How to Get a Forex Broker License?

Whether you are looking to get an offshore license, or the suggestions in today’s post will no doubt be useful in guiding you along the way.

Atomiq Consulting has years of experience helping both new and established FX brokers obtain forex broker regulation in a variety of jurisdictions around the globe. Given our positive track record, industry experience and in-depth knowledge of forex licensing, we are the ideal consulting firm to outline exactly how to get a forex broker license.

The suggestions which follow provides the best guideline for those looking to get a forex broker license. If you are relatively new to FX trading, no need to worry. We’ll aim to keep our suggestions as simple as possible.

#1. How Much Investment Capital is Needed to Get a Forex Broker License?

Similar to any new business venture, one of the initial considerations in deciding whether or not to get a forex broker license relates to the amount of investment capital required to start the business. Before diving into specifics, there are two main forms of capital we’ll discuss: capital in terms of the total amount needed to get a forex broker license as well as the amount of regulatory capital required for license approval.

Let’s start with regulatory capital. The amount of capital that forex broker regulators will require from a newly licensed brokerage will greatly depend on the desired jurisdiction. To provide some perspective, in Vanuatu the capital – more specifically a government bond – is set at $50,000. This can be compared to a Cyprus (CySEC) forex broker license where the capital is fixed at €150,000. As these two examples illustrate, capital varies from region to region, meaning the total costs to get a forex license will really depend on the desired jurisdiction.

As far as the total investment capital required to get a forex broker license, this once again depends on the jurisdiction. Nearly all jurisdictions which regulate forex & CFD trading will require a local office and directors. At a minimum, these variables must be factored into the cost equation. There are also annual government fees, accounting, and compliance costs that vary greatly from jurisdiction to jurisdiction. For a complete rundown on pricing, it is best to contact our consultants who can provide further details.

#2. What Type of Forex Broker License are You Looking to Obtain?

Forex broker licenses come in all shapes and sizes. With that said, one of the main factors that distinguishes one jurisdiction from another are risk management permissions. Most offshore jurisdictions allow for “market making” ie bearing the full risk of all client orders, while certain regions like Labuan, Malaysia only permit STP also known as “A-book.” Finally, certain jurisdictions such as Cyprus have different license classes based on the risk management profile of the brokerage.

Not only do permissions vastly differ between different regions but other criteria is also very much region dependent. For example, in Australia, a recent product intervention introduced a reduction in leverage to 30:1 for all forex pairs; in Labuan, Malaysia, though, leverage remains capped at 100:1 for all trading products.

The purpose of these examples is to highlight the fact that obtaining a forex broker license requires trade-offs as it is rare to find a license that meets nearly every requirement you are looking for. With this point in mind, it is important to fully understand the limitations of each region before applying for any one forex broker license.

#3. Forex Broker Regulators Pay Special Attention to the Brokerage Structure

Bear in mind that even if your brokerage has the necessary funds to apply for a license, that doesn’t necessarily guarantee that a regulator will approve the application. Many regulators, especially those in Europe, will pay special care to the structure of the company. Generally speaking, if the company looking to obtain the license is part of another holding entity where ownership isn’t transparent, a regulator may be hesitant to grant the license. Remember, the purpose in obtaining a license to create transparency, not avoid it.

Furthermore, your brokerage must have the proper corporate structure to be approved in many jurisdictions. If the main directors lack the necessary experience, external directors may be required in order to obtain approval. You may wonder why financial solvency is not enough to receive approval? Because regulators don’t wish to allow those with funds but limited experience to “buy” their way into a license, they always require that the directors in the firm have the necessary experience to properly run the business. Approval may ultimately require hiring additional team members to be approved, another factor to consider when applying for an FX broker license.

#4. An Alternative Approach – Forex Brokers for Sale

The fastest way to get a forex broker license is to acquire an existing forex brokerage. In many regulatory jurisdictions, the acquisition process is much faster than applying for a license while in other regions the time saved is neglible. As a general rule, though the fastest way to get a forex broker license is to acquire an existing business. If you’d like to explore our current offering of FX brokers for sale, please contact us.

Atomiq Consulting – Your Partner for Forex Broker License Consultation

Atomiq Consulting is an industry leader in providing forex broker licensing consultation. Since our company founding in 2014, we have helped countless brokers across the globe successfully obtain licensing in a variety of global jurisdictions.

If you would like to learn more about obtaining a forex broker license, feel free to contact us today!

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