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Applying For a Forex Broker License – 4 Trade-Offs To Keep In Mind

When applying for a forex broker license, it’s important to recognize that no single region can meet every requirement, in many cases a compromise might have to be made.

On a daily basis we discuss forex broker licenses with both existing brokers as well as entrepreneurs looking to launch their own forex brokerages. During these discussions a common theme is the subject of trade offs and compromises. This topic has come up so often in fact, we felt it would be helpful to share these thoughts on our site.

A common request from our clients is a forex broker license that has low costs, excellent banking, unlimited leverage and a quick turn around time. If such a license existed, we’d be the first to promote it!

The reality is that when selecting a forex broker license, compromises have to be made. This concept of trade offs holds true whether it’s an FCA license in the UK or an offshore forex license. We strongly believe these tradeoffs should be well understood before applying for a license so that expectations are properly met.

Consider these 4 trade-offs when applying for your forex broker license:

1. Leverage Varies Between Regions

Due to the recent ESMA changes in Europe, brokers are looking to apply for new forex licenses in offshore or non-European jurisdictions. Although unlimited leverage is always desired, this is often not available in many regions. Consider Labuan, Malaysia, for example, where the leverage is capped at 100:1.

2. Banking Often Poses A Challenge

It is relatively easy to secure a forex broker license in a variety of global jurisdictions, both onshore and offshore. Banking, however, often poses a significant challenge. Due to changes in global regulations, stricter AML policies, and generally a more rigorous attitude toward new accounts, banking has become more challenging in the online foreign exchange industry. Before considering a specific region, it’s important to determine how feasible it will be to open a bank account.

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Even jurisdictions outside of Europe are placing caps on the maximum leverage allowed to retail traders. The ideal license for your brokerage may involve a compromise in this respect or some of the other factors we’ve outlined.

3. Time Frames

Not all licenses carry the same delivery time. As mentioned previously, we are often asked for a license that can be obtained quickly. The challenge here is that it is often not easy to obtain a license in a couple of months. In fact, it could easily take 12 – 18 months to obtain a forex broker license in certain jurisdictions. Should you be looking to receive a license more quickly, you may need to compromise on some of the other points outlined here.

4. Capital Requirements

We are often asked about forex broker licenses that have market making permissions. A trade off here is that the majority of these licenses involve larger capital commitments than their STP counterparts. For example, a Cyprus forex license will require 730,000€ in capital, which is much more than the 125,000€ needed for an STP license. A license that may check off all the boxes for you could involve a trade-off in the form of higher paid up capital.

Obtain a Forex Broker License with Atomiq Consulting

Although we consider this post to be an excellent guideline, applying for a forex broker license will require far more than the points outlined above. Whether you are looking to launch your own forex brokerage or represent an existing broker looking for additional licensing options, our team of experts are more than happy to guide you. Don’t hesitate to contact us today!

Have a look at some of the additional services our clients have found to be helpful in the growth of their business.



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