FXOpen’s Natalia Zakharova talks zero commission trading in FX/CFD industry

Rick Steves

“I believe that this Zero Commission trend is a marketing tool used to attract more customers. Moreover, it’s not in line with the recent regulators’ efforts to make sure that the clients understand financial markets and the risks involved.”

FX and CFD brokers have been following the commission-free trading trend initiated by the US stockbrokers and introducing zero commissions in share CFDs as well.

Has trading really gone free or brokers are compensating for that loss by adding a mark-up to the spreads, rollover, and so forth?

We spoke to Natalia Zakharova, Head of Business Development of FXOpen, the leading retail and institutional FX broker, to ascertain her view on the matter, what it means for traders and for brokers.

Zero commission as a marketing tool

Ms. Zakharova started out by saying “should every broker start offering commission-free trading, it is going to make it harder to compete by charging commissions”.

“Yes, the commissions can be included in the spread. However, from the trading perspective, it would still be preferable to trade with tighter spreads and separate commissions”.

The broker still has to earn something, since running a brokerage is not cheap as maintaining licenses, client support, software, etc, doesn’t come for free.

“I believe that this Zero Commission trend is a marketing tool used to attract more customers. Moreover, it’s not in line with the recent regulators’ efforts to make sure that the clients understand financial markets and the risks involved. Every forex trader must be aware that a broker acts as an intermediary between the clients and the counterparty against whom the trade is being matched”, the FXOpen executive continued.

The only commission that an A-book broker can earn is the commission he charges:

  • the difference between the commission of the LP and the end commission the client pays;
  • the commission the clients pays (in case the position is matched against another position of another client);
  • the spread mark-up.

So, ultimately, the broker’s commission is there somewhere.

Natalia Zakharova added that there may be cases, albeit less likely, when the broker decides to offer commission-free trading at their own expense, with the intention to compensate for it by raising the commissions later.

“I’m all for a transparent relationship between the customer and the broker. It entails both understanding of how the brokerage operates on the customer’s side, and honest communication on the broker’s side”.

Several brokers have joined the commission free trading trend, including FXCM, which disclosed the firm can be compensated in several ways, which include but are not limited to adding a mark-up to the spreads it receives from its liquidity providers, adding a mark-up to rollover, etc.


Read this next

Digital Assets

GBTC share is trading at 36% below bitcoin spot price

Grayscale Bitcoin Trust share has widened its discount relative to the underlying cryptocurrency held in the fund, the highest margin ever since its debut in 2013. Digital Currency Group’s flagship GBTC shares traded at a discount of 35.8% to net asset value (NAV) today.

Digital Assets

Crypto lender Nexo investigated by 8 US state regulators

State securities regulators in New York, California, Kentucky, Maryland, Oklahoma, South Carolina, Washington and Vermont are investigating crypto lender Nexo for allegedly failing to register its Earn Interest Product.

Metaverse Gaming NFT

Astar Network’s ad features 329 top brands to support Web3 in Japan

Blockchain innovation hub Astar Network is making strides in promoting the Web3 adoption worldwide. In yet another milestone, the smart contracts platform has run a national newspaper ad in Japan that set a new global record with participation from 329 blue-chip firms.

Digital Assets

Pyth Network welcomes onchain data from crypto market maker Auros

“By sharing our high-frequency trading data with a truly onchain decentralized network, we aim to foster innovation that will lead to better financial solutions for all participants.”

Digital Assets

Tokeny integrates Ownera to boost liquidity of tokenized assets

“The adoption of FinP2P will result in higher liquidity and better access to capital and assets by providing regulated firms with one secure point of connection to multiple digital asset networks across the globe.”

Digital Assets

BingX launches subsidy vouchers to cover user losses in copy trading

“With the introduction of copy trade subsidy vouchers, new users can easily try out trading strategies without incurring losses.”

Digital Assets

Talos expands sales team: Frank van Zegveld, Matt Houston, Hillary Conley

“The extensive leadership and industry expertise of these new hires will enable us to build long-lasting relationships as we continue to build out our global presence in EMEA and beyond.”

Executive Moves

FX and CFD broker Emporium Capital hires industry veteran Robert Woolfe as COO

His past experience within the FX and CFD industry includes top roles at Capital Index, London Capital Group, GKFX, ETX Capital, and IG.  “I’m delighted to be part of the Emporium Capital team and spearheading the brokerages global expansion plans”, he said about the appointment.

Retail FX

Hantec Markets wins six categories at Global Retail Forex Awards 2022

Hantec Markets has recently rebranded with a new website and a renewed growth strategy that features the #TimeToStrike hashtag to signify a time of renewed growth for the broker.