Every year it becomes easier to open a Forex broker thanks to the development of technologies in the global financial industry. However, regulatory requirements are becoming more stringent, and along with them, the costs of licenses and legal support are increasing. A Forex broker is an intermediary acting between the trader and the market. By using its services, retail clients can gain access to financial markets that would otherwise not be possible. Most Forex brokers provide traders with the opportunity to trade not only currency pairs, but also other asset classes, including indices, metals and energies. Below we will look at the main steps that interested investors need to take to implement efficient Forex broker setup and run their own Forex-business.
Our team specializes in establishing and licensing commercial structures in various industries. We work all over the world. We are ready to offer you comprehensive advisory and practical support when obtaining a Forex-license in any jurisdiction, as well as ready-made licensed solutions for sale.
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Setting Up a Forex Broker: Legal and Regulatory Compliance
The number of trading operations with Forex instruments is also growing, which means that more and more players are appearing in the Forex broker market. First of all, you need to decide on the geographic presence of the brokerage company. Obtaining a license to operate depends on the choice of one jurisdiction or another. Since the regulatory requirements in each country are different, it is worthwhile to study in detail the most suitable jurisdictions. Among them are Mauritius, Great Britain, Vanuatu, Cyprus and a number of other countries.
Companies organizing activities in the Forex-markets are required to demonstrate fully-covering fulfillment of compliance standards and to obtain a license from the local regulatory authority of the jurisdiction chosen by the investor to conduct activities. Not everyone can comply with all the conditions of the law, so most companies continue to work according to an alternative scheme, registering a company in any foreign Forex license country. Thanks to this, they can not only work bypassing current legislation, but also optimize the taxation of the company.
After registering a company, you can collect the necessary documents and go to the bank to open an account. Having a registered account will make it possible to issue invoices to traders and accept deposits from them. Having your own company and bank account is also an additional step towards customer trust. If at the first stage you don’t want to register a company or it’s not possible, you can open an electronic wallet and simply come up with a name for the project. In this case, you will not need to collect a lot of documents, and the registration itself will be free.
There are a number of international companies where you can register a company and obtain Forex license in accordance with the financial regulations of the host state. Successfully fulfilled all Forex license requirements, with this license you can:
- provide brokerage and other financial services;
- optimizing profits through low or zero taxes;
- hold and control client assets;
- get more favorable conditions with banks;
- work all over the world.
As global Forex law says, recognized financial centers include the US, UK, Malaysia and Belize. In these countries there are no problems with government regulation and control of financial activities, so trading platforms with such registration are trusted.
Technology Infrastructure Development and Partnering with Liquidity Providers
Choosing a Forex trading platform is a critical aspect when starting a forex broker. Make sure that your trading platform meets modern market requirements and provides all the necessary functions to meet the needs of traders: a simple and user-friendly UI, as well as mobile and web versions. Before choosing a trading platform, decide in which market you would like to operate. Some platforms, such as MetaTrader 4, only allow you to trade Forex, and some, like SpotOption, only allow you to trade binary options. In turn, the UTIP platform allows you to trade on two markets at once; it’s one of the few platforms that comes for rent.
Market makers create dealing centers that provide artificial prices for certain currency pairs. When a user places a bet on such sites, he/she is playing against the broker. If the trader wins, he/she receives a reward as the difference in the value of the asset; if he/she loses, the broker takes this difference for himself/herself.
- Market makers perform the following three tasks.
- Make available bids and ask rates for certain currency pairs.
- They undertake to conduct transactions with all traders at the price indicated in the dealing center’s charts.
- Take on financial risks for each position.
In terms of Forex compliance, UTIP is a ready-made solution, the delivery package of which already includes all of the above services. If you are chasing popular products and have large investments, your choice is the leading popular Forex trading platform. If you want a high-quality product that does not require special investments, choose the solution from UTIP. It is important to add that the Forex business is built, for the most part, on beginners. For them, the most important thing is to learn how to trade as quickly as possible. They want a simple and easy terminal interface where everything is immediately clear. Open a demo account in different terminals and you will understand which terminal interface is more convenient and user-friendly.
An important aspect is also liquidity and entering into effective Forex liquidity provider partnership. Liquidity is a key factor for forex brokers. Without deep liquidity management, a broker will not be able to provide competitive spreads, which will negatively impact client acquisition. In order to avoid these problems, it is necessary to find liquidity providers. You can tap into pools of liquidity providers and provide execution that suits your clients’ requirements.
Operations and Compliance
After you have chosen the right providers and also decided on the jurisdiction, you need to develop a website for your Forex broker and integrate the solutions used. Once the setup is completed, it is necessary to conduct beta testing and announce the release together with marketing support. After a successful release, you need to decide on a strategy for further development and adapt it to market fluctuations. In addition, do not forget about competition from existing players.
- Customer service. In addition to attracting customers, it is critical to develop high-quality customer service. The reputation of your broker will directly depend on the satisfaction of your clients.
- Expertise. The successful operation of a Forex broker requires the well-coordinated work of a whole team of specialists in various areas, including risk management, technical support, compliance, dealing and a number of other areas. That is why, after launch, brokerage companies need to expand their staff of specialists to provide the highest quality services on the market.
- Financial management. It is necessary to control the company’s finances in order to use them with maximum efficiency.
The site itself must be beautifully designed, have a uniform style and easy navigation. Place a lot of useful services and widgets on your site, then your site will become more attractive to traders and traffic on it will increase significantly.
The possibilities of a good trading platform are not limited to the purchase and sale of foreign exchange assets. The best players on the market also integrate support into their website:
- contracts for difference and options;
- trading via CFDs;
- margin trading.
In addition, it is important to take care of high-quality content on the site, which will help attract customers and increase the loyalty of the community as a whole. For example, you can launch a news feed or create educational lectures, courses, and webinars. Both users and search engines like this.
If the site is under the jurisdiction of one of these departments, traders and financial partners will trust it more. Consequently, there will be more users and better conditions for cooperation. On the contrary, being under the jurisdiction of departments with a dubious reputation scares people away. Thus, stock brokerage activity requires serious training, quality education, proven knowledge and experience. Depending on the size of your brokerage and your specific needs, other specialists may be required. Technical and IT specialists are responsible for maintaining and updating systems and
brokerage company infrastructure. This includes server management and platform administration, troubleshooting technical problems and introducing new technologies.
Opening a brokerage company is a doable task, but you need to have a good understanding of how much money you are willing to spend on it. Many companies are considering going bankless through cryptocurrency, and this is a good and inexpensive start for companies to create an influx of capital and consider opening a licensed brokerage in the future. Our specialists are ready to fully accompany you along this path.
Our team offers comprehensive advisory and practical assistance in choosing Forex license jurisdiction, obtaining a Forex license and establishing this type of business in any jurisdiction. We are aimed at achieving the most effective and fastest results for our clients.
