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Any modern business is unthinkable without online payments. There are areas where these payments make up 100% of the turnover of funds. But such payment is impossible without the company having a merchant account or a merchant account, which will receive funds from various payment systems.

Connecting a merchant account consists of three stages – selection of the best option, concluding a service contract with a legal entity that provided this merchant and technical connection to a payment gateway.

If we are talking about a forex company, that is, in terms of banking qualifications, a highly risky business, then the first stage – the selection of the optimal merchant account causes the greatest difficulties.

The Forex market is hundreds of millions of transactions every day, which are performed by millions of people – traders. Technically, these operations are provided by special forex platforms or forex brokers (forex companies). The forex market is growing rapidly. The number of traders and forex brokers is growing rapidly.

For the successful operation of any forex company, in addition to the forex platform (specialized software), it is necessary to be able to allow its traders to freely replenish their forex accounts and withdraw money from them to their bank accounts. All this is possible only if the forex broker has a merchant account.

What difficulties do a forex company face when opening a merchant account?

For a high risk bank, a business like forex has several negative aspects:

1. High risk business is a high risk of payment return. That is, a client of a forex company, having received a loss instead of the promised high profit, can initiate a chargeback – a refund. And with a high degree of probability, the payment system through which the payment was made may require the payment to be returned to the client. For the bank, these are unnecessary expenses for such transactions.
2. There is a lot of fraud in the Forex market. The Internet is full of stories when scammers, posing as a forex broker, collected money from gullible traders and disappeared with them. If the bank served these fraudsters, then this is a stain on its reputation, proceedings with international payment systems and law enforcement agencies.

The chances of a forex company to open a merchant account in a bank are further reduced if it is young and does not, accordingly, have a positive financial history. And if there is also no license to conduct operations in the Forex market, then the chances of opening a merchant account in a bank become completely illusory.

And even if the bank agrees to open a merchant account for a forex company, it offers unfavorable conditions, setting high commissions:

• for payments, for example from 7 to 15% of the payment – of the transfer amount;
• for withdrawing funds to a corporate account;
• for processing the return payment – here the commission can be simply draconian.

At the same time, consideration of an application for obtaining a merchant account can take a month or more!

Forex merchant account

Providing merchant accounts for companies operating in the Forex market is one of the priority areas of our activity. We have established partnerships with a large number of European acquiring banks, which allows us to offer our clients very loyal terms of cooperation.

What a Forex company will get by applying for a merchant account at tobebroker.com:

1. Fast consideration of the application. Instead of a month – from three to seven days.
2. High chances of approval – we make a positive decision in 93% of cases.
3. Fair rates. Our commission for transactions, withdrawals, etc. is noticeably lower than in a bank – from 1.90%.
4. Easy integration. Our experts will make this process quick and easy.
5. Reliable and uninterrupted operation of the payment gateway.
6. Cooperation with 50 payment systems and more than 30 currencies. In addition, we work with the most popular cryptocurrencies. In fact, this means that a merchant account with us will suit 99.99% of sellers.
7. High reliability. Our algorithms (anti-fraud filters) allow you to block fraudulent payments without interfering with the flow of genuine payments.
8. Acceptance of payments through international payment systems with activated option 3D secure or without it.
9. Effective fight against chargebacks.
10. Consulting support around the clock.

Personal merchant account for a forex broker

Tobebroker provides forex companies that are taken for service, provides a personal merchant account. This means that the account holder is the sole owner of the account and has full control over payments. Often, other companies that provide merchant account services to highly risky businesses provide an aggregated merchant account that contains several (sometimes a lot) merchant accounts to increase their profits. But this dramatically increases the level of risk, since a situation is possible when, due to the blocking of one merchant account, the entire merchant account may be closed and other owners of merchant accounts who were on this account will suffer.

What determines the cost of servicing a merchant account

The cost of maintaining a merchant account depends on the following factors:

1. Monthly turnover. The higher it is, the lower the cost of servicing one transaction. We are constantly reviewing the cost of service, and if you, starting with a small turnover, gradually increase it, then the cost of servicing one transaction will decrease for you.
2. Past financial history. A positive processing history can strongly influence the tariff towards its reduction.
3. License. Having a license to conduct an operation in the Forex market is an important factor affecting the level of risk. If you do not have such a license, please contact us for advice.

How to get a merchant account?

Obtaining a merchant account in our company consists of the following steps:

1. Contact us by filling out a special application on the website. Our specialist will contact you and tell you in detail what documents are required from you to consider the application.
2. After consideration of the application (up to 3 days), you must sign a service agreement.
3. Integration. You will be provided with detailed API technical instructions. You can also contact our specialists at any time.
4. Start accepting payments. Completing the integration, you need to conduct a test operation, after which you can accept real payments.

One of the key points influencing the decision of a trader to choose one or another broker is his license. For many market participants, this is even more important than the size of the spread offered by the broker. What’s the point of the promised spread of 2 pips if the broker turned out to be a fraud? And his license guarantees the trader that he will not cheat.

A license is a permit to operate in the Forex market within the state that issued this license. A license is issued by a special state body that monitors the work of market participants. In addition, such a regulator resolves disputes between brokers and traders within the framework of its powers and law.

The license can be obtained in different countries. Depending on the jurisdiction, there are different requirements for persons who want to obtain a license to operate in the Forex market.

In general, we can say that a broker’s license makes it an order of magnitude more attractive to traders. His profits increase significantly/

Where can I get a broker license and what requirements must be met

All countries in which you can obtain a broker license are divided into several categories: A, B, C and D.

Let’s briefly characterize these categories.

Category A

It includes two countries, the United States and Switzerland.

USA

In the United States, there are two government bodies authorized to issue such licenses – the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). The license itself is called Retail Foreign Exchange Dealer (RFED).

Requirements:

• the capital of the company is not less than USD 20 million, but better than USD 30 million;
• legal source of receiving money (to be checked);
• passing a special exam by the key figures of the company;
• the company’s office must be located in the United States.

The term for obtaining a license is from one to two years. All activities must be absolutely transparent and all financial documents must be freely available. Regulatory authorities have the right to unannounced inspections. For the slightest violations – huge fines. But the US license is considered the most prestigious and highly regarded among traders. The broker has access to any liquidity providers and providers.

Switzerland

The government regulator is the Financial Market Supervision Authority (FINMA). Brokers with a Swiss license in this country have the status of banks, therefore, they are subject to the same strict reporting requirements, in particular, quarterly and annual audits. The broker must have a net worth of at least CHF 10 million.

The Swiss license is as valuable as the American one.

Category B

It also includes two countries – Great Britain and Australia. A license from these countries is less valued than from category A, but it is also very reputable.

United Kingdom

The government regulator is the Financial Conduct Authority (FCA). In the country, the requirements for brokers are the same as for bookmakers. Depending on the model that the bookmaker uses, he must have a capital of 100 thousand to 1 million pounds. The broker must reside in the UK. The term for obtaining a license is up to a year.

Australia

The government regulator is the Securities and Investments Commission (ASIC). The broker must have a capital of at least 100 thousand USD. The term for obtaining a license is up to a year. Brokers with an Australian license are prohibited from working with US residents.

Category C

This category includes Cyprus, New Zealand and Malta. General features:

• term of receipt – up to 6 months;
• work mainly with European brokers;
• significantly fewer reporting requirements;
• availability of a local office.

Cyprus

The state regulatory body is the Securities and Exchange Commission (CySEC). Depending on the services that the broker will provide, his capital must be at least 200 thousand to 1 million euros. Special requirements include hiring at least 3 local directors with financial experience.
In this category, a Cypriot license is the most desirable, as it allows you to work in all EU member states.

New Zealand

Government Regulator – Registry of Financial Service Providers (FSP). The broker must have a capital of USD 770 thousand. The great advantage of the New Zealand license is the ability to establish not only a Forex brokerage company, but also an asset management firm, a currency exchange office, a new payment system, and an investment company.

Malta

The government regulator is the Malta Financial Services Authority (MFSA). Depending on the services that the broker will provide, his capital must be at least 125 thousand to 730 thousand euros.

Category D countries

This category includes: Latvia, Estonia, Belize, Vanuatu and others.
General features:

• the requirements for obtaining a license are much simpler than in other categories;
• the term for obtaining a license is 3-6 months.

Latvia

The state regulatory body is the Financial and Capital Markets Commission (FCMC). Depending on the services that the broker will provide, his capital must be at least 125 thousand to 730 thousand euros. A full-fledged office in the country and at least two directors who are Estonian citizens are required. The term for obtaining a license is 3 months.

Estonia

The state regulatory body is the Estonian Financial Operations Commission (EFSA). Depending on the services that the broker will provide, his capital must be at least 50 thousand to 730 thousand euros. To engage in brokerage activities, you must first create a company in the legal form of an LLC in the country. The term for obtaining a license is 3-6 months.

Belize

The government regulator is the International Financial Services Commission (IFSC). To obtain a license, depending on the type of services, a broker must have a capital of 50,000 – 500,000 USD. A local office and local staff are required.

Vanuatu

The minimum capital is 50 thousand USD. The presence of an office in the country is not required. The term for obtaining a license is 3 months. Today, in the jurisdiction of Vanuatu, it is easiest to obtain a license to engage in brokerage in the Forex market.

Also, a license for Forex activities from countries of category D can be obtained in Ireland, Czech Republic, Bulgaria, Mauritius, Hong Kong, Gibraltar, Singapore, Panama, Saint Vincent and the Grenadines, Seychelles, etc.

How to choose a jurisdiction to obtain a forex broker license

In order to choose the right jurisdiction, you need to know the answers to the following questions:

• in which region the activity is planned;
• what funds are available;
• what is the acceptable time frame for obtaining a license;
• in which bank you plan to open an account.

To work in Europe, it would be best to obtain a license in one of the European countries. For example, in Cyprus, Malta or maybe in the Czech Republic or Bulgaria. Having received a license in one of them, after passing the certification procedure (notification of other countries where it is planned to conduct activities about the desire to offer their services in them), you can work in other EU countries.

In any case, both in the case of the choice and the direct process of obtaining a license, it is almost impossible to do without professionals in this area. Our company Tobebroker will help you make the best choice and help you draw up documents correctly in accordance with the legal requirements of a particular country, apply for a license and control the entire process of obtaining.

Stages of our work

1. Analysis of the client’s requirements by region of work, terms of obtaining a license, the amount of funds available, etc.
2. Selection of a suitable jurisdiction and its coordination with the client.
3. We prepare the necessary package of documents for opening a company in the required jurisdiction (if necessary) and for obtaining a license.
4. We open bank accounts for carrying out financial activities.
5. Submit an application for company registration.
6. We apply for a license and control the process of obtaining it.
7. We advise the client at all stages of obtaining a license.
8. We carry out certification in accordance with the EU Markets in Financial Instruments Directive (MiFID).

What gives you contacting us to obtain a Forex broker license

• choose the jurisdiction for obtaining the license that suits you best.
• save time;
• insure yourself against the risks of refusal to obtain a license due to incorrect paperwork, incomplete data, etc.

We guarantee complete confidentiality, zero probability of leaving the legal field, professional advice.

Any business involves the creation and increase of assets, which can be expressed in money, other securities, real estate, equipment, etc. At the same time, a very important criterion for the profitability of a business is the amount of not only the growth of its assets, but also the indicator of their liquidity. Let’s consider this criterion in more detail and talk directly about liquidity in the Forex market.

The concept of liquidity and its laws

Liquidity is the ability to sell your assets at a price close to the market price in a short time. Let’s clarify this concept for the Forex market. It operates with various currency pairs – EUR / USD, GBP / USD, USD / JPY, etc. Each pair has its own liquidity. It means the ability of a currency pair to sell / buy without significant fluctuations in its rate.

Now let’s figure out what affects liquidity in the Forex market, what laws it obeys.

Liquidity and business activity

Any asset can show its liquidity only on the purchase and sale market. If we consider the hypothetical case that this market is frozen, then the liquidity of any goods is zero. Let’s start mentally increasing the capacity of the purchase and sale market. For example, suppose we are talking about real estate, and there is one transaction per month in this market. What does this mean? A huge excess of supply over demand. As a result, real estate liquidity is falling. Those who urgently need money will give up their home for a third of its market value. As market activity rises, demand increases and begins to compare with supply. Liquidity is growing. Consequently, liquidity increases with the growth of business activity. For the Forex market, business activity is expressed by the volume of the number of purchase and sale transactions for each currency pair.

Liquidity and volatility

Volatility is the change in asset prices over a period of time. If we talk about Forex, that is, about the currency market, the volatility of any currency shows changes in its value in relation to another currency. For example, today one dollar was worth 1.21 Euro, and tomorrow 1.22 Euro.

It is clear that the higher the volatility of an asset, the greater the risk of getting a loss when selling it. The converse is also true. The higher the volatility, the more income you can get from selling it. A striking example is the bitcoin rate in January of this year, when it demonstrated an absolutely exciting slalom!

On January 1, 1 BTC cost USD 29,271, on January 15, 2021 – USD 39,182, and on January 31 – USD 33,783. That is, bitcoin liquidity fluctuated very much in January.

Using this example, we can conclude that liquidity and volatility are tight correlations, that is, the higher, the higher, or the higher, the lower. High liquidity can occur with high volatility. And maybe at low. But always, the less liquidity, the more volatility. High liquidity makes the market highly inertial and difficult to move. High liquidity is a buffer that softens one-time spikes leading to price changes. Therefore, it is very dangerous for novice traders to invest their funds in securities with low liquidity.

Liquidity for the Forex market

Now let’s talk directly about liquidity for the Forex market. It is clearly very liquid. There are 4 trillion transactions in one day. dollars! That is, in five days, the US GDP is scrolled in Forex! And we have established above that the higher the activity, the higher the liquidity.

The most liquid is the EUR / USD currency pair. The top currency pairs in terms of liquidity also include GBP / USD, USD / JPY, USD / CAD, AUD / USD.

Liquidity providers

What or who are they? First, let’s recall the essence of the Forex market. Consider the EUR / USD currency pair. If you bought 1 euro, it means that someone sold you 1 euro. That is, every Forex trade must be overlapped by the opposite one. And this should be done instantly. Otherwise, market liquidity will immediately collapse.

We said above that the daily Forex turnover is 4 trillion. dollars. Not a single broker has such money. And who has them? Liquidity providers – large banks such as Bank of America, Deutsche Bank, Citibank, etc., as well as various financial funds. Brokers conclude contracts with them to ensure their activities.

There is a second way. Conclude an agreement with liquidity providers who, using special software, unite liquidity providers, uniting them into one whole. The most famous liquidity providers are LMAX Exchange, Currenex, Integral, Sucden Financia, etc. This option is simpler. It’s like it is easier for an online store to conclude an agreement with a payment aggregator than with many acquiring banks and payment systems. Simpler, but not necessarily cheaper. It all depends on the fees that providers and liquidity providers charge for their services. In reality, both options work – brokers enter into contracts with suppliers and liquidity providers.

Liquidity and spread

Spread is the difference between the best buy (ask) and sell (bid) prices for an asset. For the Forex market, an asset is a currency. The broker sets the ask and bid for each currency pair. That is, he sells the currency to the trader at the ask price, and buys at the bid price. Thus, the spread is the broker’s commission that he charges the trader for his services. In order for a trader to make a break-even deal, it is necessary that the currency quotes change by an amount greater than the spread. Of course, in a direction favorable to him. For example, if he works with the EUR / USD pair and sells euros, then against the dollar the euro should grow by an amount greater than the spread from the moment the trader bought these euros.

With high liquidity of currency pairs, the spread is minimal and usually does not exceed three points. A high spread means high volatility, and therefore less liquidity. The broker insures itself against losses by the size of the spread. The spread size directly affects the volume of orders. The smaller it is, the higher the trading volume. But with a large number of orders, the liquidity provider may not have time to process them all. In jargon, this means eating up deals. As a result, price slippage occurs. That is, orders that were submitted at one price are processed at another. This is called the Depth of Market. The size of this order book directly depends on the broker. The more liquidity providers it works with, the less price slippage.

If you are a trader and choose a broker, then pay attention to which liquidity provider he cooperates with.

Liquidity and leverage

Leverage in the Forex market is the ratio in a transaction of a trader’s personal money and the money that a broker provides to him for its execution. For example, a trader sells $ 10,100 with a 1: 100 leverage. This means that the transaction involved $ 100 trader and $ 10,000 broker.
Leverage is very important in Forex. Due to its liquidity, currency quotes change very slowly. Their dynamics is expressed in hundredths of a percent! Forex is operated on a fraction of a percent, and in points. If quotes are shown as X, UUUU, then one point is equal to 0.01% or 0.0001. If the quote is provided in the form of X, UUUUU, then one point is equal to 0.00001. For example, the current quote for the EUR / USD currency pair is 1.1978. Its change during the transaction was four points. That is, at the beginning it was 1.1977 and increased by 1.1981. Therefore, on the sale of 1000 euros, the trader earned 1000×0.0001 = 0.1 euros. Therefore, it makes no sense to operate with small amounts on Forex. But the vast majority of traders do not have large amounts. Therefore, they cannot do without brokers. After all, for example, with a successful sale of 100,000 euros, the profit will already be 40 euros. With a spread of 3 pips, the trader’s net profit will be 10 euros. A trader can make dozens of such deals during the day.

It follows that leverage dramatically increases the number of transactions in the Forex market. And this directly increases its liquidity. The higher the leverage, the greater the volume of transactions, the higher the liquidity. The main thing is that the broker has the necessary amount of money to satisfy all traders’ orders.

The size of the spread, that is, the commission that the broker takes from the trader for providing leverage, is one of the decisive factors when choosing a broker by a trader.

Liquidity by time of day

Forex liquidity is highly dependent on the time of day. He himself works around the clock, which cannot be said about its participants, which is due to the fact that they live in different time zones. The least activity, and hence liquidity, is observed during the Asian session. The largest is at the opening of the European trading session. Then it gradually decreases, but with the opening of the American trading session it increases and decreases again until the close of the stock exchange in New York.

With high liquidity, even a large single participant will not be able to move the market. Its financial capabilities are significantly inferior to the volume of transactions at this moment. But with a decrease in liquidity due to a decrease in the volume of transactions, such an opportunity appears. It often happens that after a period of low business activity, the Forex market radically changes direction in a completely different direction. Therefore, during such periods, we advise you to focus on the economic calendar. It is better to close all your positions an hour before important news appears. This will help protect your funds from the actions of large players in the Forex market.

Tobebroker Liquidity Provider

Our company has been working in the Forex market for several years, being a liquidity provider. We wrote above that the attractiveness of a broker for traders largely depends on the size of the spread that it offers them. The smaller the spread, the more attractive the broker is. But the size of the spread largely depends on the commissions with which the broker works with liquidity providers and providers. The smaller they are, the smaller the spread the broker can offer to traders.

Our company tobebroker can act as a provider of quotes and liquidity, both in the Forex market and in the cryptocurrency market. By ordering a liquidity and risk management service from us, a broker will be able to significantly save money, monitor the company’s risks, and receive more than 2,700 trading instruments. Working with Tobebroker, a broker of any size will significantly expand its capabilities and, thanks to our low commission, we can become an object of desire for traders, offering them the minimum spread on the market.