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An overview of some of the most popular forex business licenses available to brokerages in 2019, the costs involved, and a more budget-conscious solution.
If you’re a new forex broker or looking to start a forex brokerage business, obtaining a forex license is one of the first things you will need to consider. While licensing activities require forex firms to follow strong codes of conduct, having a license will impact favourably on the operational and financial success of your business.
Which Forex Broker Licenses Can I Choose From?
If you’re just starting out as a broker, one of the first things you need to consider is where to incorporate your brokerage business. The physical location of your operations does not need to be the same as your place of incorporation as former involves a completely different set of considerations including aspects like rent, employees and tax, etc. In terms of incorporation however, there are various complexities with attempting to obtain a license which relate to costs, annual licensing fees, timescales, laws and taxation, to name a few.
Although every country has its own legal framework and regulatory body, the most popular forex brokerage jurisdictions tend to belong to the world-leading economies including the US, UK and Australia. Having a license issued by one of these country’s jurisdictions, for example, an FCA forex license or an ASIC forex license, brings a higher level of trust from traders and will make your brokerage more attractive to them generally, as well as appealing to a more lucrative client base. It is also easier when opening a bank account or merchant account for your brokerage. In this respect, you can also expect to benefit from reduced fees, since being established in these locations is regarded as having a lower risk.
However, obtaining a forex trading license in these countries can involve a large amount of capital, making the decision one that may not be within reach for most new brokers. An alternative choice is available with two well-regarded, mid-range budget options that have become a highly popular way forward.
Popular Jurisdictions
The first of these is Cyprus regulation (CySEC). This is one of the leading jurisdictions of choice for forex brokerages, thanks to the country’s EU membership which allows brokers to offer their services to all member states in the European Union. This, in combination with low corporation taxes, a vibrant financial sector, and skilled workforce, makes it one of the best places to launch yourself into the world of forex. The cost of a Cyprus Investment Firm (CIF) license ranges between €40,000 - €100,000 with the entire process taking around 6 months to complete.
Malta’s MFSA is another popular choice for regulatory purposes. Malta has become an established business environment for FX businesses, due to a reliable regulatory framework, as well as being in the European Union. Capital requirements for an MFSA license are in the region of €730,000.
Offshore Forex License
Cheaper options such as a Hong Kong forex license (FSC) also exist for brokers who have less capital or different requirements who can choose to incorporate their company in an offshore location. These jurisdictions usually have lower initial capital requirements, along with more relaxed regulatory demands. Many forex brokerages choose this route although arguably they are less prestigious than the former. For this reason alone, it can make it more difficult to attract a certain calibre of traders.
Nevertheless, if you choose this offshore route, there are many places where you can incorporate for a low cost. The most popular of these include the Seychelles forex license (FSA) where the application fee is just $200 with an annual license fee of $1000. A Mauritius forex license (FSC) is another popular choice where the minimum net capital requirements amount to little more than $20,000 with license acquisition taking around 4-5 months. Other low cost options include New Zealand (FSP) and Vanuatu (FSC), each bringing with them, lower costs and more lenient forex rules and regulation.
The licensing process is, as we have seen, a major part of establishing your brokerage business which takes a lot of time and know-how. This explains why many new forex brokers opt for an easier route to enter the forex industry. Choosing a forex broker turnkey takes care of the whole brokerage set up, including all licensing aspects.
If you’re a new forex broker or looking to start a forex brokerage business, obtaining a forex license is one of the first things you will need to consider. While licensing activities require forex firms to follow strong codes of conduct, having a license will impact favourably on the operational and financial success of your business.
Which Forex Broker Licenses Can I Choose From?
If you’re just starting out as a broker, one of the first things you need to consider is where to incorporate your brokerage business. The physical location of your operations does not need to be the same as your place of incorporation as former involves a completely different set of considerations including aspects like rent, employees and tax, etc. In terms of incorporation however, there are various complexities with attempting to obtain a license which relate to costs, annual licensing fees, timescales, laws and taxation, to name a few.
Although every country has its own legal framework and regulatory body, the most popular forex brokerage jurisdictions tend to belong to the world-leading economies including the US, UK and Australia. Having a license issued by one of these country’s jurisdictions, for example, an FCA forex license or an ASIC forex license, brings a higher level of trust from traders and will make your brokerage more attractive to them generally, as well as appealing to a more lucrative client base. It is also easier when opening a bank account or merchant account for your brokerage. In this respect, you can also expect to benefit from reduced fees, since being established in these locations is regarded as having a lower risk.
However, obtaining a forex trading license in these countries can involve a large amount of capital, making the decision one that may not be within reach for most new brokers. An alternative choice is available with two well-regarded, mid-range budget options that have become a highly popular way forward.
Popular Jurisdictions
The first of these is Cyprus regulation (CySEC). This is one of the leading jurisdictions of choice for forex brokerages, thanks to the country’s EU membership which allows brokers to offer their services to all member states in the European Union. This, in combination with low corporation taxes, a vibrant financial sector, and skilled workforce, makes it one of the best places to launch yourself into the world of forex. The cost of a Cyprus Investment Firm (CIF) license ranges between €40,000 - €100,000 with the entire process taking around 6 months to complete.
Malta’s MFSA is another popular choice for regulatory purposes. Malta has become an established business environment for FX businesses, due to a reliable regulatory framework, as well as being in the European Union. Capital requirements for an MFSA license are in the region of €730,000.
Offshore Forex License
Cheaper options such as a Hong Kong forex license (FSC) also exist for brokers who have less capital or different requirements who can choose to incorporate their company in an offshore location. These jurisdictions usually have lower initial capital requirements, along with more relaxed regulatory demands. Many forex brokerages choose this route although arguably they are less prestigious than the former. For this reason alone, it can make it more difficult to attract a certain calibre of traders.
Nevertheless, if you choose this offshore route, there are many places where you can incorporate for a low cost. The most popular of these include the Seychelles forex license (FSA) where the application fee is just $200 with an annual license fee of $1000. A Mauritius forex license (FSC) is another popular choice where the minimum net capital requirements amount to little more than $20,000 with license acquisition taking around 4-5 months. Other low cost options include New Zealand (FSP) and Vanuatu (FSC), each bringing with them, lower costs and more lenient forex rules and regulation.
The licensing process is, as we have seen, a major part of establishing your brokerage business which takes a lot of time and know-how. This explains why many new forex brokers opt for an easier route to enter the forex industry. Choosing a forex broker turnkey takes care of the whole brokerage set up, including all licensing aspects.
