Select from our list of frequently asked questions regarding forex broker setup and licensing. Our Broker FAQ’s cover a host of topics, including: forex business setup, broker operations, broker licenses, and broker regulation and compliance.
Forex License and Broker Setup Topics
A forex license is an official document that must be obtained before a forex company can be established. It enables a forex company to conduct business in compliance with the legal procedures in place within that jurisdiction. It is important to acquire relevant professional advice when looking to obtain a forex license, as the procedure will depend upon the jurisdiction you aim to set up your broker in.
A forex broker is a licensed company that offers brokerage services to its clients via online trading systems. A forex broker offers a range of financial investment services, such as currency exchange, commodity trading, CFDs and indices. If you are interested in becoming a forex broker it is important to gain a thorough and professional understanding of the license and registration procedures in place within your chosen jurisdiction.
A forex license is a necessary legal official document that is required for correctly conducting forex business. The license will be issued in compliance with the financial supervisory authority in place that regulates and supervises the financial firms within that jurisdiction. A forex license is required to act as a form of protection for both the company and the trader. Without a license, the company cannot legally operate and will be obliged by law to close down. In order to obtain a forex license it is crucial to acquire the relevant professional guidance. The procedure is not straightforward and it is therefore advisable to seek professional advice.
To obtain a forex license will depend upon the jurisdiction you have chosen to set up your forex company in. You will need to apply to licensing authority within your chosen jurisdiction. The procedure differs between different jurisdictions, along with the fees imposed. Before obtaining your forex license it is important to seek professional guidance from a knowledgable consultancy company. This is because the procedure to obtain a forex license will vary between jurisdictions and can be fairly complicated.
One of the most important stages in setting up a forex company is obtaining a license. This is a mandatory legal stage and your business cannot operate without it. In addition, you must register with a financial authority, which ensures protection for both trader and company. There are also a number of minimum capital requirements in place depending on the services you wish to offer. In addition, you must submit a range of documents and credentials. Setting up a forex company is not a straightforward procedure and it is therefore advisable to seek the knowledgeable guidance of a professional consultancy.
It is important to be a licensed forex broker as this is a mandatory requirement before you can enable currency trading. A license permits a broker to carry out financial activities within the parameters of its license. Without a forex license, your company is conducting business illegally and will not be protected from any lawsuits or grievance procedures. In addition, you are putting your clients at risk as their accounts will not be protected by the supervisory authority in place.
Forex brokers are regulated by the financial supervisory authority in place within a jurisdiction. Each jurisdiction has its own financial supervisory authority that imposes its own regulations as specified within the license. For example in America, forex brokers are regulated by the National Futures Association. Their aim is to oversee all futures activities, and ensure that investors are protected. Every country is regulated by a different financial authority; however their operations are all related.
Forex trading software provides a platform for both your broker dealers and your clients to conduct trade. With the facility of forex trading software, your company is able to make skilled trading decisions. When looking for trading software it is important to find a competitive platform, as this can affect the nature of your forex trading facilities significantly. For more information on forex broker software, please click here.
Capital adequacy is a measure of the financial strength of a forex company, which, by regulation, must be submitted prior to its establishment. Without the required capital, a forex company cannot become a recognized institution. DeltaQuest will guide you through the entire process of submitting and completing capital adequacy requirements.
A fit and proper test is a test carried out that assesses a forex company’s level of professional efficiency. It is an important part of the registration and broker licensing process as it demonstrates the company’s suitability as a forex brokerage or investment business. A fit and proper test acknowledges the expertise and knowledge of the forex company. Once all criteria have been approved and the tests have been passed, certification will be provided, and licensing and registration procedures can continue.
The service of compliance advisory is to ensure that all individuals and business entities that wish to set up a forex company are fully compliant. It is important for anyone seeking to establish a forex company to comply with the relevant requirements and standards of the appropriate financial and regulatory body in charge of supervising forex companies. In addition, a forex company must also operate in compliance with the relevant legislations of the country it is founded in. Deltaquest can provide compliance advisory on all aspects of complying with the necessary authorities, from operating your forex company to the administration and filing of forex company accounts and documents.
A merchant forex account is a necessary acquisition if you are going offer online payment services to your clients using card transactions. You will need a merchant forex account in order to enable clients to deposit and receive funds using various methods of payment, including bank wire transfers, PayPal and debit or credit card payments, amongst others.
There are many types of insurance available for forex brokers. This depends on the services your company provides. One type of insurance available for forex brokers is professional liability insurance. This helps to protect forex companies in circumstances of negligence claims made by a client. The type of insurance available to you will differ depending on the jurisdiction you establish your brokerage business in and the specific services you will offer. Each jurisdiction will have its own insurance scheme in place designed especially for investment firms. Without insurance, your forex company could be threatened by a number of serious concerns. Insurance for forex brokers will ensure that any claims made by clients will be covered by the insurance firm and thus compensation will be offered.
The purpose of a white label brokerage program is to offer financial institutions a complete solution to online forex trading. The purpose is to enable brokers, institutions and money managers to grow and expand their businesses. This entails partnering with a forex company, which from here, enables you to harness and develop your existing customer trading relationships, as well as to gain greater returns.
If the licensing body in place within your chosen jurisdiction acknowledges a failure to comply with licensing rules or operating codes, this could result in a forex license being revoked. The forex company will therefore be stopped from trading and be forced to shut down. A forex license will be revoked if the forex company is seen to have overlooked any rules or laws in compliance with the licensing body. This will include any legal violations that are discovered by the licensing body of the company’s jurisdiction.