IG, XM, Plus500, eToro, Pepperstone and IC Markets each serve some clients through a company in Bermuda, Belize, the Bahamas or the Seychelles. We read what those companies offer, and what their clients give up.
A broker’s name on a website tells you less than it seems. Behind each of the six retail brokers in our directory sits a group of separately licensed companies, and the one a client signs with decides the leverage they can use, the protections they keep and the rules the firm must follow.
Every one of the six runs at least one company licensed outside the UK, the EU and Australia. We set out to establish, from the firms’ own websites and documents, which companies those are, what they offer, and what changes for the clients they serve.
| Brand | Offshore company | Regulator | Licence |
|---|---|---|---|
| IG | IG International Limited | Bermuda Monetary Authority | Investment business and digital asset business |
| XM | XM Global Limited | Financial Services Commission, Belize | Securities service provider |
| Plus500 | Plus500SEY Ltd | Financial Services Authority, Seychelles | SD039 |
| eToro | eToro (Seychelles) Ltd | Financial Services Authority, Seychelles | SD076 |
| Pepperstone | Pepperstone Markets Limited | Securities Commission of The Bahamas | SIA-F217 |
| IC Markets | Raw Trading Ltd | Financial Services Authority, Seychelles | SD018 |
Each of these is a licensed, regulated company. Offshore does not mean unregulated. It means regulated under a different set of rules from those the UK and EU apply to retail clients, and the sections below show what that changes.
For four of the six, the firm’s general international website is run by the offshore company:
eToro lists eToro (Seychelles) Ltd among its regulated companies. XM’s site showed us its EU offer from our location; our audit of XM records that “the group onboards clients through XM Global Limited.”
In the EU, retail CFD clients must put up an initial margin of at least “3.33 % of the notional value of the CFD” on major currency pairs, in the words of the Central Bank of Ireland’s measure. That is leverage of 30:1. The UK applies the same limit.
The offshore companies advertise far more:
| Item | Value |
|---|---|
| EU and UK cap, major pairs | 30:1 |
| IG International (Bermuda) | 200:1 |
| Plus500SEY (Seychelles) | 300:1 |
| XM Global (Belize) | 1000:1 |
| IC Markets Global (Seychelles) | 5000:1 |
IG: retail margin of 0.5% on EUR/USD, stated as 1:200. IC Markets: its first tier, for smaller positions. XM: as recorded in our review. Pepperstone offers up to 1:1000 to professional clients of its Bahamas company; we could not confirm its retail limits.
Source: Firms' websites; Central Bank of Ireland CFD measure
What that means in money: to open a €100,000 position on EUR/USD, a client needs €3,333 of margin at 30:1, €500 at 1:200, €100 at 1000:1 and €20 at 1:5000. The smaller the deposit needed, the faster a move against the position can wipe it out.
IC Markets describes its offshore leverage as “market-leading leverage conditions across all asset classes, with up to 1:5000 leverage on FX.” Pepperstone’s international site offers “up to 1:1000 leverage under SCB Pro,” its professional account under the Bahamas licence.
UK clients of FCA-authorised firms can claim from the Financial Services Compensation Scheme, up to £85,000, if the firm fails and their money is missing. Clients of Cyprus investment firms are covered by CySEC’s Investor Compensation Fund, up to €20,000. Both schemes protect clients of firms authorised in those countries. A client of a group’s company in Bermuda, Belize, the Bahamas or the Seychelles is not a client of the UK or Cyprus company, and so is outside both schemes.
Our audits record this for every firm we have audited: clients of XM Global, Raw Trading, Plus500SEY and eToro (Seychelles) “fall outside any investor compensation scheme,” or have “no equivalent scheme.”
UK and EU rules require every CFD provider to publish the share of its retail accounts that lose money, recalculated every quarter. Offshore companies are not bound by those rules. Of the four offshore websites we read, two publish a figure anyway; the IC Markets Global and Plus500SEY pages we read did not:
| Company | Published figure |
|---|---|
| Pepperstone Limited (UK) | 73.6% |
| Pepperstone EU Limited (Cyprus) | 74.1% |
| Pepperstone Markets Limited (Bahamas) | 80% |
| IG International Limited (Bermuda) | 70% |
The same brand’s Bahamas company reports a higher share of losing accounts than its UK and EU companies. The figures are each company’s own, and we cannot tell from them why they differ. Our comparison of nine firms’ loss figures explains how the UK and EU figures are calculated.
EU and UK rules ban trading incentives for retail CFD clients, as our explainer on Europe’s CFD rules sets out. Offshore, they can be offered. Our XM audit records that “XM Global publishes terms for a no-deposit trading bonus,” and that “such incentives are not available to EU retail CFD clients; they are offered through the offshore entity only.”
Offshore companies can choose to offer protections the law does not require. Plus500SEY’s user agreement, for example, states: “We offer ‘negative balance protection’ and ‘margin close-out protection’.” A protection offered by contract can be changed by contract, however, while a legal requirement cannot.
We have reported only what we could read on the firms’ own websites and documents, or what our audits already record:
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