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Brokers

Choosing the right broker is one of the most important decisions for any investor. Each platform offers different account types, regulations, capital protection, fees, and financial products. In this guide, we will analyze in-depth the most popular brokers among retail and institutional investors:

  • Interactive Brokers
  • eToro
  • Degiro
  • Revolut

Each of these brokers has particular characteristics that make them more or less suitable depending on the investor's profile.

1. Interactive Brokers

1.1 Account Type: Omnibus or Nominee

Interactive Brokers offers nominee accounts, meaning each client is directly registered as the owner of their assets. This type of account provides greater security and transparency as the investor has a direct relationship with the markets and the assets are held in their name.

1.2 Regulation and Capital Protection

Interactive Brokers is regulated in multiple jurisdictions:

  • U.S.: Regulated by the SEC (Securities and Exchange Commission) and FINRA (Financial Industry Regulatory Authority).
  • Europe: Regulated by the FCA (Financial Conduct Authority) in the UK and BaFin (Germany).
  • Other countries: Additional regulation in Australia, Hong Kong, and Singapore.

Capital Protection:

  • In the U.S., clients are protected up to $500,000 (of which $250,000 can be cash) by the SIPC (Securities Investor Protection Corporation).
  • In Europe, through its entity in Ireland, protection reaches €20,000 under the Investor Compensation Scheme.

Exclusions:

  • Losses from market movements.
  • Fraud outside the broker's regulatory scope.

1.3 Commissions

  • Stocks and ETFs: From $0.005 per share (minimum $1 per trade).
  • Futures: From $0.85 per contract.
  • Forex: From 0.2 pips.
  • Inactive accounts: Maintenance fee of $10/month, waived if sufficient commissions are generated.

1.4 Tradable Assets

  • Stocks and ETFs in over 135 markets.
  • Options and futures.
  • Forex.
  • Bonds and mutual funds.
  • CFDs and cryptocurrencies.

1.5 Advantages and Disadvantages

  • ✅ Access to global markets.
  • ✅ Low commissions and competitive spreads.
  • ✅ Professional platform with advanced tools.
  • ❌ Complex interface for beginners.
  • ❌ Inactivity fee if certain requirements aren't met.

2. eToro

2.1 Account Type

eToro uses omnibus accounts, meaning that stocks and assets are registered in the broker's name and not the investor’s. This means that, in case of bankruptcy, clients may face a higher risk.

2.2 Regulation and Capital Protection

eToro is regulated by:

  • CySEC (Cyprus) for operations within the EU.
  • FCA (UK).
  • ASIC (Australia).

Capital Protection:

  • In Europe, up to €20,000 through the Cyprus Investor Compensation Fund.
  • In the UK, up to £85,000 under the FSCS scheme.

Exclusions:

  • Cryptocurrency transactions.
  • Market volatility losses.

2.3 Commissions

  • Real stocks: $1-2, and 0% commission for copytraders.
  • ETFs and CFDs: Spread.
  • CFDs: Variable spread and overnight commission (if leveraged).
  • Cryptocurrencies: Spread from 0.75%.
  • Withdrawals: Fee depending on investor level and amount, up to $5.

2.4 Tradable Assets

  • Stocks and ETFs.
  • Cryptocurrencies.
  • CFDs on indices, commodities, and currencies.

2.5 Advantages and Disadvantages

  • ✅ Intuitive platform and social trading.
  • ✅ Free demo account.
  • ✅Fractional share purchasing (you don’t need to buy a full share, especially if it has a high price per share).
  • ❌ High spread on some assets.
  • ❌ Omnibus account structure.

3. Degiro

3.1 Account Type

Degiro uses omnibus accounts, which means the assets are in the broker's name, not the client's.

3.2 Regulation and Capital Protection

Regulated by the Dutch Authority for the Financial Markets (AFM) and supervised by the Dutch Central Bank (DNB).

Capital Protection:

  • €20,000 under the Investor Compensation Scheme.
  • Funds are segregated in external banks.

3.3 Commissions

  • Stocks and ETFs: From €0 + 0.03%.
  • Derivatives: Variable commission depending on the asset.
  • Forex: Currency exchange commission of 0.25%.

3.4 Tradable Assets

  • Stocks and ETFs.
  • Financial derivatives.
  • Bonds.

3.5 Advantages and Disadvantages

  • ✅ Low costs.
  • ✅ Access to international markets.
  • ❌ No nominee accounts.
  • ❌ Does not allow cryptocurrency trading.

4. Revolut

4.1 Account Type

Omnibus accounts.

4.2 Regulation

Regulated by FCA (UK) and CySEC.

Capital Protection:

  • Up to €85,000 in the UK.

4.3 Commissions

  • Stocks: No commission on the first 3-5 trades/month.

4.4 Tradable Assets

  • Stocks and ETFs.
  • Cryptocurrencies.

4.5 Advantages and Disadvantages

  • ✅ Easy integration with digital banking.
  • ❌ Not suitable for advanced traders.

Note: Brokers with omnibus accounts do not offer all available stocks in the market, only those within their catalog, meaning those that have previously acquired them as Market Makers.

Conclusion

Each broker has its advantages and disadvantages. Interactive Brokers is ideal for professional traders, while eToro and Degiro are better for beginners. Renta 4 and MyInvestor offer local regulation but with higher costs. The choice will depend on the investor’s profile and needs.

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