Brokers With Synthetic Indices

Brokers with synthetic indices offer instruments that imitate the action of traditional financial markets. However, because they are simulated they are not normally tied to the movements of real assets, such as stocks or forex. This article lists the best synthetic index brokers, from fees to MT4 and MT5 integration.

The best-known synthetic index broker is Deriv, which offers a suite of bespoke products. However, British traders are not accepted. The table below ranks the top brokers for synthetic index trading in the UK.

Best Synthetic Index Brokers

  1. Pepperstone

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    Founded in Australia in 2010, Pepperstone is a highly regarded broker specialising in forex and CFDs. Serving more than 400,000 clients globally, it provides access to over 1,300 financial instruments through popular platforms like MT4, MT5, cTrader, and TradingView. Its fee structure is both low and transparent. With regulation by reputable bodies such as the FCA, ASIC, and CySEC, Pepperstone guarantees a safe trading environment for traders at every level.

    Instruments Regulator Platforms
    CFDs, Forex, Currency Indices, Stocks, Indices, Commodities, ETFs, Crypto (only Pro clients), Spread Betting FCA, ASIC, CySEC, DFSA, CMA, BaFin, SCB MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade, Quantower
    Min. Deposit Min. Trade Leverage
    $0 0.01 Lots 1:30 (Retail), 1:500 (Pro)

  2. XTB

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    Established in Poland in 2002, XTB caters to over a million clients worldwide. This forex and CFD broker offers a robust regulatory framework, a diverse range of assets, and prioritises trader satisfaction. It provides an intuitive proprietary platform equipped with excellent tools to support aspiring traders.

    Instruments Regulator Platforms
    CFDs on shares, Indices, ETFs, Raw Materials, Forex currencies, cryptocurrencies, Real shares, Real ETFs FCA, CySEC, KNF, DFSA, FSC, SCA, Bappebti xStation
    Min. Deposit Min. Trade Leverage
    $0 0.01 Lots 1:30

  3. CMC Markets

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    Founded in 1989, CMC Markets is a reputable broker publicly listed on the London Stock Exchange. It holds authorisation from top-tier regulators such as the FCA, ASIC, and CIRO. The brokerage, which has received multiple awards, boasts a global membership exceeding one million traders.

    Instruments Regulator Platforms
    CFDs, Forex, Stocks, Indices, Commodities, ETFs, Treasuries, Custom Indices, Spread Betting FCA, ASIC, MAS, CIRO, BaFin, FMA, DFSA Web, MT4, TradingView
    Min. Deposit Min. Trade Leverage
    $0 0.01 Lots 1:30 (Retail), 1:500 (Pro)

  4. Saxo

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    Saxo Markets is a renowned trading brokerage, investment firm, and regulated bank. Featuring over 72,000 trading instruments, alongside investment products and managed portfolios, it provides abundant opportunities for clients. This reputable brand ensures transparent pricing and is protected by top-tier regulations from more than ten agencies, including FINMA, FCA, and ASIC.

    Instruments Regulator Platforms
    Forex, CFDs, indices, shares, commodities, cryptocurrencies, futures, options, warrants, bonds, ETFs DFSA, MAS, FCA, SFC, FINMA, AMF, CONSOB TradingView, ProRealTime
    Min. Deposit Min. Trade Leverage
    £500 Vary by asset 1:30

  5. Interactive Brokers

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    Interactive Brokers (IBKR), a leading brokerage, offers access to 150 markets across 33 countries and provides extensive investment services. With more than 40 years of experience, this Nasdaq-listed company complies with strict regulations from the SEC, FCA, CIRO, and SFC. It is among the most reliable brokers worldwide for traders.

    Instruments Regulator Platforms
    Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral, ProRealTime, Quantower
    Min. Deposit Min. Trade Leverage
    $0 $100 1:50

  6. IG Index

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    Founded in 1974, IG is a part of IG Group Holdings Plc, a publicly listed brokerage (LSE: IGG). The company provides spread betting, CFD, and forex trading, offering access to over 17,000 markets. Its platforms and investing apps are notably user-friendly. Over the past 50 years, IG has consistently been an industry leader, excelling in all essential areas for traders.

    Instruments Regulator Platforms
    CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA, FINMA, CONSOB, AFM Web, ProRealTime, L2 Dealer, MT4, TradingView, AutoChartist, TradingCentral, ProRealTime
    Min. Deposit Min. Trade Leverage
    $0 0.01 Lots 1:30 (Retail), 1:222 (Pro)

What Are Synthetic Indices?

Synthetic indices mimic price action seen in conventional markets. But their values are usually determined by cryptographically-secure random number generators – not underlying assets. This means these artificial products can often be traded 24/7.

The top synthetic index brokers are also audited by independent third parties, so firms cannot influence the values, providing a fair trading environment for investors.

The most popular synthetic indices available to British traders are volatility indices and currency indices:

  • Volatility indices track the level of volatility in a specific market, such as the VIX which measures the S&P 500
  • Currency indices track the performance of a currency against a basket of other currencies, such as the US Dollar Index

Whilst not full synthetic indices compared to the artificial products available at Deriv, volatility indices and currency indices share similar characteristics, measuring the value of a market or part of a market.

They also offer opportunities to UK traders with CMC Markets, for instance, offering a British Pound Index that tracks the strength of the GBP compared to the currencies of key trading partners.

Table of currency indices at CMC Markets

CMC Markets – Forex Indices

Pros Of Trading Synthetic Indices

  • Consistent volatility
  • Low spreads and fees
  • Can be traded around the clock
  • Multiple trading vehicles available, including CFDs, futures and binary options
  • The top brokers with synthetic indices are regulated by the FCA
  • Can be used as a hedging tool

Cons Of Trading Synthetic Indices

  • Limited list of UK brokers with synthetic indices
  • High volatility can lead to large losses, especially for beginners
  • 24-hour availability increases the risk of overtrading

How To Compare Brokers That Offer Synthetic Indices

To get started, you will need to open an account with a UK broker that offers synthetic index products. Saxo Bank, for example, offers the VIX via CFDs and DMA VIX via futures.

Importantly, compare brokers with synthetic indices across several areas:

  • Fees – Key costs to consider are spreads, commissions and overnight fees. IG Index, for example, offers the CBOE Volatility Index (VIX) and the EU Volatility Index (VSTOXX) with floating spreads from 0.4 pips. Also check for any deposit fees and market data subscriptions, though the best synthetic index brokers offer commission-free transfers. If you sign up with binary options brokers that offer synthetic indices, also check payouts. Leading platforms offer payouts of 95%+ on their artificial products.
  • Trading Platforms – Brokers with synthetic indices may offer a choice of proprietary terminals and/or third-party platforms, such as MetaTrader 4 (MT4) and MetaTrader 5 (MT5). Check for a reliable interface, sophisticated analysis tools, and mobile app support. Interactive Brokers, for example, offers bespoke web, desktop, and mobile applications. This includes their flagship Trader Workstation (TWS) designed for active traders.
  • Demo Account – Those new to trading synthetic indices may want to look for a free demo account. This will allow traders to explore synthetic index products and trading setups without risking real money.
  • Payment Methods – Check the broker offers GBP as a base currency alongside accessible payment methods, such as credit/debit cards, bank wire transfers, and e-wallets. Some platforms may also have a welcome bonus.
  • Regulation – Look for synthetic index brokers authorised by top-tier financial bodies such as the Financial Conduct Authority (FCA). As well as adding a layer of credibility, FCA-regulated platforms offer negative balance protection, provide clear risk warnings, and offer access to compensation schemes in the case of business insolvency.
  • Customer Support – Given the volatility of these financial products, the best synthetic index brokers offer reliable customer support 24/5 or 24/7.

Getting Started

Most UK-regulated brokers with synthetic indices have a similar registration process:

  1. Open a live account and submit any KYC documents to verify your identity and address
  2. Make a deposit, noting any minimum transfer requirements from the broker
  3. Log in to the client dashboard and open the trading platform such as MT4 or MT5
  4. Review the synthetic product list and open your preferred asset on the terminal
  5. Conduct any analysis and make a trade

Bottom Line On Synthetic Indices

Synthetic indices replicate realistic market movements without being tied to real assets. Values are usually determined by secure number generators though they can also be based on the volatility of major indices like the S&P 500 or the strength of the GBP vs a group of major currencies.

Open an account with one of the best synthetic index brokers to start trading.

FAQ

Which UK Broker Offers Synthetic Indices?

UK brokers that offer synthetic indices include Pepperstone, XTB, and CMC Markets. These platforms are all FCA-regulated with competitive fees, stable trading platforms and good customer ratings. Clients can trade volatility indices and/or currency indices.

What Are Synthetic Indices In Forex Trading?

Some forex brokers offer an index that measures the strength of a currency like the GBP or USD against the currencies of a group of comparable countries. For example, the British Pound Index allows traders to go long or short on the value of the GBP.

Is Trading Synthetic Indices Safe?

Online trading is risky, regardless of the investment product. However, traders will get a more secure investing experience if they sign up with a brokerage regulated by a trustworthy body like the FCA. Also check for login security measures like two-factor authentication plus risk management features on the firm’s platform.

What Are The Benefits Of Trading Synthetic Indices?

Synthetic indices have gained traction with retail investors due to their consistent volatility, 24/7 trading times, and low fees. Traders can also get started with a limited upfront investment.

How Can I Trade Synthetic Indices?

You will need to open an account with a broker that has synthetic indices. Compare supported products, spreads and fees, minimum deposits and payment methods, and UK regulations. Then sign into the firm’s trading platform, complete any analysis, and open a trade.