50 likes | 55 Vues
What is the Best Jurisdiction to Incorporate a New Forex Broker? Choosing a suitable jurisdiction for considering regulation and getting brokerage licence.<br><br>
E N D
Forex Brokerage Licensing & Incorporation: What You Must Know Copyright’s 2019 © Sanfrix Pvt Ltd All Rights Reserved For Further info contact sales@sanfrix.com Call us at: +65 9860 7215
Reading Time: 5 minutes The Forex brokerage industry today is very tightly governed and regulated by countries across the globe. Regulatory requirements are becoming stringent by the day, making it difficult for forex brokerages to enter new regions. Though this might be looked at as an inconvenience to the aspiring forex broker, it is something that puts not just the expert brokers, but also the end trader at ease. 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 and how you want to present yourself is the most important part of any FX brokerage plan. Company Incorporation is the first step to get your forex brokerage going. This procedure establishes that yours is a legal forex trading firm 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. Your brokerage’s credibility is what draws clients to your business, which is also why choosing the right jurisdiction for setting up the forex broking firm is very crucial! The fact that the laws of incorporating a company (forex brokerage) differs from region to region should weigh in on your decision of choosing the jurisdictions you will be operating Copyright’s 2019 © Sanfrix Pvt Ltd All Rights Reserved For Further info contact sales@sanfrix.com Call us at: +65 9860 7215
in. Another important factor to consider when choosing a jurisdiction is the model of your trading. The type of brokerage you are determines 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. Your organization can be headquartered anywhere depending on the kind of talent you want to recruit and the budget you have in mind for having a physical space and compensating your human resources. However, some jurisdiction requires you to have a local office for you to obtain and hold a license. You may end up choosing to have more than one base of operations for the same reasons. To make things simpler for you, we have categorized the jurisdictions here along with the basics you will need to know about each of them before deciding which one/s you want to go with. Forex Jurisdiction Category #1 USA (regulated by NFA) and 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. Forex Jurisdiction Category #2 Great Britain (regulated by the FCA) and 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 jurisdiction. Also, obtaining a license will take an average of 3 to 4 months upon submission of all necessary documentation. Forex Jurisdiction Category #3 Cyprus (regulated by CySec), Malta (overseen by MFSA), New Zealand (watched over by FSP), and Bulgaria (overseen by BFSC) Copyright’s 2019 © Sanfrix Pvt Ltd All Rights Reserved For Further info contact sales@sanfrix.com Call us at: +65 9860 7215
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. 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. Forex Jurisdiction 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. Forex Jurisdiction Category #5 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. 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 Copyright’s 2019 © Sanfrix Pvt Ltd All Rights Reserved For Further info contact sales@sanfrix.com Call us at: +65 9860 7215
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. We understand that you might be overwhelmed with all the possibilities and would like to research more on your own once you have filtered down on a jurisdiction or two. This is where we would like to remind you of the basics. Always be sure to choose a country with a strong legal system, a transparent economic policy, and a relatively stable currency! Also, if the country you choose has been blacklisted by the Financial Action Task Force (FATF), a global organization fighting against money laundering and terrorist financing. Before we let you go, we want to remind you of the importance of having a legal as well as an industry expert in your corner! Though this article can be used as a guide to understanding the various aspects to consider when incorporating your brokerage and obtaining a license, having a brokerage solution expert such as Sanfrix guide you through all the steps involved is the best way to go. From company incorporation to setting up the right bank accounts, and getting you licensed in the perfect jurisdiction based on your business model, we will handle everything for you. Our services are not limited to just 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. Go on, check us outnow! Copyright’s 2019 © Sanfrix Pvt Ltd All Rights Reserved For Further info contact sales@sanfrix.com Call us at: +65 9860 7215