1 for accounts opened within Europe and Australia.
- Currently, eToro trading accounts are available only in USD. Still, eToro accepts deposits in EUR, GBP, AUD, MYR, IDR, THB, PHP and VND. Therefore, when depositing with a different currency, the deposited amount will be converted at the current market rate into USD. Please note, this conversion is subject to a charged fee from 50 pips of the market exchange rate.
Financial instruments
Trading with eToro can be done only via the eToro trading platform, available as web terminal and for mobile trading (Android and iOS). The broker offers an excellent selection of more than 2,200 instruments to trade, including Forex, indices, stocks, ETFs, commodities and cryptos.
- FX market - 49 currency pairs (including Minor and Exotic crosses).
- Indices - 13 world indices including AUS 200, DJ 30, UK 100 and NIKKEI 225.
- Stocks - 2,000+ shares from worldwide top companies and banks, divided by sector, from utilities, technology, financial, healthcare to consumer goods. The offering is quite huge with big names such as Walt Disney, Apple, Credit Agricole SA, Caterpillar, AstraZeneca and so much more.
- ETFs - 151 ETFs from worldwide top funds such as JP Morgan, Invesco, Bloomberg, Vanguard.
- Commodities - 31 commodities CFDs available for trading; 7 metals (Gold, Silver, Platinum, Palladium and Copper included), 2 energies including Oil and Nat Gas (also 17 Oil futures contracts) and 4 soft; Cocoa, Wheat, Sugar and Cotton.
- Cryptos - 16 cryptos CFDs crosses, including BTC/USD, ETC/USD, LTC/USD and XRP/USD.
Pricing
4.0
| Pricing/ Account |
Retail | Professional |
|---|---|---|
| Spread EUR/USD | from 1.0 pip | from 1.0 pip |
| Commissions (1 lot) | ❌ | ❌ |
| Minimum Deposit | from 50 USD | from 50 USD |
Spreads
The eToro trading spreads, for currencies, are somehow interesting. First of all, eToro is a market maker, so, traders are not dealing with intermarket prices, but trading on eToro's own pool of liquidity (or basically, trading against eToro, as they are the counterparty). We've also noticed that there's a 0.5 to 0.6 pip delay on eToro's quote compared with FX brokers that offer an ECN trading environment.
Back to the spreads, with eToro, for the most traded pair, the EUR/USD spread on both Retail and Professional accounts starts at 1.0 pip, with an average of 1.1 pip. On the positive side, there are no commissions added to open a position, as they are already priced on the spread.
Back to the spreads, with eToro, for the most traded pair, the EUR/USD spread on both Retail and Professional accounts starts at 1.0 pip, with an average of 1.1 pip. On the positive side, there are no commissions added to open a position, as they are already priced on the spread.
Rollover Rates
The eToro swap rates, as of 23-11-2020, for 1 lot EUR/USD (100,000 units) stands at an average rate of -6.17 for holding overnight a long position of a 1 lot contract and at -0.74 for holding overnight a short position of a 1 lot contract. We consider these swap rates to be higher when compared with the rollover rates offered by other top Forex brokers.
Deposits/Withdrawals and Other Fees
- Deposit fees - Trading accounts can be opened only in USD, but eToro accepts deposits in 8 different currencies. Trading accounts can be maintained via different funding methods, including cards, bank wires and e-payments such as Neteller, PayPal and Skrill. Deposited funds are available almost instantly. Now, eToro states on their website that they do not charge any fees for deposits, but eToro does charge a conversion rate of a minimum of 50 pips, for deposits other than USD. As an example, a trader in Europe deposits 1,000 EUR with an exchange rate of EUR/USD 1.1890. The 1,000 EUR deposit will be converted into 1,189 USD (1,000 X 1.1890). With a conversion fee of 150 pips for EUR deposits, the converted deposit on the account will be 1,174 USD (1,1890-0.0150 X 1,000 EUR). In plain language, the "free" deposit has just cost the trader 15 USD.
- Withdrawals fees - There is also a standard withdrawal fee of 5 USD (minimum withdrawal amount is 30 USD), plus the same conversion rate policy applies for withdrawals other than USD. If a trader wants to receive a 1,000 USD withdrawal in EUR, for example, eToro will charge the extra conversion rate of 50 pips. For a complete conversion rate charges of the 8 currencies accepted into USD, please visit the eToro trading fees page.
- Inactivity fee - There's also an inactivity fee charged by eToro. For accounts that after 12 months have no activity, a 10 USD monthly inactivity fee will be charged on any remaining available balance.
Popularity
4.0
| Forex Education | Deposit Options | Deposit/Withdrawals Fees | Non expiring demo account | Customer Support |
|---|---|---|---|---|
| News & Analysis Podcasts Tutorial Videos Forex Courses |
Cards Bank Wire E-payments |
✔️ | ✔️ | Multi language |
With over 10,000,000 accounts opened and customers in dozens of countries (according to their corporate website) the eToro Group seems to have captured the attention of a lot of traders, also, thanks to the broker's great advertising budget, who recently enrolled Alec Baldwin as their ambassador.
Still, more savvy traders are not so keen on choosing eToro as their trading partner. The main reason for this seems to be the not so popular eToro, flash based, web trading platform. To note also that eToro aims at becoming the market leader (if not already) on the social trading segment. Therefore their trading platform is geared up more towards the social trading, with tabs not found in any other trading platform, such as "Invite Friends", "Write a Post", "Like", "Comment" and "Share".
- Trading accounts - We can't recommend a specific account to traders, as eToro has only one trading account. The variables "Retail" and "Professional" are used only to classify the traders and allow a higher leverage (up to 400:1) to be used. Also, when opening an account, if a trader is classed as "Professional", that trader will automatically waive certain ESMA protections such as the Investor Compensation Fund and recourse to the Financial Ombudsman Service (offered by default, including NBP, to traders classed as "Retail").
- Forex education - The eToro extensive range of Forex education materials, available through the "Education" tab, gets extra popularity points. Clients of eToro can enroll on live (and physical) trading courses to enhance their trading skills and overall market knowledge, watch and learn with video tutorials, listen and make informed decisions with eToro's market podcasts.
| Funding Methods | Bank Wire, Credit/Debit Cards, PayPal, Neteller, Skrill (Moneybookers), Rapid Transfer, iDEAL, Klarna/SOFORT, Local Online Banking, Trustly (EU only) |
|---|---|
| Support Languages | Arabic, Chinese, Croatian, Danish, Dutch, Finnish, French, German, Indonesian, Italian, Norwegian, Polish, Portuguese, Romanian, Spanish, Swedish, Thai, Vietnamese |
- Minimum deposit - Opening a trading account with eToro is fast and can be done online, taking around 10 to 15 minutes to complete the required forms and verification process. The eToro minimum deposit requirement is 50 USD for the Retail/Professional account and 10,000 USD for the Corporate account.
- Customer support - The eToro multi language customer support service is available 24 hours, 7 days a week, through their FAQs section, translated in 18 languages. For live support/customer service, the only way of contacting eToro is by opening a new ticket and wait for the answer. Live chat, although enabled directly from the broker's website, di not work at the time of writing this review.
Broker Profile
The eToro Group was established in Tel Aviv in 2007, initially as RetailFX, from the initiative of brothers Yoni and Ronen Assia and David Ring. In 2010, eToro launched the eToro Open Book investment platform, which included the Copy Trading functionality. This platform allowed investors to automatically search, track and copy other successful traders. Later that year, eToro introduced its first trading app for Android, allowing users to buy and sell stocks via the mobile phone.
Between 2007 and 2013, eToro raised $31.5 million with four funding campaigns, and in December 2014, eToro received $27 million in extra funding, mainly from Russian and Chinese investors.
For more than a decade, eToro has been a leader in the global Fintech revolution and social trading. It is the world's leading social trading network, with over 10 million of registered users and an array of innovative trading and investment tools. With eToro, investors can easily create a portfolio with cryptocurrencies, stocks, commodities, ETFs and more, or simply copy the trading positions of more experienced traders.
Overall, on our eToro review, the broker scores a great 4.0 out of 5 as it is an excellent choice for traders looking for a reputable broker with fund's safety and strong regulations in place. On the downside, the availability of trading platforms could be an issue for the more savvy traders, as the more popular trading platforms, such as MetaTrader are not offered. On a positive note, a good thing about the eToro platform is the ability of setting the leverage when opening a position (from 1:1 to a maximum of 30:1 for EU customers). Also to review, the pricing structure; the swap rates are not very competitive and the conversion rate fee applied to deposits other than USD can substantially increase the overall cost of trading with eToro, when compared with other top brokers.
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Between 2007 and 2013, eToro raised $31.5 million with four funding campaigns, and in December 2014, eToro received $27 million in extra funding, mainly from Russian and Chinese investors.
For more than a decade, eToro has been a leader in the global Fintech revolution and social trading. It is the world's leading social trading network, with over 10 million of registered users and an array of innovative trading and investment tools. With eToro, investors can easily create a portfolio with cryptocurrencies, stocks, commodities, ETFs and more, or simply copy the trading positions of more experienced traders.
Overall, on our eToro review, the broker scores a great 4.0 out of 5 as it is an excellent choice for traders looking for a reputable broker with fund's safety and strong regulations in place. On the downside, the availability of trading platforms could be an issue for the more savvy traders, as the more popular trading platforms, such as MetaTrader are not offered. On a positive note, a good thing about the eToro platform is the ability of setting the leverage when opening a position (from 1:1 to a maximum of 30:1 for EU customers). Also to review, the pricing structure; the swap rates are not very competitive and the conversion rate fee applied to deposits other than USD can substantially increase the overall cost of trading with eToro, when compared with other top brokers.
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