Most traders, when choosing a broker for trading on the foreign exchange market, pay attention to its corresponding permission from the financial regulator, i.e., a license. Moreover, even if the broker just has brilliant reviews on the network, but does not have a license, most likely the trader will bypass it. Knowing this, all brokerage companies are trying to acquire a license no matter what it costs them. They all ask themselves: where and how to get a Forex license? A license can be obtained in many countries around the world, but this depends on the scale of the company, its budget and many other factors.
What is a license and why is it needed
A broker’s license is a special permit that gives a company the right to carry out brokerage activities in a particular country.
Licenses are issued by a special state body (regulator) that regulates brokerage activities in a given country. Roughly speaking, the regulator resolves disputes that arise between a trader and a broker. A broker needs a license not only to legitimize his activities. It also serves as a significant advantage for the company’s reputation: it is believed that if a broker has a license, traders can trust him. Consequently, such a company has more customers and earns more.
Therefore, brokers seek to obtain a license. But here there is a nuance. As a rule, the license of a brokerage company is issued by the state in which it is registered (in other words, registered). However, today, thanks to the possibilities of the Internet, a company can be registered anywhere in the world, but the actual activity can be carried out in many countries.
That is, a broker can be registered in Cyprus, where it is easier and cheaper to obtain a license, and work in the UK – where licenses are not issued so easily and they cost a lot of money.
Which jurisdiction to choose?
Business abroad for many is a promising, profitable business. To open your own commercial organization in the Forex market, first of all, you should choose the jurisdiction where the business will be registered.
Depending on the policy and legislation of the state, the procedure for issuing a license differs. Some of the most popular jurisdictions in which Forex brokerage is regulated include:
- Great Britain;
- China;
- Australia.
A license issued for this type of activity by one of the competent authorities of the above countries inspires confidence and reliability among traders, which helps to increase the attractiveness of the brokerage company.
In addition to the above states, the optimal territories for brokerage operations and obtaining a license are:
- Cyprus;
- Malta;
- Seychelles.
One of the most important qualities of each broker in the currency market is the ability to competently and quickly analyze all information regarding changes in exchange rates, build accurate forecasts based on such analysis, and determine the most accurate time for currency purchase/sale transactions.
Price fluctuations in the global foreign exchange market will have to be monitored constantly. In addition, you will always have to take into account the economic characteristics of the countries that issue this or that currency, events on the political world stage, and much more. In order to be a Forex broker, you have to study a lot, gain your own experience and look for a trading strategy that suits you.
Brokerage only seems simple in appearance – in fact, it is a huge work that requires the development of the necessary qualities of character. What should a broker be like in order to occupy a solid niche among countless competitors? First of all, being well-informed about the events of the world financial market. But it is not enough to know about the changes – you need to be able to play on them. This requires quick reaction, business acumen and determination. And most importantly: you need to develop correctness, honesty and responsibility to each client. The reputation of a conscientious, reliable professional is not easy to earn, but in the end it will work for you.
