Are you a new forex broker? Have you planned to start a forex brokerage business from scratch? If yes, then this article is worth reading for you. Here we will provide a complete overview of some of the best forex business licenses available to brokerages in 2020. We will also discuss the costs involved and budget-conscious solutions. So, without any further delay, let’s discuss it.
Forex License is the first and foremost thing you need to obtain if you plan to start a forex brokerage business. Obtaining a forex license is incredibly beneficial for your business’s operational and financial success because licensing activities require that the forex firms abide by the codes of conduct set by the license providers.
Which Forex Broker License to Choose?
Having understood that you need a forex broker license, now the next question that comes into your mind is that which forex license should I choose?
If your objective is to start as a broker, the first thing that you need to consider is where to start your brokerage business. However, the operations’ physical location does not have to be the same as your place of incorporation because the physical location involves an entirely different set of considerations, including rent, tax considerations, employees, etc.
When it comes to incorporation, there are various things to consider to obtain a license. These considerations are related to costing, timescales, annual licensing fees, laws and taxation, and a few more.
Yes, every country has its legal framework and legislative laws, bit the most famous forex brokerage jurisdictions belong to the world-leading economies, including the US, UK, and Australia. So, having a license issued by any of these country’s jurisdictions is incredibly beneficial as it comes with a higher level of trust from traders and makes your brokerage much more attractive.
It also becomes appealing to a more lucrative client base. But one must remember that obtaining a forex trading license in these countries involves a huge amount of capital, which is difficult for most of the new brokers.
The alternative for such new brokers is to go with two well-regarded and mid-range budget options that have gained a significant reputation in moving forward.
Cyprus regulation (CySEC) is the leading jurisdictions to choose for forex brokerages. By taking advantage of the country’s EU membership, brokers can offer their services to all EU member states. When combined with low corporation taxes, a skilled workforce, and a vibrant financial sector, this becomes the most suitable place to launch yourself in the forex world.
Cyprus Investment Firm (CIF) cost varies from € 40,000 to €100,000, and the entire process takes about six months to complete.
Offshore Forex License
If you are a new broker and have less capital, you can opt to go for cheaper options such as a Hong Kong forex license (FSC). Such brokers can incorporate their companies in an offshore location. The advantage of choosing these jurisdictions is that they have lower initial capital requirements added with relaxed regulatory demands.
Some less reputable forex brokerages choose this, making it difficult for them to attract a certain caliber of traders.
However, if you opt to choose this offshore route, there are many places where you can incorporate for a low cost. One such option is the Seychelles forex license (FSA), where the application fee is about $200, and the annual license fee is about $1000.
The licensing process usually takes a lot more time and requires complete know-how. That’s why many forex brokers choose an easier route to enter the forex industry. Opting to go with forex broker turnkey takes care of the entire brokerage set up, including all licensing aspects.
An Easier Option
An all in one solution is an ideal way to kick start your brokerage business. It does not involve high costs and does not require setup and licensing complexities. The process is much more cost-effective and efficient to get started instead of undertaking the entire process on yourself.
All such hurdles can be avoided by choosing the technology provider Smart Broker Solutions. SBS will provide you all the tools that you need to get started:
- Liquidity for seven different asset classes
- MT4 and MT5 white label
- Multiple connectivity methods: Prime XM, AMTS, and FIX API
- Crypto Payment Method
- 24/6 customer support
And much more.
In addition to that, Smart Broker Solutions also takes care of all the legal and licensing processes, including company registration, connection to reliable fiat PSP, and bank account opening.