How to Become A Licensed Forex Broker???

Forex Market is the world’s fastest-growing asset market because of its trading volume and liquidity. This is one of the main reasons why its popularity has been increasing continuously for many years. You must have deep market knowledge, good intuition, and a fast-decision-making nature to be effective and make constant profits on the Forex Market.  You should think about becoming a broker if you understand the rules of the forex market & the needs of traders and have experience in this sector, especially as the Introductory Broker (IB).

For becoming a regulated Licensed Forex broker, there are some phases. We will go through these phases one by one.

A Forex license is a financial service license that allows Forex brokerages to act as legal and regulated brokers in the forex sector. It also enables brokers to run their brokerages in their selected jurisdiction. To choose the most appropriate jurisdiction according to specific requirements, start-up brokers are advised to seek advice from a professional firm.

There are certain aspects to consider when selecting jurisdiction: The following are :

• Minimum capital requirement : Each jurisdiction has a different minimum capital requirement which must be deposited to meet the criteria for a license. The size and the specific services they offer depend on this amount. This amount depends on the company’s size and the services that they will provide.

• Processing time : Processing time depends on the selected jurisdiction. Different jurisdictions have different timespan to systematize applications and approve the license.

• Taxes rules & Regulation : It is important to find one that profits most from capital gains and profit, because of the tax system that differs among regions

Best jurisdictions

Actually, there is no specific jurisdiction which is best for all. It completely depends on the facilities & strictness of regulations.

To understand the situation, one of the leading jurisdictions of Forex brokerage’s choice in the European Union is Cyprus Regulation (CySec). Low corporate taxes, a vibrant financial sector, and an accomplished workforce make it one of the best platforms to start a broker’s journey in the forex world. CIF’s licensing cost ranges from €40,000 to €100,000 for a Cyprus Investment Firm (CIF), with a process lasting around 6 months

Another leading jurisdiction of popular choice in the European Union is Malta’s MFSA.

The maximum leverage for both is 30:1

A trustworthy regulatory system makes it a known corporate environment for forex brokerages. Its license capital requirements are in the €730,000 range. In the USA, The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) are the most popular jurisdictions. Both US-based forex brokers and other forex brokers intend to provide service to clients throughout the country to implement the laws enforced by the CFTC and the NFA.

Let’s see an example of obtaining a Forex license. Here, we will discuss how to obtain a license under CySec jurisdiction.

General Information

Company structure :

• A company with at least two native executive directors and two non-executive directors.
• Minimum 3 or more local employees.
• Additional key staff, such as a compliance officer and an AML officer, authorized and licensed to provide the respective investment service may be required depending on the intended investment services.
• Regular accounting and Audited accounts submission is required.
• Details of benefit owners – conveyed to the authorities.
• Details of shareholders – Part of Public Records.
• Details of Board members – Part of Public Records.

Financial Costs:

• Minimum capital requirements- EUR ~ 125,000.00 or EUR 730,000.00 depending on the licensee type (STP or MM)
• Low corporate tax (12.5%)
• Corporate income tax of 0 %
• 19% Lowest VAT
• No stabilization tax on earnings.
• A large network of Double Taxation Agreements.
• Access to EU directives and EU VAT registration.

Process of Application

Step-1 : Collect and prepare all the documents for initial verification. Then courier the original documents.

Step-2 :  Company name registration. The company name must be ended in “Limited” & must be approved by the Registrar of Companies.

Step-3 : Company Registration / Incorporation in Cyprus.

Step-4 : Fulfill post-registration agreements. Company registration with the local authorities (TAX, VAT, SI)

Step-5 : CIF license acquisition. Then proceed with CySec and work closely to promptly reply to requests, updates, or other items of CySec.

Step 6 : License Activation. Now at this stage of development, complete the final requirements as said by CySec for the license activation.

Step-7 : Apply for a license to CySec. Incorporation & obtaining a license takes time almost from 5 to 9 months

Required Documents :

For opening a bank account, every beneficial owner, shareholder, director, signatory authorized and secretary must submit –

• Notarized copy of valid passport.
• A copy of the residential address evidence (ex. utility bill that is not older than 3 months)
• Notarized copy of Letter of Reference form Bank, Attorney or Accountant

For local regulatory authorization every beneficial owner, shareholder, director, signatory authorized and secretary must submit –

• Resume
• Notarized copy of valid passport.
• A copy of the residential address evidence (ex. utility bill that is not older than 3 months)
• Notarized copy of Letter of Reference form Bank, Attorney or Accountant

Offshore Licensed Forex Broker

For brokers with less capital or priorities can choose to incorporate a company into the offshore region. Cheaper options such as Seychelles Forex License (Financial Services Authority) at a $200 application fee are available for them. These jurisdictions generally have lower capital requirements and liberal regulatory requirements.

Benefits of obtaining an offshore licensed forex broker 

• Citizens from any nations can be managers or owners
• Simple risk assessment Requirements.
• Affordable license fees
• Quick approval.
• Renewal fees are low.
• Can operate around the world.
• Minimum capital deposit.
• No accounting reports required
• No audit reports
• Low cost to own and operate

Becoming a Regulated Broker

The procedure of obtaining a Forex license is very difficult. It requires time, resources, and dedication. Brokers with business knowledge prefer an easier method to enter the forex industry.

The process of acquiring a Forex broker license involves collaboration with the regulatory body of the selected jurisdiction, compliance with the laws of that particular proficiency, and the administration and presentation of all documentation and credentials required.

It is recommended to choose the most appropriate jurisdiction according to specific requirements, start-up brokers are advised to seek advice from a professional firm.

The entire brokerage setup process, including regulatory processes and the licensing procedure, can be handled by a reliable Forex broker turnkey solution provider.

(All the information above may change anytime as per the jurisdiction law)