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What is the Best Jurisdiction to Incorporate a New Forex Broker? Choosing a suitable jurisdiction for considering regulation and getting brokerage licence.
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The Forex brokerage industry today is very tightly governed and regulated by countries across the globe. Regulatory requirements are becoming stringent making it difficult for forex brokerages to enter new regions. That being said, we would like to mention that there still are some regions where you can enter easily. But if you want to enter those regions, how you present yourself is the most important part of any FX brokerage plan. Introduction
Company Incorporation is the first step to get your forex brokerage going. This confirms that your brokerage is a legal firm and is authorized to carry out monetary transactions.In order to do this, the first thing to consider is the jurisdiction(s) in which you will be operating. Each jurisdiction has its own regulatory bodies, cost and time of obtaining a license, and different levels of clientele.An important factor to consider when choosing a jurisdiction is the model of your trading. Since the type of brokerage, you determine the regulations that you will have to follow.However, please understand that your place of incorporation doesn’t have to be your base of operations as well.
Here are some jurisdiction categories, along with information on the regulatory requirements.
Category #1 USA (regulated by NFA) & Japan (regulated by FSA) • This is a jurisdiction that a lot of people avoid due to the high cost and strict reporting requirements • To obtain a forex brokerage license in either of these countries, you will have to prove that you have $20 million of freely accessible capital, excluding client funds
Category #2 Great Britain (regulated by the FCA) & Australia (overseen by ASIC) • Compared to the previous category, this one costs less and has less stringent reporting requirements. Acquiring a forex brokerage license can cost anywhere between $35,000 and $50,000 • A capital of $100,000 (excluding client deposits) should be enough to get you going • However, physical office space is an additional requirement in these jurisdictions. Also, obtaining a license will take an average of 3 to 4 months upon submission of all necessary documentation
Category #3 Cyprus (regulated by CySec), Malta (overseen by MFSA), New Zealand (governed by FSP) & Bulgaria (overseen by BFSC) • These countries offer a decent level of protection for forex brokerage clients. However, a local office is a must. The reporting stringency levels are lower even than category #2 and the taxes are quite reasonable as well. • The cost of the license is again anywhere between $35,000 and $50,000 which will vary based on the type of license. The average time for a license to be issued is around 2 to 3 months. However, legal services and take sometimes about six months upon submission of the required documents which might cause an additional 2 to 3 months delay.
Category #3 Cyprus (regulated by CySec), Malta (overseen by MFSA), New Zealand (governed by FSP) & Bulgaria (overseen by BFSC) • In Bulgaria, Cyprus and Malta you will also need to deposit an average of $125,000 in your corporate account. Opening a bank account is relatively easy and in some cases can be done from outside the country. The fact that most of the countries in this category are in Europe offers greater credibility than some other regions.
Category #4 Belize (overseen by IFS), Vanuatu (regulated by VFSC), and British Virgin Islands (regulated by BVI FSC) • These countries have basic regulations and require a license to operate, putting your customers at more ease than an unlicensed or unregulated jurisdiction. The incorporation can be done in a matter of days and license obtain in about 4 months upon submission of all necessary documents. • The entire process will cost you around $30,000 and you will need to deposit a minimum of $125,000 in your corporate account. Though there might be banks in this region where you can open a corporate account without a license, obtaining your brokerage license first will definitely make the process easier and open up doors to more banks.
Category #5 Others • Any country in the rest of the world where forex trading and brokerages are possible will fit into this category • Countries such as Seychelles and St. Vincent will fall in this category. In these two countries, with $2000 in your hands, you can register a forex company in around a week or two without having to worry about a license. • Though this option is cheap and fast, there are several reasons to not start a brokerage without a license of which the foremost one is the lack of credibility.
Category #5 • Additionally, banks will shun away from offering corporate accounts to unlicensed forex firms as they will be putting themselves in a position of risk by allowing unregulated transactions to go through their entity • That being said, we should also mention that there still are a few banks that might allow you to open an account based on how you approach them and present yourself as a business
OVERWHELMED WITH ALL THE POSSIBILITIES...? DON’T WORRY!
From company incorporation to setting up the right bank accounts, and getting you licensed in the perfect jurisdictions based on your business model, we will handle everything for you. Our services are not limited to that. From offering white label solutions to setting up a custom CRM, we can do anything you can imagine getting done in the forex industry.
Sturdy CRM customised for Forex brokerages with unified communications, KYC, customer journeys, insightful reporting and more. COMPANY INCORPORATION Sanfrix has initiated several exchanges and brokerages from various jurisdictions and can help you too, making the entire set up hassle-free. TECHNOLOGY We offer advanced trading platforms, payment integration services and all the technology you need at an affordable cost. LIQUIDITY We offer deep liquidity with customised pricing and execution analytics to make sure all your liquidity needs are met. CRM & BACK-OFFICE STRATEGIC PARTNERSHIP Continued strategic partnership, free consultation support and 24/6 customer support from our Chief Success Officer.
Sanfrix can help you with all your forex needs and has helped several forex brokerages double their profits by simply implementing the right tools. Question is… Will yours be one of them? Contact Us +65 9860 7215 sales.sanfrix sales@sanfrix.com t.me/sanfrixltd
