How to open a Forex brokerage?


Forex has become a very popular field in recent years. Not only people became interested in trading, but some of them with progress and advanced technology, are now interested in the profession of a broker. But in order to become a real professional and make good money, you first need to understand many aspects, consider all details of this business, assess the risks and your financial capabilities and resources. 

Who is a broker? 

Forex broker is an intermediary between an investor and foreign exchange market. A Forex broker can be either an individual or a company. As a rule, this is not just an intermediary, but also a financial expert, analyst, a person who you should trust. Due to the fact that a private person, according to the law, cannot enter into direct transactions on the foreign exchange market, all trading operations are performed by a broker. It invests the client’s money in Forex trades. A broker can also be called a trader in financial instruments, who plays on changes in world prices for currencies of different countries, securities, commodities, etc., using funds entrusted to it by clients, while receiving a percentage of the transactions. 

A broker receives his earnings from the spread set by it. Sometimes it can be a flat fee for the total income of trades. Real customer reviews speak about who is better and more convenient to work with, so you can learn from other people’s mistakes, as well as use the successful experience of other brokers. 

How to register a broker? 

To create a brokerage company, you will initially need to decide on the following: 

  • Target market and location, because the place of registration depends on this; 
  • You need a business plan and start-up capital; 
  • Choose liquidity providers, usually large banks; 
  • Ensure uninterrupted and guaranteed operation of payments; 
  • Organize office work. 

1. Determine the target market

First you need to decide on the target region. Determining the location of future clients will affect the jurisdiction for registering a new Forex broker. This is important as the requirements for obtaining such a licence vary from country to country. It should be noted that Forex regulation per country differs. So, for example in order to obtain the necessary financial licence in any country, a high-authority licence is a preferable option because your reputation and legitimacy will be increased. Typically, companies that receive such a license receive more trust from their customers. But to fulfil all the necessary conditions requires considerable investment, a lot of time and sometimes bureaucratic procedures. Therefore, most companies choose the second option for themselves – registration of a company in foreign jurisdictions. This allows you to work not only bypassing the current legislation, but also significantly save on taxes, and also saves time for registration (up to 2 weeks). 

But of the minuses, it can be noted that it will not be possible to connect payment systems, it will be necessary to work only in manual mode, withdrawing money to electronic wallets. There are unregulated jurisdictions, such as the Marshall Islands, Saint Vincent and the Grenadines, these are countries where there is no control over the activities of Forex brokers, no regulators, no licences, but there is privacy protection. Financial regulators are companies that oversee compliance by financial institutions with certain rules and requirements. 

To carry out activities on the territory of European states, you will need to obtain a license in a regulated jurisdiction, select a financial regulator. However, such a licence will cost a lot, it will be necessary to provide regular reports, pay considerable taxes. FCA and CySEC are one of the best options. 

2. Starting capital

Financial investments will initially depend on the chosen jurisdiction, since registration of an enterprise is radically different in price and obtaining a licence. You also need finance to buy your own or rent a ready-made trading platform. Further, it is necessary to open a brokerage account, which will make it possible to accept deposits from clients, this is how it works. Then finances will be needed for the promotion and advertising of the broker’s services – this is a personal website and advertising on third-party websites. And finally, it is necessary to calculate the lease of office space and the maintenance of the office and employees. 

3. Providers of liquidity

One of the important keys to a broker’s success is choosing a liquidity provider, as the broker will need to provide leverage to their clients. Liquidity providers are large banks that have the necessary capital to enter the foreign exchange market directly, where an ordinary trader and most brokers cannot get. 

4. Payment system 

Depending on whom, what type of registration was chosen, in what jurisdiction, will depend on what payments will be able to use. If the Forex broker plans to have a European jurisdiction, then it will be possible to accept payments using Visa and MasterCard.

In the unregulated zone, payments will only be possible in manual mode, i.e. payments that are not carried out automatically. It is generally a good idea to implement as many payment systems as possible, so that customers remain content.

5. Office work 

The presence of an office is one of the advantages that inspire the client’s trust. At this stage, you need to decide on the desired location and the number of employees. You will need an IT department, customer support, finance, marketing and sales. 

After solving all organizational processes and tests, you can start attracting customers! But it really takes a long time to fully “activate” your brokerage company to the maximum and earn decent revenue.