How FX brokers are exploiting SMEs – and what needs to be done

The opportunity to work with overseas clients, customers or suppliers can be an exciting step for a small company, as it looks to expand its market footprint and seek out new cost-effective partners. But it usually also means having to get involved in the daunting world of foreign-exchange trading. 



The likes of Trump’s tariffs and Middle East conflicts can make exchange rates volatile and many SMEs would rather leave the seemingly complicated process of getting the right rate to change sterling into the likes of dollars, Euros or yen to a professional FX broker. After all, a mistake could lead to paying an invoice or completing an order being much more expensive. The problem is, however, a lot of brokers are feeding off SMEs’ lack of knowledge around FX trading to take advantage of them.



I used to work as an FX broker but became disillusioned with the way small companies were treated. While many people in the sector are highly professional and do their utmost for clients, too many brokers engage in opaque practices - such as lying about exchange rate movements to “skim” money from trades for themselves or unfairly reneging on deals.



My company, Glyde - a borderless currency-exchange platform that has worked with more than 150 SMEs - recently analysed more than 3,400 legacy FX transactions globally. We found that brokers skim an average of around £992 per transaction from SMEs worldwide. In the UK, that figure rises to £1,305. For a business trading overseas regularly, such losses can quickly add up to tens of thousands of pounds a year, with a significant impact on revenue.



Brokers are regulated by the Financial Conduct Authority (FCA). But, though it accepts that these opaque methods are “poor practice”, it takes little action to stop them.

One of the oldest tricks in the broker playbook is hidden markups. They’ll offer you tight margins to win your trust, but once they have control of your funds, those margins quietly widen. With exchange rates moving constantly, most SMEs never realise they’ve been charged more than promised.

Brokers often present themselves as protecting SMEs from volatile currency markets, offering tools like limit orders that trigger when rates hit a certain level. In reality, these deals can be dangerous. Some brokers delay execution – “letting orders run” – to skim extra margin while obscuring the true conversion rate. Worse, if the market dips after the target has been reached, clients are left gambling on a worse outcome despite being told their order had already been secured. Over time, this practice quietly drains significant sums from SMEs.

One of the most damaging tactics is when brokers quietly close out forward contracts for their own gain. A forward contract is a financial agreement between an individual or organisation, such as SME, and the money markets to buy or sell a specific amount of one currency for another at a predetermined exchange rate, on a future date. An SME may fix a rate for months ahead, thinking they’re protected, but if the market moves in the client’s favour, some brokers renege on the deal. They claim, often without grounds, that the SME can’t meet its obligations, cancel the contract, and then take the profitable trade for themselves. The broker pockets the upside, sometimes thousands of pounds, while the SME is left exposed with no hedge in place.

The FCA and the wider FX industry need to do far more to stamp this kind of behaviour out. Every broker should be obliged to show a customer exactly what it is costing them to convert and pay out funds at any given time. There must be full transparency about the rate a client is being offered versus the current interbank exchange rate.

At present, brokers are merely encouraged to do the right thing. That isn’t enough. Authorities must have the power to compel them legally. New regulation is urgently needed to strengthen the FCA’s hand.

In the meantime, SMEs sadly need to take action to protect themselves and avoid placing blind trust in brokers. Leaders should improve their knowledge of how exchange-rate mechanisms work and consistently check rates through sources such as xe.com. Brokers may claim that these platforms don’t show the most up-to-date or competitive figures, but that simply isn’t true.

If something doesn’t seem right about what a broker is charging or claiming, SME leaders mustn’t be afraid to challenge them. While the FX sector might appear difficult to grasp, with a little extra knowledge SMEs can hold brokers to account far more effectively.

Where possible, company leaders who feel confident should consider exchanging money directly with banks or trusted FX providers, bypassing brokers altogether. Alternatively, platforms like Glyde enable businesses to trade in more than 50 currencies, providing transparent insights into the best rates available which the companies then select themselves, with no hidden fees or middlemen.

Most SMEs trust their lawyers and bank managers. FX brokers should be no different. Yet the murky communication and relentless focus on profit over client interests have turned much of the sector into something of a rogue marketplace. Unless transparency and accountability are imposed, FX broking risks losing both its credibility and, ultimately, its viability.


About Glyde

Glyde is a borderless currency platform that empowers individuals and businesses to send, receive, and convert over 50 currencies on their own terms. For more details visit For more, visit www.glyde.money.

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