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How to become a broker – Guide #1

Establishing a forex brokerage business does not necessarily involve a complicated process of licensing and fighting against forex regulations. First, you should thoroughly understand the legal jurisdictions. Take your time to learn about the internal regulations and authorities in the area of your choice.  

Find a trusted partner who will help you analyze each of available options. Starting a forex business doesn’t have to be complicated since you can always rely on industry experts. Consider not only where is it easiest to register a forex broker, but also how to develop your business and attract traders.

How much does it cost to start a forex brokerage

Startup brokers have three choices when getting started – they can obtain an FX license and get fully regulated, they can obtain a license from a less recognized regulator (semi-regulated) or they can start their business offshore and stay unregulated. The key is that you evaluate your strategic and financial capabilities. The license is more difficult to obtain in: 

– USA and Japan (J1) – very strict conditions and high costs. In order to apply for a licence, you need to have a capital of $20 million and meet several administrative requirements.  There are also annual fees and the need to run an office on site. 

– UK, Australia, Malta, Cyprus, New Zealand (J2/J3) – you have to wait from six months to one year for the forex license to be granted. Although this area involves lower costs (licensing from $35,000) you have to provide much higher capital to further run the business and a local office. 

These legal jurisdictions offer great opportunities for financial sharks. The advantage is the advertising opportunities in developed countries and the ease of setting up corporate bank accounts. 

Semi-regulated and unregulated Forex Brokers

With a lower capital you should consider to set up a brokerage business on semi-regulated or unregulated forex jurisdictions. Take a look at Vanuatu, British Virgin Islands, Cayman Islands (J5). Registration itself costs about $30,000 but is subject to lesser regulations. Unfortunately, apart from Belize, an on-site office is required everywhere. The cons are that licensing takes only up to 3 months. The possibility to remotely open a bank account within the Baltic countries is also a big plus!

Around 94.2% of Forex Brokers start without a license. You can become an unregulated fx broker in Saint Vincent, Grenadines, Nevis or Seychelles (J5). Registering a forex company will take a few weeks at most. Unluckily, it will be very difficult to set up a corporate bank account, while most banks don’t want to expose themselves to potential cooperation with fraudsters.

Where to look for additional information on how to start a forex business

The Forex market is a powerful industry where over $2 trillion is traded every day. When planning your own brokerage business in this industry, the most important thing is a good plan and a trusted partner. Technology provider can help you not only choose the right solutions but can also save you from costly mistakes. 

Take a look at our Guide on how to Become a Broker. Our e-book is a tool for deepening your understanding on the process of registering a company in selected jurisdictions. Inside you will find a step-by-step instruction on documents, opening a corporate bank account and licensing authorities. There is also a broad analysis of each legal forex jurisdiction. It includes information on what to watch out for and other tips to help you make the right decision.