How to obtain a Forex license: the main requirements for forex brokers

The forex market today is worth trillions of dollars, and forex brokers are very popular there, but without a forex license a brokerage company has no legal right to process traders’ transactions.

The activity of brokerage companies which do not have a forex license is considered to be illegal and unsafe, and traders avoid such companies.

Each jurisdiction has a regulator, which controls the transactions in this market and licenses the brokers. A brokerage company can raise a lot of questions from these authorities. In any case, if a forex broker does not want to have problems with the regulators or wants to get new clients, it is necessary to get a forex license.

Jurisdictions to pay attention to:

The first issue for a forex broker is choosing the jurisdiction in which a novice forex broker can set up business and obtain a brokerage license at the best price and in the shortest period of time.

Considering such factors as the price, the term of obtaining a forex license and the reputation of the jurisdiction, all the countries are divided into several categories.

  • Category A countries: USA and Switzerland. These jurisdictions are the most prestigious, and licenses for forex activities obtained from the local regulators provide access to customers with the largest financial opportunities, respectively, the requirements and prices are also high. The minimum equity of forex broker in the United States must be $ 20 mln. The period of obtaining the forex-license is 1-2 years.
  • Category B countries: United Kingdom and Australia. These countries have lower capital and reporting requirements. For example, the minimum capital in the UK is $100 thousand, and the procedure for obtaining a license takes about a year and will cost $22 – 50 thousand.
  • Category C countries: Cyprus, New Zealand and Malta. These jurisdictions combine price, quality and access to markets in other countries (for example, the EU for Cyprus and Malta under the MiFID Directive). For example, the minimum authorized capital for a broker agent in Cyprus is 125 thousand EUR.
  • The countries of the category D: Belize, British Virgin Islands, Cayman Islands, Vanuatu are the least demanding in the size of the authorized capital and the previous experience of the brokerage activity.

Jurisdictions C and D are the most popular among the forex brokers due to the fast and cheap procedure of obtaining forex licenses.

The best choice for a forex broker who starts its activities in this market is Vanuatu. The process of obtaining a Forex license takes only 2-3 months from the moment all the necessary documents are received. The minimum registered capital is 50 thousand USD.

How to get a Forex License?

We have made a short checklist for obtaining a Forex license in any jurisdiction:

  • Register your company;
  • Prepare corporate documents;
  • Pay state fees;
  • Prepare business plan, description of AML/KYC procedures and other documents;
  • Fill out and submit a forex license application to the appropriate state authority;
  • Open a corporate bank account;
  • Connect a merchant account for bank card processing.
  • The requirements for the required documents vary by jurisdiction, but in general most documents will be identical.

Obtaining a Forex license: additional requirements

Additional costs include:

  • Accounting;
  • Virtual or physical office;
  • Payroll and employees;
  • Opening of additional bank accounts and merchant accounts; Legal website design, writing Terms of Use, Privacy Policy, Cookies Policy (as required by GDPR and payment systems).

A forex license in Vanuatu is the best option for a novice forex broker in 2020.




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