Did you know that foreign exchange markets trade an average of $5.09 trillion every day? The Forex market is the largest and most liquid market in the world, and each day, more and more traders try their luck by buying and selling world currencies.
But what if you want to take things one step further, beyond just trading yourself? Starting a new forex business is not an easy task and it brings with it a series of decisions, choices, and of course, risks. Every decision that you make will impact not just the amount of money you need to get going and the types of clients you will attract, but also ultimately, whether you are successful or not.
One of the most important choices you need to make is where you will incorporate your brokerage. Of course, the base of your operations and the place where you are incorporated and licensed, do not need to be the same, but for the purpose of this article, we will discuss the former.
Here are is the Fast Offshore analysis of three of the best jurisdictions to obtain a forex license in.
Over the last few years, Cyprus has seen a huge increase in the number of forex businesses both applying for licenses, and setting up shop on the island. The regulatory body, CySec is known for being tough yet fair, and gaining accreditation from them is a significant vote of confidence.
The cost of a Cyprus Investment Firm License ranges between EUR 40,000 and EUR 100,000 and the application and approval process will take around six months from start to finish.
It is popular for a number of reasons- partly because of its EU Member State status, meaning any business that operates there, is able to do so throughout all other countries in the European Economic Zone. This combined with low corporate taxes, a booming financial sector, and pretty much year-round sunshine means it is not hard to see why it is so popular. In addition to this, the Cypriot workforce are highly educated, skilled, and at least bilingual. Due to the geographic position of the island, it is also home to a lot of expats from all over the world, meaning if you want to set up foreign desks, you can easily find people to staff them.
Another prime jurisdiction in the Eurozone is the equally sun-drenched island of Malta. All forex firms and related service providers are regulated by the MFSA, who again are known for being firm with their requirements. Whilst forex is not as prolific in Malta as it is in Cyprus and licenses are a bit harder to come by, it is still a flourishing environment with a reliable regulatory framework.
The MFSA offer two types of license for forex brokers- Category 2 for risk-free managers and Category 3 for businesses who trade on their own account. The initial capital requirement is the same for both at EUR 730,000 but the license application fees are considerably lower than Cyprus at between EUR 1300 and EUR 3000. Corporate tax is also a lot lower than Cyprus and depending on the satisfaction of certain criteria, you could end up paying close to zero %.
If having an EU based license is not essential to your requirements, one of the most popular jurisdictions for forex business is the Seychelles. This tranquil paradise is not just home to beautiful beaches, palm trees and 7 * luxury resorts- it is also home to one of the most attractive global forex markets. With an income tax rate of just 1.5% for global companies, the Seychelles is a superb low-cost option for those operating forex companies.
A forex startup can obtain a Special License Company in between 4 and 12 weeks and the application fees are very low. Licensing fees are also some of the lowest in the world both initially at setup as well as on an ongoing basis. Of course there are a number of other financial considerations to factor into the equation, but on the whole, the Seychelles offers the best value for money option, particularly for startups.
How we can help
Fast Offshore have been working in the forex since 1998, making us something of experts in the industry. We have helped countless clients apply for, and then obtain licenses in all of the above jurisdictions, and more, depending on their needs. We are also able to assist with other corporate requirements including company formation, bank account opening, payment processing, and a variety of other matters.
If you are considering a move into forex, don’t waste any time and contact us today.