Forex broker license

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.