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Forex/Securities Dealer License in 2023

Updated: Aug 16, 2023


The Forex market, also known as the foreign exchange market, is the largest and most liquid financial market globally, with a daily trading volume of around $6.6 trillion. The opportunities for businesses in this market are vast, and many startups and entrepreneurs are drawn to the idea of opening an online Forex brokerage. However, engaging in such activities requires obtaining a Forex broker licence or securities dealer licence in most jurisdictions. In this article, we will delve into the process of obtaining a Forex/Securities Dealer licence in 2023.


Understanding Forex and Securities Dealer Licence


The Forex market involves the exchange of different currencies, where traders seek to profit from fluctuations in value between currency pairs. It has witnessed a surge in popularity, with approximately 9.6 million people trading Forex online regularly.


A Forex broker acts as an intermediary between traders/investors and the interbank market. To ensure the safety and legality of their operations, Forex brokers need a Forex licence. Without a licence, brokerage companies cannot legally process traders' transactions, and their activities are considered unsafe.


Similarly, securities dealers, also known as stockbrokers, are individuals or firms involved in the buying and selling of securities like stocks, bonds, and other financial instruments on behalf of clients. Securities dealers, too, require proper licensing and regulation to operate legally.


The Importance of Obtaining a Forex/Securities Dealer Licence

  1. Legitimacy and Trust: A licence confirms the legitimacy of a Forex brokerage or securities dealer, instilling trust in clients and investors. Licensed entities are seen as more credible and reliable, attracting a broader customer base.

  2. Regulatory Compliance: Licensed brokers adhere to strict regulations and comply with legal requirements, ensuring fair practices and protection of clients' funds and interests.

  3. Market Access: A licence enables brokers to operate in pecific markets, allowing them to provide their services to clients worldwide.

  4. Investor Protection: Regulatory bodies provide a safety net for investors by ensuring that brokers maintain sufficient financial resources and adhere to operational standards.

  5. Reputation and Branding: Obtaining a licence enhances the reputation of a Forex broker or securities dealer, contributing to long-term brand building and growth.

Financial regulators play a vital role in the Forex industry by overseeing brokers' activities and ensuring compliance with licensing requirements. They aim to safeguard traders and investors, prevent broker misconduct, and maintain stability in the financial markets. Some of the prominent regulators in the Forex market are:

  1. CySEC (Cyprus Securities and Exchange Commission): A state regulator in Cyprus, it is one of the most significant regulators for Forex brokers operating in international financial markets. Because Cyprus is an EU member, CySEC has the authority of the European Forex regulator and provides attractive conditions for brokers.

  2. FCA (Financial Conduct Authority): Operating in the UK, the FSA's main objective is to protect consumers of financial services and ensure stability in the industry while promoting healthy competition among service providers.

  3. NFA (National Futures Association): As an independent watchdog in the US, NFA protects futures and commodity markets from financial institution abuses, ensuring investor protection and equal rights for all participants.

  4. FSC (Financial Services Commission): This regulator oversees non-banking financial services and businesses in Mauritius, promoting transparency and regulating brokerage firms to prevent investment abuse and financial fraud.

While these are just a few examples, there are numerous other regulators worldwide contributing to the legal framework of the Forex market. Their collective efforts help maintain the integrity and reliability of the industry for traders and investors.


The Process of Obtaining a Forex/Securities Dealer Licence


Obtaining a Forex licence is a comprehensive process that involves several essential steps. Here's a detailed guide on how to obtain a Forex licence for starting your own brokerage:

  1. Selecting the Regulator: The first step is to choose a regulatory body that aligns with the market you want to serve as a broker. Each regulatory body has its own set of requirements and regulations. Thoroughly research and understand the requirements of the regulator in the target market.

  2. Company Registration: Register your Forex company, which forms the foundation of your brokerage business. Decide on a suitable name for your company and select a trading platform like MT4, MT5, or cTrader for traders to use. Additionally, choose a reliable liquidity provider and thoroughly beta test all systems before launching. Ensure your brokerage website is accessible on various devices.

  3. Preparation of Corporate Documents: After registering your company, prepare official documents that govern the rights and obligations of your legal entity. These documents are essential for various purposes, such as opening a bank account in another country, conducting audits, or dealing with partners. Examples of documents you may need include articles of incorporation, articles of association, registration card, tax residency certificate, and a list of beneficiaries.

  4. Payment of State Duties: Pay the required state fees for registering your legal entity (brokerage company). The amount of the state duty may vary depending on the location, so be sure to check the relevant payment information.

  5. Opening of Corporate Bank Account: Open a corporate bank account, which is crucial for handling financial transactions and commercial activities. Research and compare offers from banks to find the most favorable conditions for your business.

  6. Connection of Merchant Account for Bank Card Processing: Set up a merchant account for bank card processing, enabling electronic fund transfers from traders to your brokerage. This involves integrating software for payment processing, including card payments and e-wallet transactions.

  7. Completion and Submission of Forex Licence Application Form: Once you have completed all the previous steps, prepare and submit the application for a Forex licence to the relevant regulatory authority. If you have met all the requirements, the application will be reviewed within a specified period, and upon approval, you can officially begin your brokerage activities in the Forex market.

Obtaining a Forex/Securities Dealer licence is a crucial step for anyone looking to venture into the Forex market or securities trading industry. The licenсe not only ensures regulatory compliance but also builds trust and credibility among clients and investors. It's important to note that the process of obtaining a Forex licenсe can be complex and time-consuming.


Therefore, it is advisable to seek professional assistance from legal and financial experts who specialise in Forex licensing to ensure that all the requirements are met accurately. Compliance with regulatory standards is crucial to establish a trustworthy and legally compliant brokerage, providing a secure environment for traders and investors. SAXE Global team can offer valuable insights and assistance in acquiring the right Forex/Securities Dealer licence for your business.


Book a free consultation here

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