Best Forex Brokers in Netherlands

• Facilitates trading via MT5 only
• Below-average range of tradable products
• Lacks FCA authorization

Is Forex Trading Legal in the Netherlands?

Forex trading is considered a legal activity for residents of the Netherlands, with the AFM being the main regulator overseeing forex trading operations conducted on the territory of the country. To be sure that they are trading in a safe and fair environment, Dutch traders are recommended to join only brokers that have obtained the proper license from the AFM. Since the Netherlands is a member of the EU, forex brokers operating in the Dutch market are also required to follow guidelines imposed by the European Securities and Markets Authority (ESMA) and conduct trading abiding by the MiFID 2 directives.

Since properly regulated Dutch forex brokers are operating following guidelines imposed by both the local regulator and EU authorities, Dutch traders can always be certain that their funds will be protected using industry-standard security tools and measures. Negative balance protection, maximum leverage, and KYC are just a few of the instruments implemented in the operation of licensed Dutch brokers. In April 2019, the AFM moved to prohibit advertising, distributing, and selling binary options to retail clients from the Netherlands.

How Does the Authority for the Financial Markets (AFM) Regulate Forex Trading?

The AFM is an independent agency responsible for the regulation of firms, making sure they operate following directives issued by the Dutch Ministry of Finance. While the regulator has plenty of responsibilities, some of them include issuing licenses to entities who wish to conduct finance activities, including forex brokers.

In addition to issuing licenses, the AFM has also been authorized to take regulatory actions like imposing financial penalties or withdrawing licenses when a company has breached regulatory guidelines. With the AFM being stringent with its regulation, all Forex brokers licensed in the Netherlands are making sure they offer a safe trading environment that will help them keep their AFM licenses.

One of the AFL license conditions forex brokers are required to meet involves periodic financial statements as well as audit reports that companies must submit regularly. Such documents are submitted on a regular basis to help the local regulator monitor the financial activities of licensed entities, allowing for the prevention of any fraudulent activities. Brands operating under an AFM license are also required to keep their customers’ money in segregated accounts, ensuring their safety.

When it comes to the operation capital of AFM-regulated forex brokers, companies are required to notify the regulator about any significant changes in their issued capitals. Every time the overall operating volume of a licensed entity marks a change of over 1% in the previous three months, it is instructed to inform the AFM about its capital changes.

How Can I Verify AFM Authorization?

Confirming the validity of an AFM license is extremely easy, allowing Dutch traders to verify whether a certain forex broker is trustworthy. You can check the online registry available on the AFM official website, allowing you to search for any company and verify the information provided by the broker. The Central Bank of the Netherlands (DNB) maintains a separate register where consumers can find all entities it licenses and oversees.

Traders may also follow the regulator’s social media accounts as well as subscribe to its newsletter, which provides the latest news about the Dutch financial industry. Public notices and warnings can also be found on the official website of the AFM, informing Dutch traders about any regulatory actions taken against entities that have breached AFM guidelines.

Dutch traders can also get in touch with the AFM by directly sending an email to [email protected] or by visiting the regulator’s headquarters in Amsterdam (Vijzelgracht 50, 1017). If you decide to pay them a visit, make sure you carry a valid identification document like a passport, government-issued identification card or driver’s license.

Are My Funds Safe with Forex Brokers Operating in the Netherlands?

You can be certain that as long as a forex broker has been licensed by the AFM or has been authorized by the EU authorities, it is offering a fair and secure trading experience. As mentioned above, you can easily verify the legal status of any forex broker operating in the Dutch market, with the local regulator also taking proper actions against any brand participating in unlawful activities.

Following both MiFID 2 directives and security guidelines imposed by the AFM, Dutch forex brokers are required to ensure a safe trading environment for their clients, assessing risk levels and offering the best possible results for traders’ operations. As already mentioned, the Dutch regulator requires licensed brokers to keep their customers’ funds in segregated bank accounts, ensuring an additional layer of protection for traders’ money.

Top forex brokers operating in the Netherlands accept a wide range of payment solutions, offering traders a wide range of convenient and safe options for their deposits and withdrawals. It should be noted that reliable forex brokers utilize enterprise-class security tools like SSL encryption, preventing any unauthorized third parties from accessing the banking information you may share while initiating transactions.

Do Dutch Brokers Provide Negative Balance Protection?

If you register with an AFM-regulated forex broker, you can be certain that the brand will offer negative balance protection to its clients. Both the AFM and MiFID 2 directives require regulated Dutch brokers to implement mandatory negative balance protection for traders residing in the Netherlands. Thanks to this safety measure, traders cannot amass losses that exceed their cumulative deposit amount.

When Dutch traders are placing orders and making use of leverage, they may risk accumulating bigger losses due to the leverage and lose an amount bigger than what is available in their balances. In that case, traders will owe the broker more money, which may lead to trading volumes that exceed the amounts they can afford to lose. Thanks to the negative balance protection feature, Dutch traders are protected from accumulating debts, with the maximum potential losses being capped at the amount equal to the deposits traders have already made to their accounts.

Do You Pay Tax on Forex Trading in the Netherlands?

Generally speaking, Dutch traders are not required to pay any taxes on capital gains, which is the category that profits from forex trading fall under. Since the Dutch Supreme Court has ruled out that forex profits are not subject to corporate income tax, Dutch traders are not required to pay capital gains tax. That is, however, true in the case of your profits not exceeding the value of typical assets.

In case the transactions of Dutch forex traders exceed the typical asset management, their gains are considered income generated from different types of activities, which may also include business income. We should remind readers that tax laws are often subject to amendments so it is always recommended to contact your local financial experts to help you determine whether your forex income should be subject to taxation.

How Does the Available Leverage of AFM-regulated Brokers Compare to the Leverage of Brokers Regulated in Different Jurisdictions?

If you take a look at the maximum leverage Dutch forex brokers offer to their clients, you will notice the same offerings as the ones at any EU-regulated broker. Due to the ESMA regulations imposed across all brokers operating in EU countries, there is a mandatory maximum leverage of 1:30 on major currency pairs and 1:20 on non-major pairs. Dutch brokers make no exception, offering the same maximum leverage on currency pairs.

The compulsory maximum leverage was introduced in 2018, with every EU broker required to stick to these margins. Dutch forex brokers are also implementing the aforementioned leverage maximums, which were introduced as an additional protection measure, balancing out risk levels while trading currency pairs.

The same maximum leverage of 1:30 on major pairs and 1:20 on non-major currency pairs has also been implemented by the official trading regulators in Australia and the UK. Meanwhile, the maximum leverage you can use on major currency pairs if you reside in the US is capped at 1:50. Depending on the market and the local regulator responsible for overseeing financial activities, the leverage can be significantly higher. We suggest traders check with the broker to make sure what is the highest leverage they can get while trading with major and non-major currency pairs.

It should be noted that leverage limitations do not apply to accounts of clients who have been designated as Elective Professional traders. These types of accounts will also have no negative balance protection, enabling higher-risk trading with bigger leverage.

What Do You Need to Qualify to be Designated as a Professional Trader in the Netherlands?

If you wish to bypass the mandatory leverage limitations, you may want to classify as a professional trader. While any reputable Dutch broker will allow you to set up a professional trading account and enjoy higher leverage while trading forex pairs, you should know that you need to meet certain conditions to qualify as a professional trader.

According to ESMA, to be eligible for the perks that come with professional trading, traders must prove they are experienced, knowledgeable, and have the portfolio to back up their high-risk trading. Dutch traders, as well as trading experts residing in other EU countries, are required to meet at least two out of three requirements to be eligible to open professional trading accounts with forex brokers:

• Initiate 10 transactions of sufficient amount per quarter within the last 12 months
• Have at least one year of experience in the financial sector
• Have a financial instruments portfolio worth at least €500,000

Each Dutch broker will require a set of documents to prove that you can meet the criteria that will classify you as a professional trader. Make sure to follow the steps required for the verification process and you may be able to enjoy plenty of perks that come with professional trading accounts, with competitive margins and low or no commission rates being just a few of them.

What Trading Platforms are Available to Dutch Traders

To meet the highest standards and provide seamless trading to Dutch traders, forex brokers strive to offer some of the most popular and easy-to-use trading platforms. While some brokers tend to offer proprietary platforms, there are also commonly used options like MetaTrader4, cTrader, and more implemented in the operations of many reputable Dutch brokers:

MetaTrader 4: It is extremely common for Dutch forex brokers to support the MT4 platform, offering both newbies and experienced traders a rather easy-to-use platform that is extremely suitable for forex trading. In most cases, MT4 is adapted for both desktop and mobile trading, letting Dutch traders enjoy an easy cross-platform trading experience.

MetaTrader 5: While offering a similar experience to MT4, MT5 is more suitable for traders who wish to expand their portfolio and enjoy options beyond forex pairs. In most cases, MT5 offers more markets and better pricing. What is more, MT5 is considered to be faster than MT4, which is something that any forex trader would appreciate.

WebTrader: This platform represents the web-based version of the MT4 platform, offering the same seamless trading experience straight on your preferred browser. That eliminates the need to install any software on your device, making trading even more intuitive. WebTrader tends to have fewer customization options than MT4 but it is very suitable for beginner traders who can make use of basic technical analysis tools.

cTrader: Many Dutch brokers also support the cTrader platform, giving forex brokers access to an extensive charting selection, with over 70 default indicators and intuitive drawing tools allowing expert traders a better insight into different markets. Providing a more modern take on forex trading, cTrader is preferred by many advanced traders.