Thanks to the development of the Forex industry, today there are many Forex brokers with different business models, which, despite their differences, offer the same service that is the opportunity for users to try their hand at trading currency pairs and other trading instruments. However, in order to successfully provide services to its clients, the broker must have the appropriate license for its activities, the obtaining of which, as a rule, begins with the selection of a regulatory authority. Below we will look at the best jurisdictions to get Forex licenses. In addition, we will try to lift the veil of secrecy around the features of the general procedure.

Our team is first-class specialized specialists in the field of establishing and licensing commercial structures. We know all about Forex license jurisdiction selection working all over the world and being ready to cope with the most extraordinary cases. Our company has ready-made solutions for Forex-licenses in South Africa, Vanuatu, Japan, Cyprus and other countries.

Overview of Regulatory Frameworks for Forex-Licensing and its Importance

According to Forex industry standards, getting a permit is not always necessary. Trading services can be found on various unauthorized sites. However, they have certain restrictions (they cannot work in some countries, they do not cooperate with reliable liquidity providers, etc.). Additionally, traders who trade with an unlicensed broker are not legally protected from liability. Without any guarantees, their money is at risk from scammers and they have no recourse. In such organizations, traders take full responsibility for their actions and cannot count on the help of other parties in resolving disputes. There are several opportunities for fraud at unapproved brokerage firms. In order to operate in the Forex market, a company must have a permit.

To get Forex licenses, a broker must have a certain amount of funds.

1. The financial market regulator issues a permit based on a package of documents provided by the broker.
2. When issuing licenses, the powers of the broker and the financial and economic training of employees are taken into account.
3. The legitimacy of a Forex-license depends on the jurisdiction of the issuing authority.
4. The duration of the permit and the requirements for obtaining it are determined by the regulatory authority.

Top Forex License Jurisdiction List

Now we’re going to form some country comparison in terms of FX-licensing. Sometimes regulators that issue licenses to Forex-brokers are divided into reputable and non-reputable. This division is fundamentally wrong. In reality, regulators are divided into levels that differ in the requirements for a broker to issue a license and the degree of control over the broker’s activities. As a result, the reliability of a licensed broker is determined by the level of the regulator that issued the license to him/her. So, let’s look at the best Forex license jurisdiction list.

Vanuatu

The state licenses enterprises with the following types of activities:

• trading on the Forex-market;
• asset management;
• consulting on financial issues.

The main requirement is regulatory compliance, appropriate education and experience in the financial industry. Directors and shareholders may be residents of any country. To obtain Forex license, it is advisable for the founder to have appropriate education and/or experience in this field. There is no need to submit reports in Vanuatu, but continuous accounting has not been canceled. According to local Forex law, all financial statements must be prepared properly and kept in case they are needed for regulatory inspection.

Thus, at the moment, the Vanuatu license is the undisputed leader in terms of the required costs and time to get a permit.

Cyprus

The island nation is a generally recognized jurisdiction for Forex regulations and CFD (Contracts for Difference) trading. The license issued by the CySec authority provides the ability to provide brokerage services in any EU country on the basis of a pan-European passport. Main types of Cyprus-licenses are next-mentioned:

• to store client assets without trading, a standard license is sufficient; the cost is 125,000 EUR;
• for independent trading as a market maker you will need a full license; cost is 730,000 EUR.

Cyprus legislation is in accordance with the provisions of the EU MiFID Directive on Markets in Financial Instruments.

British Virgin Islands

BVI can be a great place to open a Forex broker due to the speed of registration. To get an FSC-license it will take about 3 months, which cannot be called a long period. The British Virgin Islands are in demand among brokers who are targeting the European market. However, it is worth keeping in mind that there are serious registration requirements:

• local office;
• number of directors are from 2 people;
• the minimum amount of authorized capital is from 250,000 USD.

Singapore

This jurisdiction is the financial center of Asia. Recently, Singapore began to willingly accept Forex brokers. Its key features:

• a colossal credit rating of “A+++”;
• GFCI membership;
• there is a supervisory body represented by MAS, which does not allow violations.

Brokerage activity in Singapore automatically means high prestige.

Switzerland

In this Forex license country, FINMA is fully responsible for the Swiss financial system and has the right to monitor any currency flows, including any attempts to manipulate the Forex market and suppress any illegal actions of Forex brokers that violate the law or the rights of clients.

In fact, Swiss licensed forex brokers have the status of a bank and, as a result, are subject to the same strict controls as banking institutions, making them reliable agents. Swiss brokers are required to submit regular reports, as well as quarterly and annual audits from only the highest class companies.

Licensing Procedure: Documentation and Forex License Requirements

Regardless of jurisdiction, to get a Forex-license capital-holders should implement next-mentioned:

• set up a company;
• provide the company’s constituent documents;
• pay required fees and charges;
• create a business-plan;
• go through bank verification procedures to ensure the purity and veracity of the sources of funds.
• create a bank account and connect a special trading account (merchant).

These are the main positions that are identical in all jurisdictions. Be prepared that you will have to perform additional steps to get a Forex-license in a particular country.

Each jurisdiction has its own rules for applying for a forex-license. Minimum conditions for authorized capital vary. The applicant must provide documentation of key individuals, internal anti-fraud policies and more. But there are general rules. First, you need to register a legal entity in the country where you want to work as a broker. All entrepreneurs who want to get a Forex-license must conduct business transparently and provide the regulator with an impressive list.

In almost any country, registration will require you to provide information about the company (certificates, office address, website). It is also necessary to confirm the education, work experience and reputation of top officials. All licensees are required to develop policies to vet customers and protect assets from abuse.

1. Preparation of necessary documents.
2. Opening a broker company to provide forex services or binary options trading services.
3. Opening bank accounts to transfer money to clients from most countries.
4. Assistance in the process of collecting and submitting documents prior to the issuance of a permit.
5. Meeting compliance requirements in terms of tax, insurance, etc. issues.

Basic requirements that must be met are next-mentioned.

1. Initial capital and its proof.
2. Qualified personnel.
3. Payment of government fees.
4. Business activity in the territory of the country in which the regulator issued a license.
5. Meeting list of normative points for a resident or non-resident of the country.

These are general criteria. In reality, the legal systems of different jurisdictions vary and these differences must be taken into account when planning to get a brokerage permit.

The very fact of getting a permit, no matter what type, indicates that the company strives to work transparently and officially. But inverters cooperate with unlicensed brokers at their own peril and risk: no matter what guarantees they give, all their promises are unsubstantiated and have no legal force. Regardless of the level of license, such a broker is responsible to its clients financially and legally.

Thus, obtaining this type of permit is extremely necessary for companies that decide to work in this direction. Our company will be happy to assist you with this, and will also help you purchase a ready-made version of a licensed organization. Contact us right now to avoid unnecessary difficulties.

Article’s author is Denys Chernyshov – founder and CEO of the globally-famous organization Eternity Law International.

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