broker · 10 min read · BrokerFit Editorial
How to Choose a Broker: 12-Point Checklist (2026)
A checklist of 12 criteria to evaluate any broker independently — regulation, fund safety, real stocks vs CFDs, hidden fees, and more.
Contents
Meta
Why Broker Marketing Doesn't Tell You What You Need to Know
Every broker advertises "low fees," "safe funds," and "trusted regulation." Almost none explain what those phrases mean in practice — or what they leave out.
This checklist is a tool for independent evaluation. Twelve criteria that let you assess any broker yourself, before opening an account. Each item includes a concrete action you can take in five minutes using publicly available information.
The Checklist
- Regulation & licence — Which regulator, which jurisdiction, what protections does that imply?
- Client fund segregation — Are your funds held separately from the broker's own capital?
- Investor compensation scheme — How much is covered if the broker fails?
- Real stocks vs CFDs — Do you actually own the underlying asset?
- Commissions & hidden fees — Spread, FX markup, overnight swap, inactivity, withdrawal.
- Real minimum deposit — What you actually need to invest, not what's on the homepage.
- Country availability — Can you legally open an account from your country?
- Deposit & withdrawal methods — Which methods, how long, what do they cost?
- Trading platform — Desktop, web, or mobile — does it match your workflow?
- Available instruments — Real stocks, ETFs, bonds, forex — does it cover what you need?
- Tax reporting — Does the broker generate reports you can submit to your tax authority?
- Customer support — Which languages, what hours, how fast do they respond?
1. Regulation & Licence
A broker's regulatory status determines what rules it must follow and what protections it must provide. The key question is not "is it regulated?" but "regulated by whom, and what does that actually cover?"
- FCA (UK Financial Conduct Authority)
- SEC + FINRA (United States)
- BaFin (Germany), AMF (France), KNF (Poland) — EU national regulators
- CySEC (Cyprus) — EU passport, but lower enforcement history than FCA or BaFin
Offshore licences from Belize, Seychelles, or the Bahamas are not equivalent. They typically have minimal capital requirements and no meaningful enforcement track record.
Example: Interactive Brokers holds licences from the FCA, SEC, FINRA, MAS (Singapore), and IIROC (Canada). XTB holds FCA and KNF licences. Both serve CIS clients through CySEC-regulated entities — so EU investor protection rules apply.
How to spot it: Go to the broker's "About" or "Legal" page. Find the exact regulator name and licence number. Verify it directly on the regulator's public register — for example, the FCA register at register.fca.org.uk is searchable by name or number.
2. Client Fund Segregation
A regulated broker must hold client funds in accounts that are legally separate from its own operating capital. If the broker goes bankrupt, your funds cannot be used to pay its creditors.
Without segregation, client money becomes part of the broker's estate in insolvency — which can mean months of delay and partial recovery at best.
What to look for: The broker's terms should explicitly state that client funds are held in "segregated client accounts" at a reputable bank. EU MiFID-regulated brokers are required to segregate by law. Offshore brokers are not.
How to spot it: Search the broker's Client Agreement or Terms of Business PDF for "segregated" or "client money." If the document doesn't mention segregation — that's a red flag. If it mentions it but uses vague language ("we may commingle funds") — treat that with caution.
3. Investor Compensation Scheme
Even with segregated funds, if a broker is unable to return client assets due to fraud or operational failure, compensation schemes provide a backstop. Coverage varies significantly by jurisdiction.
| Scheme | Jurisdiction | Coverage per client |
|---|---|---|
| FSCS | UK (FCA) | £85,000 |
| ICF | Cyprus (CySEC) | €20,000 |
| SIPC | US (SEC/FINRA) | $500,000 |
| EdW | Germany (BaFin) | €20,000 |
Note: compensation schemes cover broker failure, not investment losses. If you buy a stock and it drops to zero, no scheme covers that.
How to spot it: Look for the compensation scheme name in the broker's legal disclosures. Verify on the scheme's own website — FSCS at fscs.org.uk, ICF at icf.gov.cy.
4. Real Stocks vs CFDs
This is one of the most misunderstood distinctions in retail investing. A real stock means you legally own shares — you receive dividends, you have voting rights, and shares are held in custody in your name.
A CFD (Contract for Difference) is a derivative: no ownership of the underlying asset, a contract with the broker on price movement, leverage by default, and overnight financing costs.
Why it matters: Many "zero-commission" brokers that appear to offer stocks are in fact offering stock CFDs. Tickmill offers stock CFDs only — not real share ownership. Interactive Brokers, EXANTE, and XTB (stock accounts) provide real share ownership.
How to spot it: Look for "share dealing" or "real stocks" vs "stock CFDs" in the instrument specification. Check whether the platform mentions "custody" or "DMA" (Direct Market Access) — these indicate real ownership. If leverage ratios appear on stock positions by default, it's almost certainly CFDs.
5. Commissions & Hidden Fees
"Zero commission" is a marketing claim, not a full fee description. Brokers generate revenue through spread markup, payment for order flow, overnight swap fees, FX conversion markup, inactivity fees, and withdrawal fees — none of which appear in the "commission" column.
For a complete breakdown of all six mechanisms with real numbers, see: Zero-Commission Brokers: 6 Ways They Actually Make Money.
To compare the estimated annual cost across brokers for your specific account size and trade frequency, use the fee calculator.
How to spot it: Get the full picture — not just commission rate. Check spread on your target instruments, FX conversion markup, inactivity policy trigger and amount, and withdrawal fees. The broker's "Rates and Charges" or "Pricing" page should list all of these.
6. Real Minimum Deposit
Many brokers advertise a minimum deposit of $0 or $1. The real minimum — the amount you need to actually place a meaningful position — is often higher once you account for lot sizes and instrument minimums.
For a breakdown of the gap between advertised and real minimums across six brokers, see: Broker Minimum Deposit: Real vs Marketed.
How to spot it: Look for the minimum position size for your target instrument. If a broker requires a minimum of 1 share and the share costs $200, that's your real entry point — not the "minimum deposit" in the headline.
7. Country Availability
Not every broker accepts clients from every country. Restrictions can be legal, practical (payment methods not supported), or risk-based (broker's underwriting policy).
- US-regulated IB LLC entities have restrictions on non-US clients; IB's EU/UK entities are more accessible
- CySEC-regulated entities typically accept Kazakhstan, Ukraine, and Turkey residents
- Verification document requirements differ — some brokers require notarised documents for certain countries
Check our country-specific broker availability guides: Kazakhstan, Ukraine, Turkey.
How to spot it: Look for a country-of-residence selector during registration or in the broker's FAQ ("which countries do you accept?"). If your country isn't in the dropdown, you cannot open an account — even if the broker's website loads fine in your browser.
8. Deposit & Withdrawal Methods
Funding and withdrawing from your account involves real costs, especially for international clients outside the SEPA zone.
| Method | Typical cost | Typical time |
|---|---|---|
| SEPA transfer (EU) | €0 | 1–2 business days |
| SWIFT wire | $25–40 | 2–5 business days |
| Debit/credit card | 0–2% | Same day |
Example: EXANTE charges $30 per SWIFT withdrawal (verified May 2026). Interactive Brokers offers free SEPA transfers for EU clients. Correspondent bank charges ($10–25) may be added by your receiving bank and are not disclosed by the broker.
How to spot it: Find the "Deposits and Withdrawals" section in the fee schedule — not the account opening page. Note minimum withdrawal amounts and whether correspondent bank charges are mentioned separately.
9. Trading Platform
The platform is where you'll spend your time. Its quality affects your ability to execute, analyse, and monitor your portfolio.
- MetaTrader 5 (MT5): Popular for forex and CFD traders. Less suited to long-term stock portfolio management.
- Proprietary platforms: IB's Trader Workstation (powerful, steep learning curve), XTB's xStation (clean, beginner-friendly), EXANTE's platform (functional, multi-asset).
- Mobile-first: Quality varies widely; most brokers have mobile apps, not all are full-featured.
How to spot it: Request a demo account before depositing. Verify that you can place limit orders, view position history, and export transaction data in demo mode. Features not available in demo will not appear after funding.
10. Available Instruments
Before choosing a broker, confirm it offers what you actually intend to trade.
| Asset class | What to verify |
|---|---|
| US stocks & ETFs | Real shares or CFDs? DMA access? |
| EU stocks & ETFs | Which exchanges (Euronext, Xetra, LSE)? |
| Bonds | Government and/or corporate? Minimum lot? |
| Crypto | Real custody or CFD contract? |
Example: Interactive Brokers provides access to 150+ markets globally — real shares on US, EU, Asian, and emerging market exchanges. EXANTE covers 50+ exchanges. Tickmill focuses on forex and CFD instruments — no real share custody.
How to spot it: Use the broker's instrument search and look for a specific ticker you want — for example, VWCE (a widely-used EU-accessible world ETF). If it doesn't appear, or appears only as a CFD, the broker doesn't offer it as a real asset.
11. Tax Reporting
In most CIS and EU jurisdictions, you are responsible for declaring capital gains and dividend income from foreign broker accounts. Whether the broker provides documentation that makes this easier varies significantly.
- Interactive Brokers: Comprehensive annual statements with gain/loss data and cost basis. Among the most complete tax reporting in retail brokerage. Form 1099 available for US persons.
- XTB: Annual PDF summary for tax purposes.
- EXANTE: Annual statement available on request.
- Offshore brokers: Typically provide no structured tax documentation — you calculate manually from transaction history exports.
How to spot it: Search for "tax reports" or "annual statement" in the broker's help section before opening an account. Download a sample and verify the format matches what your local tax authority accepts.
12. Customer Support
Support quality matters most when something goes wrong: a failed withdrawal, a verification delay, or an unexpected charge.
- Languages: Interactive Brokers supports 18 languages; XTB chat is available in 13 languages.
- Hours: IB and EXANTE offer 24/5 support; many smaller brokers are business hours only.
- Channels: Phone, live chat, email — availability varies by language.
How to spot it: Send a test inquiry before depositing real money. Note whether you receive a response from a person with domain knowledge or a scripted FAQ redirect. A broker that takes 48 hours to respond to a pre-sales question will not respond faster when it's your money on the line.
Summary: 7 Brokers Across 4 Key Criteria
| Interactive Brokers | XTB | EXANTE | Tickmill | Just2Trade | Admirals | Freedom Finance | |
|---|---|---|---|---|---|---|---|
| Regulator | FCA, SEC, FINRA, MAS | FCA, KNF, CySEC | CySEC, FCA, MAS | FCA, CySEC | CySEC | CySEC, FCA, ASIC | AIFC, CySEC, BaFin |
| Asset type | Real stocks & ETFs | Real stocks & ETFs + CFDs | Real stocks & ETFs | CFDs only | Real stocks & ETFs | Real stocks & ETFs + CFDs | Real stocks & ETFs |
| Compensation | SIPC $500k / FSCS £85k | FSCS £85k / ICF €20k | FSCS £85k / ICF €20k | FSCS £85k / ICF €20k | ICF €20k | ICF €20k | ICF €20k |
| Wire withdrawal | Free (SEPA) | Free | $30 | Free | Free | Free | $7 |
For a full side-by-side comparison of any two brokers, see broker comparisons.
What to Do Next
If you've worked through this checklist and have a shortlist of 2–3 brokers, use the fee calculator to compare their actual annual cost for your specific account size and trading frequency.
If you're still not sure where to start, the broker quiz takes 2 minutes and narrows down options based on your country, goals, and experience level.
Disclaimer: This article is educational. Broker availability, fees, and country acceptance change without notice. Tax treatment depends on your specific residency and citizenship. Confirm current terms on each broker's site and consult a licensed advisor for personalized guidance. BrokerFit lists brokers in alphabetical order and does not weight placement by affiliate relationship.
About the author
In-house editorial team — software engineers, product designers, and data analysts
The BrokerFit editorial team researches and maintains every page on this site. We are not licensed financial advisors, which is why our work focuses on systematizing public regulator data, building decision-support tools, and explaining how products actually work rather than issuing personal recommendations. All data points we publish are traceable to a public source — regulator register, broker disclosure document, or market data provider — and we correct errors within seven days of verification. For topics that require a licensed professional, we invite named external contributors and sign their work clearly.
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