Whatever the reason may be, for anyone who has decided to open up his own forex brokerage—or even for those merely considering the notion—Yael Warman of Leverate outlines seven crucial steps that must be followed and why.
Congratulations! You’ve decided to start your own brokerage. Perhaps you’ve heard about the massive amounts of money to be made and want to jump in on the action or perhaps it has been your longtime dream to own a financial brokerage. Whatever the reason might be, you have decided to open a forex brokerage and are on the path to entrepreneurship heaven (or hell, depending on how well you plan your strategy). As an expert in the field of brokerage start-ups and having assisted brokerages across the globe in successfully launching their own forex brokerage, we’ve summarized the steps you’ll need to follow in order to start your own brokerage and undertake trading bliss:
- Research: Do your homework and determine what your target market will be. Forex licensing and regulation requirements are determined by the specific country in which you will be actively seeking traders.
- Gather initial capital. As a forex brokerage, you’ll have two types of expenses, operating and trading expenses. In some locales, a minimum capital requirement has already been codified for forex businesses who are either based locally or who are actively seeking clients living in the jurisdiction. Regardless of capital requirements set by jurisdictions, a brokerage should plan to have significant funds set aside to cover ongoing costs during the first couple of months of operations. Operating funds and trading funds must be segregated.
- Before you even open your brokerage, you need to incorporate. Once you are incorporated, you’ll need to become a licensed and registered broker. Some locations, such as Cyprus, Belize, the British Virgin Islands, the Cayman Islands, Jersey, Luxembourg, and Panama, cater to newly incorporated brokerages. Cyprus is extremely popular, since registering there, provides brokerages access to clients residing in any of the countries belonging to the European Union.
- Set up contracts with Payment Service Providers. It is advisable to have more than one PSP available in the event your primary PSP shuts you down, you’ll have a backup one already in place. To see the remaining steps, click here...
By Yael Warman, Content Manager, Leverate