Pepperstone - #1 Bond BrokerFind Out More

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.7% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Best 5 UK Bond Brokers

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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.7% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Top 5 UK Bond Brokers

1. Pepperstone

Pros

  • Extensively regulated
  • No minimum deposit
  • Low fees and mostly free withdrawals
  • Good customer service

Cons

  • No investor protection for clients outside UK, EU and EEA
  • Withdrawal fee for clients outside EU and Australia
  • CFDs only

Best for: Traders interested in forex CFDs
Assets and markets: CFDs in forex, indices, shares, commodities, ETFs, crypto
Account types: Standard, Razor, Active Trader Razor, Demo

Pepperstone is an Australian CFD stockbroker, active in the UK and globally. It has created a trading app for each of the platforms it provides – MT4, MT5 and cTrader.

The Pepperstone cTrader app is recommended for those new to trading or still finding their investment footing. The cTrader app provides the same trading experience that you would experience in the computer version.

Like eToro, Pepperstone offers social copy trading, but unlike its competitor, you may only trade CFDs with this broker.

The standard account is commission-free, whereas Razor account holders are subject to commission charges. There is no minimum deposit, but Pepperstone recommends £500.

Withdrawal fees are charged to customers outside the EU and Australia.

Visit Pepperstone

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.7% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

2. City Index

Pros

  • Regulated by FCA
  • Low forex fees
  • Low minimum deposit
  • Good trading and research tools
  • Social and copy trading

Cons

  • No customer service during weekends
  • Inactivity fee
  • High commission for shares CFD trading

Fees: Depend on how they are invested. There is a 0% commission on spreads, but if investing in share CFDs there is commission payable. There are no withdrawal fees, however.

City Index was founded in 1983 and is a UK brokerage that is well-organised and competitive. Great for new and mid-level investors because it offers a huge amount of education options.

Visit City Index

3. CMC Markets

Pros

  • No minimum deposit
  • Wide range of trading instruments
  • Low forex fees
  • High level of regulation, both UK and globally
  • Extensive range of trading tools
  • Mobile app for trading on the go

Cons

  • High CFD fees on shares and ETFs
  • Can only trade with CFDs or spread betting
  • Does not lead to ownership of trading assets

Fees: Vary but average about 0.1% commission

CMC Markets was founded in 1989 and is a UK-based broker that is publicly traded.

CMC Markets offers a comprehensive government bond listing and is good for beginner investors.

The CMC ‘Next Generation’ trading platform is modern, easy to use and available on multiple platforms including smartphones.

Visit CMC Markets

69% of Retail CFD or Spread Betting Accounts Lose Money.

4. Degiro

Pros

  • Regulated by BaFin and FCA
  • No minimum deposit
  • Low trading fees
  • No inactivity fee
  • No withdrawal fee
  • No deposit fee
  • Web platform and mobile app are user-friendly

Cons

  • No credit or debit card deposits
  • Lacking educational resources
  • No demo account
  • No forex, CFDs or crypto
  • No customer support on weekends and no live chat

Fees: €3 +0.03% per bond

DEGIRO is a Dutch company that was launched in 2013. Over 1 million customers across Europe take advantage of incredibly low fees and multiple account options across various platforms.

Although the fees are low, there are limited options for education so this can be a turn off for new investors who want to understand the investment market.

Visit Degiro

Top 10 UK Bond Brokers
Top UK Bond Brokers

5. Interactive Brokers

Pros

  • Regulated
  • Wide range of offerings
  • Low commission
  • Socially responsible
  • 24/5 customer support across multiple channels

Cons

  • No additional platforms
  • Inactivity fees

Fees: 0.01% commission with a minimum of £1.

Interactive Brokers was founded in America in 1978, and the trading technology that is used to provide financial services is simple to use. It is available on computer and smart phones.

Visit Interactive Brokers

What Are Bonds?

A bond is a loan offered by a government, business or other organisations where investors can make a fixed investment and get a predictable return over a specified period.

The bond is for a specific duration and the investors earn an income from interest (known as the coupon).

Bonds are a popular method of investing for income rather than capital growth for stability and known income in a portfolio, allowing investors to match future returns to future liabilities. Coupons can be variable or fixed rate, so income comes throughout the period of the bond – which could potentially be 30–50 years.

Bonds have a nominal rate of £100 (UK) or $1,000 (US), but these prices can fluctuate when it first comes to the market and throughout the term, although those with short durations are less likely to change over time.

Prices fluctuate because of supply and demand, the credit rating of the company issuing the bond, the coupon rate and how close it is to the end of the term.

The nominal rate is described as the ‘par value’ and is the face value of the bond.

Although bonds are seen as less risky investments than equities because they offer predictable income and returns, negative interest rates can influence the return, causing investors to take on more risk.

What Are the Different Types of Bonds?

There are several types of bonds available, each with different risk profiles and possible returns.

Bonds are rated based on risk and credit ratings by institutions like Moody’s and Standard and Poor’s to ascertain the financial stability of the entity – and therefore determine the likelihood of bonds being repaid and the interest rates being met.

Bonds are rated on an alphabetic scale, with the top rating being AAA and riskier bonds at a C or below.

Government Bonds

Often referred to as Gilts in the UK, government bonds are issued by government agencies and national treasuries.

They are considered low risk as it is more likely that the coupon and the return are likely to be paid and the conditions of the bond will be met.

A supranational bond has a similar risk profile but tends to be issued from banks.

Corporate Bonds

In general, corporate bonds are a relatively safe fixed income investment. Investment-grade corporate bonds are the most common, issued by companies with a high credit standing.

Corporate bonds tend to offer a higher coupon threshold than government bonds so offer more income.

Junk Bonds

Junk bonds are essentially corporate bonds from companies with a lower credit rating. They are considered much higher risk but offer a greater return if the risk pays off.

Junk bonds are often offered by companies that are going through some kind of financial struggle and need an injection of cash.

Savings Bonds

Savings bonds are offered by banks and building societies and are popular with retail investors, especially those with little experience of investing.

With low prices for investing and relatively low risk, savings bonds can fluctuate quickly but the maturity terms are often lengthy.

Who Regulates Bond Brokers?

Bond brokers in the UK are regulated by the Financial Conduct Authority (FCA). Other bond brokers in other countries that trade in the UK should be regulated in their own countries as well as the FCA.

Look for regulation agencies like CySEC and ASIC for further confirmation that the broker will be held accountable if there are any problems.

Why Use a Bond Broker?

Investing in bonds as a retail investor can be difficult without a brokerage. Bond brokers specialise in bonds and other fixed-income securities, allowing private clients to invest and trade in bonds.

Bonds can be issued in very large denominations, sometimes in the billions, so investing directly needs considerable capital. A bond brokerage can get clients exposure to the bond markets with smaller capital amounts.

Bond brokers can offer investment into bonds as well as trading with bond ETFs, acting as intermediaries and, in some cases, providing research and education.

Bond brokers tend to charge either a commission or a fixed fee for trading.

Frequently Asked Questions

Freetrade is a great trading platform for anyone who wants to invest with low fees. It has 0% commission on all its trades, and it is very easy to navigate.

With Freetrade you can invest in a huge selection of international shares, and some of these include US-based bonds. You can also invest in exchange-traded funds (ETFs) and investment trusts.

Be aware that some of the more premium features of Freetrade are hidden behind a paywall.

If you are looking at investing small amounts of money then Orca is also a good trading platform. With Orca you can invest in both UK and US bonds and shares. It only functions as a mobile app and prioritizes UK stocks over internationally-based stocks.

The easiest way to acquire crypto coin in the UK is through Coinbase and eToro.

With Coinbase, you can set up a wallet and buy bitcoin, monero, Litecoin and other cryptocurrencies. All you need to purchase crypto on Coinbase is some form of valid identification, an email address, a phone number and an active debit or credit card.

With eToro you are buying cryptocurrency to invest in. eToro is one of the most popular online trading platforms. You can invest in crypto shares and exchange other trades for cryptocurrency.

Doing your research into online brokerages will give you the best information on which trading platforms allow you to invest in bonds.

Reading the right news materials will also give you information on the best bond brokers.

Bloomberg.com and Morningstar.com are great resources that will give up-to-date information on bond brokers. Other educational resources on YouTube and online will also give you the best information on reliable bond brokers.

Bonds have much different maturity rates, qualities and yields than stocks or shares. Because of this, they are mostly traded in something known as the secondary market.

The secondary market is where investors and traders trade securities they already own. They do not speculate on the trades and stocks that may be offered elsewhere.

Investors often consider buying or selling bonds after the trade of shares or stocks. Bond trading is usually done over the counter, and this usually requires some form of arrangement between the broker and investor.

There are a few ways in which you can government bonds in the UK. First, you can do this directly through HM Debt Management or an authorized agent. They will advertise the bonds that are available for purchase and the quality of the bond.

You can also buy bonds via shares in a bond exchange-traded fund (ETF).

Finally, you can trade government bonds on a market. To do this you must spread bet or arrange a CFD with the seller.

You do not need a broker to buy bonds if you do it through an HM debt management or an authorized agent. However, bonds and securities are becoming a more popular form of exchange, especially within the market.

Many brokers now allow you to purchase bonds online. It may be difficult to locate a broker that specifies in bond, but it is possible to buy bonds through a broker.

Brokers like CMC markets list government bonds that you can purchase.

Freetrade is a highly rated broker where traders can easily search up stocks they want to invest in.

You do not need a minimum deposit to set up an account on Freetrade and all the clients accepted are UK-based.

It is a great platform to test out stockbroking for little financial risk.

If you are looking at a stock broker that operates on the global market, then Trading212 and eToro are popular choices for beginners.

Trading212 requires no deposit and eToro requires a small deposit. eToro has more educational features than Trading212 and it is a social trading platform, meaning that you can view the investment patterns of other traders and replicate their success.

Final Thoughts

Bonds make a mostly reliable investment that offers an income as well as a return at the end of the term.

When considering bonds, decisions should be made depending on the credit rating of the entity issuing them. The higher the rating, the less risk in investing – although returns might not be as high.

The highest credit ratings tend to be in Gilts (government bonds) and supranational bonds as well as savings bonds, but corporate bonds offer higher coupon rates. Junk bonds are riskier but often have higher returns if they are completed.

Bonds will have a coupon (interest) rate and a maturity date. This describes the monthly income from the bond as well as the duration of the loan – and when the repayment of the amount will occur. The par value will be the repayment value at the end of the term.

Choosing the right bond broker for your investments is a personal choice, but there are certain things that are important. A well-regulated broker means that your investment will be safer, and while lower fees might be a draw getting support and education alongside research and commentary is useful if you want to understand how best to invest.

WikiJob does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal capital.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.7% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.


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