- How to choose incorporation jurisdiction
- Legal form
- Where to incorporate Forex brokers in 2022 – licensing across countries
- Belize-licensed Forex brokers
- Great Britain as gold standard
- Is it easy to set up Forex brokers in Cyprus in 2022?
- Mauritius – your choice for a quick Forex broker set up in 2022
- British Virgin Islands, Malta, and New Zealand
- USA, Japan, and Australia as quality standard
A Forex broker is an intermediary between the trader and the market. Using the services of a Forex broker, retail customers may access financial markets. This would be impossible otherwise. Most Forex brokers let traders trade in not only Forex currency pairs, but also any other asset classes. Here belong stock indices, metals, and energy products.
A Forex broker may be of added value to you, such added value being customer-targeted services. You should be scrupulous with setting up a Forex broker. You also need to be very particular about the choice of the incorporation jurisdiction. It is worth remembering that countries allowing to set up Forex brokers, have their own incorporation considerations and rules.
How to choose incorporation jurisdiction
As for the basic factors influencing the choice of the incorporation jurisdiction to set up a Forex broker and get your license, the following 5 have the most significance:
- Government allows Forex broker incorporation and licensing, i.e., the laws of a certain country provide for this opportunity.
- Stock transactions are safe and consistent.
- Well-developed stock market.
- It does not take much time, money, and effort to set up a Forex broker and get your license.
- Jurisdiction’s reputation worldwide.
You should choose a country permitting Forex brokers (the jurisdiction in question may either regulate Foreign broker operations or leave them alone) as your incorporation jurisdiction and the place to get your Forex license. The country’s laws should not interfere with the company’s business.
A well-developed stock exchange market with its safe and consistent transactions is a bonus for an incorporation jurisdiction. A Forex broker receives the necessary guarantees and does not have to worry about its operations. An emerging market is not a bad thing, but a Forex broker willing to operate thereon, will have to work harder and do more to be successful in such incorporation jurisdiction.
Finding your right way to set up a Forex broker and get your Forex license without much effort is of utmost importance. No one wants to do paperwork, go through various audits and get inspected for half a year. International reputation of the incorporation jurisdiction where you would like to set up a Forex broker may be an ambiguous criterion. Offshore zones are rated as the least trustworthy jurisdictions, and they hand down this image to Forex brokers willing to operate therein. Don’t be quick to spring to any conclusions though Offshore jurisdictions with clean international reputation do exist.
NB: every Forex broker has its own criteria that it thinks important for its incorporation jurisdiction and Forex license. Forex brokers targeting their image worry a lot about reputation, and for those concentrated on profits it is different.
The incorporation jurisdiction is of primary importance when you need to choose a legal form for a Forex broker. The following 4 are deemed to be the most popular legal forms in this case:
|Legal form||Incorporation jurisdictions|
|Ltd||Ltd companies enjoy the greatest popularity in Great Britain. Forex brokers receive tax benefits and exemptions when operating outside of their incorporation jurisdiction. You should remember that the country where the Forex broker is to be incorporated, sets strict accounting and reporting requirements for any Forex transactions.|
|IBC||A specific Forex broker type. IBCs are most often incorporated in offshore zones. IBC Forex brokers shall operate outside of their incorporation jurisdiction.|
|LLP||An ideal Forex broker type for Great Britain, which makes it possible to incorporate a Forex broker, get your license, and operate in the European Union.|
|LLC||LLCs are often incorporated in the framework of the English legal system, yet operate on the global market. This legal form is beneficial for the Forex brokers resident in the incorporation country, and such brokers shall have several beneficial owners.|
Forex brokers most often use the 2 following legal forms: IBC (for setting up companies in offshore zones) and Ltd (for incorporating companies in prestigious jurisdictions).
NB: Forex brokers willing to turn into credible market players choose Ltd as their legal form and set up their own companies in prestigious incorporation jurisdictions.
Where to incorporate Forex brokers in 2022 – licensing across countries
A company shall have a corresponding license to be able to operate as a Forex broker. Various incorporation jurisdictions have their own licensing criteria.
Some countries impose strict, moderate, or mild requirements for Forex brokers. Each license has a different status. Licenses issued in prestigious jurisdictions are more valuable:
- Forex broker license to incorporate a company in the USA
- Forex broker license to incorporate a company in Great Britain
- Forex broker license to incorporate a company in Japan
- Forex broker license to incorporate a company in Australia.
It takes a couple of months to half a year on average to set up a Forex broker and get your license. It is highly advisable to put all licensing procedures under the care and watchful eye of highly qualified and experienced lawyers. International Wealth experts will certainly assist you with this issue.
Vanuatu offers more freedom to businessmen wishing to get their Forex broker license as compared to all other countries. Thus, credit limits for Forex brokers with a Vanuatu license are more flexible.
For you to set up a Forex company in Vanuatu, you need to incorporate your company first, legalize a number of documents, have your company seal made for you, and pay all related state duties and official fees. You will receive your constitutional documents at the next stage, and your license will be renewed annually.
Here are the requirements Vanuatu sets to Forex brokers planning to establish their own company and get a license in this incorporation jurisdiction:
- meet the minimum capital requirement (in the form of a security deposit) of USD 50,000, as provided for under the laws of Vanuatu
- hire at least 1 director resident in Vanuatu
- employ mostly high caliber specialists
- set up a local office.
Legal priorities of a Forex broker with a Vanuatu license:
- foreign currency transactions are allowed
- bank account in a non-resident bank may be opened with the approval of local supervisory authorities
- risks may be hedged against in any financial institution, with no approvals necessary.
It takes 8 months on average to incorporate a Forex company licensed in Vanuatu.
Belize-licensed Forex brokers
Belize is among the cheapest regulated jurisdictions to incorporate a Forex broker, and this option is available from anywhere in the world. Here’s what your Belize-issued Forex license allows you to do:
- set up a Forex broker
- provide customers with an online trading platform so that they could trade independently
- offer related services to customers and open own trading accounts
- provide customers with easy access to their accounts by means of debit cards
- secure special brokerage services
- offer controlled trading options for Forex market
- trade in financial instruments, including derivatives, futures, and shares
- set up a broker or a consulting company to offer consultations with regard to a number of financial services to your customers.
A Belize-issued license makes it possible to provide the following services:
- payment processing
- lending transactions
- money brokerage and exchange.
You don’t need to employ local directors or employees. Neither do you need to make any physical transactions within the incorporation jurisdiction. It will take you 6 to 8 months to submit your incorporation application and get a license. This period already includes the time necessary to set up your Forex broker and open a bank account therefore.
Great Britain as gold standard
Great Britain issues the world-famous Forex broker license, providing for an opportunity to set up your own company. The laws of Great Britain may serve as the gold standard for both broker and investment companies. FCA Regulations create a favorable environment for brokers and make it possible for them to directly access one of the biggest European financial markets.
Great Britain is an extremely popular incorporation jurisdiction, and it adopts strict selection standards for those applying for a Forex broker license. In the United Kingdom, these licenses are only issued to companies fully compliant with all the applicable legislative requirements. Such Forex brokers shall also have physical presence in Great Britain, while their capital amount shall meet certain legislative requirements.
Potential founders of Forex broker companies in Great Britain shall conform to the most stringent standards of the local regulatory authorities:
- set up a local office
- hire one or several highly skilled and experienced directors with significant exposure to financial sector (in the currency market);
- director shall reside in Great Britain
- Forex broker shall be controlled from its incorporation jurisdiction
- employees of the Forex broker in question shall have the necessary skills and qualifications.
Possibilities open to companies, whose operations are regulated by British financial authorities, are various:
- receiving a dealer license and setting up a corresponding company (capital requirement: EUR 750,000)
- getting a limited Forex broker license and incorporating a corresponding company (capital requirement: EUR 750,000). For all the details and peculiarities as to getting your Forex broker license in Great Britain, please, consult the International Wealth lawyers. Not only will they provide you with all the necessary information, but also process your documents, consult you on every single detail of the procedure, and generally take care of all your worries. Your success is guaranteed, if you apply to International Wealth for advice and consultations.
Brokers, contemplating to incorporate their own Forex broker company and get a Forex license in Great Britain, will receive an opportunity to offer a wide range of financial services to their customers:
- incorporate an investment management and consulting company
- set up a branch office to support investment deals
- generate business leads
- facilitate negotiations
- consult customers on any deal structuring issues
It will take you up to 12 months to get your Forex broker license in Great Britain.
Is it easy to set up Forex brokers in Cyprus in 2022?
The Government of Cyprus worked out a list of CySEC requirements. They are updated and improved on a permanent basis so that Forex broker operations would be effectively managed. If you incorporate your Forex broker in Cyprus, you will receive an opportunity to get and sell customer deposits and to establish your actual commercial presence anywhere in the European Union.
Applicants wishing to incorporate their own company and get a Forex license in Cyprus, shall meet the following requirements of CySEC, the country’s financial authority:
- incorporate an office in Cyprus
- hire at least 3 highly skilled and experienced directors resident in Cyprus, with significant exposure to the financial sector
- meet the minimum capital requirement of EUR 750,000
- submit financial accounts to CySEC on a regular basis
- support customers under conditions of high market volatility
- protect traders as provided for under the provisions of ICF policies
- open segregated bank accounts to deposit traders’ funds.
It may take 9 to 12 months for businessmen to get their Forex license in Cyprus and set up an operating company.
Mauritius – your choice for a quick Forex broker set up in 2022
Mauritius initiated global business operations in 1992 году. As of now, this incorporation jurisdiction is home to over 16 000 corporations, trust funds, and collective investment schemes, as well as over 20 banks, with at least 10 of them being foreign banks. They service both domestic and offshore sectors.
The Financial Services Commission of Mauritius (FSC) was established in 2001 and operates within an internationally recognised legal framework under the Financial Services Act. FSC licenses, regulates, monitors and supervises business activities in the financial services sector other than banking. In Mauritius, FSC regulates all non-banking activities in the following sectors: insurance, capital markets, funds, and global business (regulated by the Global Board of Trade). The latter is the first international multi-asset class exchange from Mauritius.
Mauritius is an active member of OECD, FATF, and UNO.
Here’s what you shall do to incorporate a Forex broker in Mauritius::
- set up a company with at least 2 directors resident in Mauritius that may be represented by a local managing company
- secure an authorized capital of at least USD 25,000, as provided for by the local laws
- establish a local office
- employ highly skilled personnel
- guarantee that your Forex broker customers do not come from any blacklisted countries.
Setting up your Forex broker in Mauritius as an incorporation jurisdiction has definite advantages:
- royalties paid to non-residents are tax-exempt
- no stamp duties, registration fees, or any similar taxes shall be paid
- tax rates are flexible and a wide range of tax benefits is offered
- OTC market transactions are allowed.
It takes 6 months to get your license and incorporate a Forex broker in Mauritius.
British Virgin Islands, Malta, and New Zealand
The British Virgin Islands is a popular offshore incorporation jurisdiction and a tax haven. This jurisdiction provides for an opportunity to establish your own offshore company. No wonder it is one of the best countries to incorporate a Forex broker and get your Forex license allowing you to set up the business in question. A Forex license issued in the British Virgin Islands offers a variety of benefits. The procedure itself takes just 3 or 4 months, and the total costs are below USD 30,000.
The BVI is not a top incorporation jurisdiction to set up your Forex company, like Japan or the USA. It is still a highly respected offshore jurisdiction. A license issued by the Financial Services Commission of the British Virgin Islands (FSC BVI) is perfectly legal. Being a tax haven, the BVI offers corporate tax benefits and higher confidentiality to all persons willing to set up their businesses in the country.
Malta is a magnet for lots of Forex brokers, as it is relatively easy to set up your company in this incorporation jurisdiction. The reasons are obvious:
- favorable legal framework
- affordable costs
- well-established international reputation.
Forex licenses of several categories are available for you in Malta to set up a Forex brokerage company. A second category license allows you to manage customers’ funds but not your own trade equipment. A third category license additionally allows you to provide investment services. The Malta Financial Services Authority (MFSA) is in charge of Forex licensing in Malta.
The costs of setting up your own company and getting a Forex broker license are much lower in New Zealand than in top offshore jurisdictions. FSP is the regulatory body in charge of Forex licensing in New Zealand. This incorporation jurisdiction is favored by those Forex brokers that are not after prestige.
The Republic of SIngapore, or Singapore for short, is known as a global financial center, just like New York and London. Due to the country’s stable development, its rating was upgraded to AAA by Moody’s. Major international banks and well-known financial companies, with Forex brokers among them, are flocking to this tiny island to open their representative offices.
Singapore is a global high-tech center. It enjoys the cutting edge tech infrastructure that serves as an ideal host for both servers and telecommunication network of the present day virtual economy. The latter may be used to set up a successful company. Such companies normally dispose of highly-qualified and technically skilled workforce, and this is just another advantage of the rapidly developing financial center in question.
NB: the body in charge of company set up, licensing and regulatory supervision in Singapore is the Monetary Authority of Singapore (MAS).
The daily turnover on the Singapore forex market is the greatest in the region. It can even compete with the one in New York or London.
Any Forex broker wishing to set up a Singapore representative office shall have a MAS license. It shall also follow the strict local rules of conduct and meet capital adequacy requirements, as well as operational standards. For security reasons, all customer deposits shall be split into separate bank accounts.
USA, Japan, and Australia as quality standard
The United States of America (just like Japan) is potentially the most prestigious incorporation jurisdiction to get your Forex broker license and set up a company. The rules, however, are among the strictest here:
- Your capital shall make up USD 20,000,000.
- You shall be registered as a Forex broker with the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) supervised by SEC.
- Company of yours shall be registered as a futures commission merchant.
Expenses for a company registration are significant in case of a retail forex dealer. The initial ones make up USD 125,000, plus USD 125,000 to USD 1,000,000 extra annually. The exact figure depends on your annual gross income. If a Forex broker opts to be registered as an individual introducing broker, the initial and annual fees will amount to just USD 750.
One more reputable country to set up your Forex broker and get a Forex license in is Japan. You have to meet the requirements of the local Financial Services Agency to do this. The initial costs are also high in Japan, and the demands for the company’s capital and adhering to all due diligence procedures are no less stringent.
Australia has the same capital requirements for potential Forex brokers wishing to open a representative office in this incorporation jurisdiction as Great Britain. The primary regulatory authority here is ASIC. It will take you around 12 months to establish a Forex broker and get your Forex broker license in Australia.
The above incorporation jurisdictions are among the safest, most trusted, and most reliable in the world, where you may set up your Forex broker and get a corresponding license. Capital requirements and fees are the only tripping stone for novice brokers here.
First and foremost, you need to set up a company and get your license in the incorporation jurisdiction most suitable for you to become really successful in your Forex business. Lots of appealing options are offered today, and the choice depends on your specific needs, time limitations, and budget.
In certain jurisdictions, you may become a broker even if you don’t have a license. This, however, is strongly discouraged. You’ll become just a face in the crowd of unlicensed brokers, and will have a hard time winning your customers’ trust or working on a global scale. Talk to our experts before you make up your mind to proceed with Forex broker incorporation. At International Wealth, we are always ready to offer assistance with any issues you may face. Go ahead and contact us straight away.
What is the fastest way to get a Forex broker license?
If time is of the essence to you, you should apply for your Forex license in the BVI. It will take you no more than 3 to 4 months to get licensed there, with 4 months being the maximum period.
What incorporation jurisdictions are the most prestigious for Forex brokers?
Forex brokers from several jurisdictions enjoy the benefits of a stainless business reputation right from the start. We are referring to the USA, Great Britain, Japan, and Australia. It is a lot trickier to get such their license though. It is not only a longer incorporation period that you will need, but also a significant minimum capital.
What legal form should I choose for аn offshore Forex broker?
There are no strict rules regulating this. In real life, however, Forex brokers most often set up IBCs in offshore jurisdictions. This legal form makes it possible to operate outside one’s incorporation jurisdiction. It also provides for more favorable reporting requirements and less stringent supervision on the part of local supervisory authorities.