Best Forex Brokers in Hungary

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Is Forex Trading Legal in Hungary?

Hungary has no specific legislation that prohibit forex trading, and the National Bank of Hungary (MNB) has licensed a certain number of foreign exchange brokers. Therefore, you do not need to worry about facing potential legal repercussions for partaking in forex trading if you are a Hungarian resident. You can pay a visit to the MNB’s website for further information on forex trading regulations in Hungary.

Apart from the MNB, the Cyprus Securities and Exchange Commission (CySEC) is another regulator that has given its seal of approval to a number of Hungary-friendly brokers, and many brokers are also licensed by other financial watchdogs across countries that are members of the European Union or jurisdictions considered to be a part of the European Economic Area. Offering forex binary options and advertising them to retail traders from Hungary is prohibited in line with the product intervention measures introduced by the European Securities and Markets Authority (ESMA) in 2018. Trading forex through contracts for difference (CFDs) is allowed, albeit with certain restrictions for retail clients.

MNB Regulation info

Hungary’s financial sector is regulated by the National Bank of Hungary (MNB), which has been in operation since 1924. In general, forex brokers that target a Hungarian audience can be licensed by the Hungarian National Bank, the Cyprus Securities and Exchange Commission (CySEC), or other regulators in the European Union or the European Economic Area.

Seeing as Hungarian regulators evaluate the performance of brokers based on the Markets In Financial Instruments Directive II (MiFID II) given its status as a member of the European Union, the rules that brokers need to follow in Hungary are quite similar to those that can be found across Europe. Said rules include lower caps on retail leverage, the availability of negative balance protection, obligatory client funds segregation, and participation in investor compensation schemes. The MNB is tasked with maintaining price stability of the local currency (the forint), protecting consumers from bad players, and supervising authorized market participants.

How can I verify that a Hungary-friendly forex broker is licensed?

Regulated forex brokers make it easy to check if they are authorized to operate by a reputable regulatory body. Usually, this information will be provided in the footer of a forex broker’s homepage. Alternatively, a dedicated page might contain licensing details and regulatory information. Another option is to check if your broker has dedicated a section of its FAQ to what its licensing status is in different jurisdictions. No matter the case, a confirmation should be available somewhere on the website. If you cannot find it, however, you may approach a representative of the customer service staff.

As for what licenses in particular to be on the lookout for, authorization by the National Bank of Hungary will always be a welcome sight. The MNB keeps a register of all market participants authorized to provide their services in Hungary. Residents can search broking companies by brand name, identifier number, registration number, or ISIN code. Another suitable license can be that of the Cyprus Securities and Exchange Commission. In general, any broker licensed by a jurisdiction in Europe is pretty much guaranteed to be trustworthy. All EU and EEA-licensed brokers catering to traders from Hungary are available in the ESMA database where you can filter regulated entities by home and host country.

Are my funds safe with forex brokers in Hungary?

In general, you will not need to worry about the safety of your money in terms of security or the potential for misuse. Forex brokers are required, by law, to guarantee that your funds and the company’s money are not in any way intermingled. In other words, brokers need to keep user money segregated in separate bank accounts if they wish to continue operating legitimately.

It should also be stressed that forex brokers utilize state-of-the-art encryption technology and other security measures in order to keep client funds, transaction data, and other information away from malicious third pirates.

Last but not least, as pretty much all Hungary-facing brokers are regulated by European financial watchdogs, you can also trust that negative balance protection will be provided by your broker of choice. This will only apply to you if you are a retail trader, however.

Do Hungarian brokers provide negative balance protection?

CySEC and other Europe-based regulators impose ESMA’s negative balance protection rules. The said regulations dictate that retail traders must be offered negative balance protection. Therefore, if you make sure to stick with EU-friendly brokers as a Hungarian, you will also be eligible for negative balance protection so long as you have not made trading your profession.

Mandatory negative balance protection is a relatively recent development in foreign exchange, and the reason for its widespread adaptation can be traced back to 2015, when Switzerland’s National Bank scrapped the Swiss franc’s peg to the Euro. The repercussions for forex traders were significant, with many traders incurring substantial debt as a result of their account balances going below zero. This, in turn, underscored just how crucial negative balance protection can be for retail participants in the foreign exchange market, hence the regulations that are in place today.

Do you pay tax on forex trading in Hungary?

In Hungary, capital gains are taxed at a rate of 15%. These taxes are not automatically deducted, however. Instead, if you reside in Hungary, you will need to manually report your taxes. Failing to do so can have negative consequences like fines and other troubles with the National Tax and Customs Administration (NTCA).

How does the available leverage of Hungarian brokers compare to the leverage at brokers regulated elsewhere?

Given Hungary’s status as a member of the EU, Hungarian clients will typically trade at brokers that are licensed by the Cyprus Securities and Exchange Commission, the MNB, or another European regulator. This, in turn, will dictate the maximum amount of leverage they have access to.

Essentially, traders will not be able to take advantage of a leverage of over 1:30 when it comes to major foreign exchange pairs. In contrast, minor pairs’ leverage is capped at 1:20. If you wish to trade with higher leverage, you will need to work toward becoming a professional trader.

As established, the above limits are not atypical of European countries. Germany and France, for instance, are also jurisdictions where leverage is regulated in the same manner, seeing as brokers that operate in the said countries must abide by ESMA’s rules. Some countries have decided to not impose the exact same limits, however, with Poland being one such example. Retail forex traders based in Poland can trade with a leverage of up to 1:100 when the trades involve major pairs, and many consider this to be a major perk of participating in the foreign exchange market in Poland. The US is also more generous leverage-wise compared to most of Europe, as the Securities and Exchange Commission permits major currency pair leverage of 1:50 at most.

If you are curious about why the above limits have been set, it mainly has to do with the level of risk involved. Leverage carries great potential in terms of profits, but it can easily drain traders of their capital and more seeing as trading is conducted with borrowed funds.

What do you need to qualify to be designated as a professional trader in Hungary?

In general, whenever you wish to create a professional account at a forex broker, or you plan on upgrading your retail one to a pro status, the broker will demand that you meet two of three main requirements. The said conditions are based on the rules of the European Securities and Markets Authority.

The first eligibility requirement has to do with your trading history. Basically, if you have made at least 10 trades per quarter in the past four quarters, and each of the said trades was substantial, then you meet one of the broker’s criteria.

Next, whether you get a professional account or not might be a matter of your professional experience. This has to do with whether you have worked in the financial sector for a year or more and are particularly knowledgeable about the trading of derivatives.

Last but not least, you will be able to obtain a professional account if, in addition to another requirement, you have also fulfilled the criteria of having a financial instruments portfolio of over €500,000.

What trading platforms are available to Hungarian traders?

As one’s access to trading platforms is dependent on the broker they have chosen to go with, a trader’s experience will vary quite a lot based on their broker of choice. One thing that will not change across brokers, however, is their compatibility with mobile devices. Pretty much all online brokers recognize how crucial portability has become for the vast majority of modern traders. Of course, desktop clients of foreign exchange software are provided by default, so PC users do not need to worry if a forex broker they are eyeing is mobile-friendly.

The vast majority of forex brokers support both MetaTrader 4 and MetaTrader 5, so these are some of the platforms most Hungarian traders will be able to look forward to using. Although both MT4 and MT5 are exceptionally popular, they are not the only available options. Often, you will come across brokers that offer platforms like cTrader, which have also gained traction among forex traders. Some brokers also develop their own platforms, and they are typically just as useful and feature-rich as MT and other options that traders are likely to be familiar with.

Hungarian forex traders will find more extensive information on their local regulatory framework in the external links provided in this section. The links lead to additional details on the watchdogs governing the provision of forex services in Hungary, the local licensee database, and how to lodge complaints for unethical practices on your broker’s side.

1. MNB (Hungarian National Bank) maintains the stability of the local financial markets and ensures fair practices on behalf of all market participants through close supervision of their operations.
2. MNB’s register provides comprehensive information on all locally licensed brokers complying with Act CXXXIX of 2013. Companies targeting Hungarians without proper authorization are also listed there, along with their domains. Traders can search brokers by name or registration number (in the case of licensed entities).
3. The MNB frequently issues warnings against forex brokers and other market participants targeting the Hungarian market without due authorization. The database includes domestic warnings as well as notices issued by foreign regulatory authorities based in the EEA and the EU.
4. CySEC’s register provides details on brokers offering their services in EU and EEA member states, including Hungary. Such companies can legally accept Hungarians through a passporting system without obtaining express authorization from the MNB.
5. Submit your complaints to the MNB if experiencing issues with a broker or another financial service provider. Keep in mind that the Central Bank handles complaints only if consumers have first addressed their issues with the financial firms and no resolution has been reached.
6. Alternatively, local traders can approach the Hungarian Financial Arbitration Board, which provides an alternative dispute resolution platform and operates under the umbrella of the MNB. Most cases are resolved within 90 days and do not entail additional procedural fees.
7. Keep up to date with the latest news, decisions, and announcements of the MNB by following the regulator on social media platforms like X, Instagram, Facebook, and YouTube.