The 4 Most Important Factors to Consider When Obtaining a Forex Broker License
Because it is a commitment of both time and money, obtaining a forex broker license requires thought and careful planning. For this reason, it’s important to partner with a consultation firm that is familiar with the latest regulatory policy and changes. This is especially true in the online foreign exchange industry where developments happen rather quickly.
Having had countless discussions with both new and existing brokers on the subject of forex broker licenses, we are able to boil down the decision process to four main areas of consideration:
1. Capital Requirements
Nearly all reliable license jurisdictions will require some form of capital commitment. Simply put, global regulators will require that a set amount of funds are held in a local bank account for the duration that the broker is licensed. Specific capital varies from region to region. In Labuan, Malaysia, for example, capital is fixed at 500,000 RM (Malaysia Ringgit). In BVI, though It’s a different scenario altogether, where the capital is determined after the license has been granted.
2. Overall Costs to Maintain the License
Nowadays nearly all license jurisdictions require a physical office with local employees. The number of required local directors and staff, however, varies from jurisdiction to jurisdiction. For example, those looking to apply for a forex license in Cyprus, should expect to have at least 4 local employees in their office, which is one of the more extreme cases. Generally speaking, most regulators require a minimum of 1 to 2 local employees. Before applying, it’s important to consider these expenses which are not limited just to salaries but also office rent, compliance costs, and regulatory fees.
3. Ease in Obtaining a Bank Account
Banking is by far the biggest challenge that forex brokers will face when deciding upon the proper jurisdiction to obtain a forex broker license. It’s important for brokers to understand that local banks have their own policies, which may not be in line with the regulator that approved the license. Before deciding upon a region for your forex broker license, it’s important to understand what banking options will be available.
4. Time Frame to Obtain the License
Ideally, a license should be granted after a couple of months. In reality it can take far longer. In fact, for certain regions, the expected time frame could exceed an entire year! If the region your broker is most interested in has a longer approval period, it may make sense to apply for a second license to cover the time required to wait for approval.
Atomiq Consulting – Forex Broker License Expertise
Our brief outline is just a small sample of our industry expertise and knowledge surrounding forex broker licenses. To learn more about our recommended regions, discuss your preferred license areas in more detail or ask any other questions related to forex broker licenses, don’t hesitate to contact our team. We look forward to hearing from you!
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