Did you know that the foreign exchange market generates more than $5 trillion every single day, making it one of the biggest markets in the world. The opportunities in this sector are vast and as such, it attracts a high number of entrepreneurs and traders every day. One of the most obvious and profitable ways to move into the sector is by setting up your own forex brokerage.
Choose a jurisdiction
There are a number of jurisdictions that are geared up with the necessary legal and regulatory framework to support the presence of Forex Brokerages. Some of these include Cyprus, Seychelles, UK, BVI and Malta. Some require that you get a license, others do not, and all have different sets of requirements that you need to meet before you start operating there. You also need to take into account matters such as taxation, reporting obligations, audits, and operating costs, before you make your final decision.
Set up a company
Once you have decided on a jurisdiction, you can go about setting up a company to be the legal entity of your operations. Depending on which country you will operate in, there could be different kinds of entities available and which one you opt for will depend on your needs. You need to consider your registered office, directors, shareholders, and various other things before you go any further. Remember that setting up a company, finding a building, opening bank accounts and other corporate matters can take time, so be prepared to wait a bit before you are up and running.
Apply for a license
In some jurisdictions, you will be required to have a Forex Brokerage license before you start your operations. This means you have to make an application with the applicable regulatory body and ensure that it is approved before you open the business. You may need to pay a fee, provide identity documents, bank references, and proof of address, amongst other things before you proceed. In jurisdictions where a license is not required, it is still advisable to take professional advice to ensure you are not making any potentially costly or damaging mistakes.
Choose a business model
There are three main business models in the world of Forex Brokering; the Market Maker is where the company takes the risk during trading, the Agency Model is where the company passes the trading activity to a third party and the Hybrid Model which is a combination of the two other models. You will need to carefully consider which model you will opt for before you commence business.
One of the key things you need to ensure is that you protect your client’s information and the trading process. You need to keep their data safe, make sure it will not get stolen or shared with anyone else, and that you have full ownership of their information. Safety is an important part of running a Forex Brokerage and you need to be sure you have strong safety processes in place, and that you stick to them.
For startup Forex Brokers, the Prime of Prime brokerage account is the best option. This helps small to medium size businesses ensure they have the liquidity they need to operate. A good provider will also offer clients a high level of transparency, as well as a high level of liquidity.
Setting up your own Forex Brokerage might not be very easy but at Fast Offshore, we can guide you through the whole process and assist you in making the key decisions. We have decades of experience in both Forex and corporate services so can take care of the setup process for you from start to finish, all you need to do is tell us your vision. To find out more, contact us today.