Establishing your own FX brokerage company requires following some legal regulations and selecting legal options that may bring benefits or create losses for a future broker. It is worth to thoroughly analyze these options, before making final decisions. Fortunately, there’s possibility of introducing some changes later on, but keep in mind that some of your initial decisions may affect your capital. Below you’ll find some recommendations associated with the legal aspects of starting the FX brokerage business.
This first questions you need to ask yourself is where you want to set up your business?
You have to carefully reflect on this matter because it may influence the amount of tax you’ll be paying, the amount of application and renewal fees or the initial capital you need to have. Some brokers prefer to set up their businesses in the established countries because it generates more trust and these locations may attract more customers. These countries include the UK or Australia. Others prefer to cut costs and select Cyprus or the British Virgin Islands due to lower initial capital or taxes.
TO BE OR NOT TO BE A REGULATED BROKER?
Regulated brokers enjoy higher trust among traders. However, they have to act in compliance with certain, very strict guidelines relating to financial resources and have to go through many audits. They also have to establish procedures that will be applied when handling customers’ complaints or queries. Regulated brokers need to invest more money and time in order to satisfy these requirements, and usually it is necessary to employ staff that will ensure the compliance with all these guidelines, but in exchange, they are considered by traders as more reliable and trusted, and as a result, acquire more customers.
The best way for a new broker, who doesn’t want to invest a lot of capital without knowing what the return on investment will be, the best idea is to establish business in less prestigious locations, and after establishing a customer base and earning enough income, it is always possible to change the location of the business and become regulated.