The stock market is home to thousands of companies, and forex brokers are among these. Some of the most popular FX brokers are listed companies that trade their stocks on major exchanges. Investors in these stocks look out for the annual and quarterly revenues and changes in fee structures and client onboarding figures, as they show the prospects of the FX brokers.
Some of the most successful multi-asset brokerages are public companies, and investing in them can be highly lucrative during periods of high economic growth.
However, high-interest rates and bearish market sentiment make it more difficult for investors to pick the possible winners and losers in the market.
In this review, we will look at some of the best and worst-listed FX brokers to invest in their stock and hold for the long run.
Best FX Broker Shares To Invest In
The best FX brokers are typically not limited to only currency trading and offer other asset classes, such as stocks, futures, options, and more, to their broad client base.
Certain listed FX brokers have generated market-beating returns over the past few years, and healthy financials and a robust customer base ensure they have more room for growth in the future.
Interactive Brokers Group Inc (NASDAQ: IBKR)
Interactive Brokers is perhaps the best-known name in the brokerage industry. The multi-asset broker offers various instruments, such as stocks, forex, futures, options, CFDs, etc.
IBKR has also been one of the best-performing broker stocks of the past five years, gaining more than 62.3% over the same period.
Growing onboarding numbers, as well as a healthy bottom line, have been instrumental in the rise of Interactive Brokers stock. For instance, the latest quarterly report released by the company in June 2023 shows the following:
- Revenues increased to $1.06 billion, up by 48.8% YoY
- Net income reached $125 million (73.61% increase YoY)
- Net profit margin increased to 11.85% (16.63% growth YoY)
Overall, Interactive Brokers remains one of the most popular and accessible online FX brokers in the world and is one of the best investments among FX broker shares on the stock market.
XTB SA (WSE: XTB)
XTB has undoubtedly been the top-performing brokerage stock of the past five years. The Poland-based FX broker trades shares on the Warsaw Stock Exchange under the WSE: XTB ticker symbol.
The stock has gained over 545% over the past five years, among the highest returns among stocks on any exchange worldwide.
This may come as a surprise to some readers, as XTB’s finances have taken a significant hit since the highs of the pandemic. The latest quarterly report shows revenues of PLN 275.95 million and net earnings of PLN 118.18 million, down by 30.4 and 48%, respectively.
IG Group Holdings plc (LON: IGG)
UK-based IG Group has also experienced some decline since its 2021 highs to 2023. However, the firm has gained 8% over the past five years, which is better than most other listed FX brokers.
IG’s decline represents more buying opportunities for investors, as its large selection of tradable instruments and broad customer base make it a formidable player in the global brokerage market.
However, new investors should be wary of current market conditions, which have prompted investors to pick more risk-averse assets that generate less commission revenue for brokerages, such as bonds and gold.
Worst FX Broker Shares To Invest In
Certain FX brokers have endured challenging market conditions over the past years, which has resulted in subpar financial performance and a significant decline in stock price. These brokers may not be well equipped to handle the decline in trading activity caused by bearish market sentiment prevailing in the current global markets.
NAGA Group AG (ETR:N4G)
NAGA Group is a German FX brokerage with a cumulative trading volume of EUR 138 billion as of 2022. The firm is relatively smaller than most of its competitors, with annual revenues during the same period reaching EUR 51 million. The total number of active clients had reached 0.5 million.
The stock is listed on the Frankfurt Stock Exchange under the N4G ticker symbol.
The company came to prominence during the peak of the pandemic boom between 2020-2021 but has since fallen much faster than its rise.
Higher interest rates in the Eurozone and the challenging macroeconomic outlook in Germany have prompted traders and investors to redirect their capital to more inflation-proof assets, such as gold. Declining growth and slim profit margins have tested the patience of NAGA investors, causing a gradual sell-off and sinking the stock to near EUR 1. The store had a market capitalization of only EUR 60 million as of this writing.
If the firm does not improve its onboarding numbers and bottom line, delisting could be on the cards in the coming months.
Plus500 Ltd (LON: PLUS)
2023 has been a challenging year for brokerage stocks listed on the London Stock Exchange. Plus500, the Israeli-based FX and CFDs broker, has endured a difficult period on the stock market.
Its shares have fallen 25% over the past 12 months, after an impressive rise that the drop has primarily erased. Over the past five years, the stock has gained a negligible 3% in value.
A significant factor in all of this has been the financial performance of the company, which has deteriorated significantly in 2023.
The 2023 Q2 earnings report shows revenues of $182.25 million, down by 27.58% YoY. Net income has also shrunk to $73.25 million – a roughly 40% decrease over the year.
The current market conditions make it unlikely that Plus500 will be able to recoup its losses in the coming quarters, making it a stock to avoid shortly.
CMC Markets plc (LON: CMCX)
Another FX and CFDs broker listed on the London Stock Exchange, the story has largely been the same for CMC Markets. The firm has lost all of its pandemic gains as of 2023, losing over 18% of its stock value over five years.
Looking at its financial performance, the decline in revenue and net income figures has been stark. The firm reported quarterly revenues of GBP 67 million and net income of GBP 6.24 million for the quarter ending in March, with declines of 13% and 71%, respectively.
Current market trends are unlikely to give much of a boost to CMC Markets stock, which is why it is best to avoid the shares of this listed FX broker in the near term.
Critical Takeaways From Best And Worst FX Broker Shares
FAQ On FX Broker Shares
Do FX brokers trade shares?
Yes. Many FX brokers are listed on major stock exchanges, and anyone can invest in them. This allows brokers to gain market relevance and obtain more capital during the IPO process.
Some of the most famous FX and stock brokerages are publicly traded and deliver varying returns.
What is the best-listed FX broker?
XTB has been the best-performing listed FX broker over the past five years, returning over 545% over the same period. The firm’s future growth prospects are uncertain due to rising interest rates and bearish market sentiment worldwide.
Do listed FX brokers pay dividends?
Most listed FX brokers do not pay dividends, as they do not have a very long track record of being public companies. However, stable financial performance over the long run could prompt these companies to pay dividends to shareholders.