How to Open a Forex Broker?

SOLID ECN LLC

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Guide to Establish a CFD Forex Broker

This unique A- Z guide will demonstrate inside and outside of a CFD broker, and it explains how an individual or a corporation could establish a brand new forex broker.

In this article, you will also find information about how a broker functions, and how your trades are being executed. We will go through A Book, B Book, and relevant dealing desk strategies that are being utilized on the broker’s side.

We will shed light on the broker’s income, and if you were trading in the ECN environment as your broker claims. Are there hidden fees? Why do withdrawals take so long? And transparent vague spots that every trader could have in mind.

If you have a team and the budget to start a broker, and/or if you are a professional trader who seeks a decent broker to trust, this article is for you.

Solid ECN Team
 

SOLID ECN LLC

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Minimum Requirements

1)
Forming a new company or buying an existing firm.

2)
Type of the company
Location of Registration
Regulation/Licensing
KYC requirements

3)
Creating a website, CRM, and client area.

4)
Buying or renting or developing a trading platform

5)
Buying or renting or developing a bridge (hub) to connect the trading platform to the liquidity providers.

6)
Website, CRM and client dashboard Integration with the trading platform and the hub.
Partnering with one or multiple liquidity providers.

7)
Partnering with Payment Processors

7)
Required departments
CEO / Management
Technical (IT)
Dealing desk / Risk management
Compliance
Customer support
Sales

8)Marketing and branding.



Solid ECN Team
 

SOLID ECN LLC

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Forming a new company



Step 1
Where is your target market?
Do you want to go local or worldwide?
How much is required to form a new company?

Before forming a new company, you should answer the questions above. It is utterly important to do things right from the very beginning.

In this post, we decide to accept clients worldwide, regardless of the client's race, country, or continent. A broker that offers its service for traders worldwide without discrimination.

In the licensing and regulation section we will discuss discrimination, limits, and bans in accepting clients from countries in a different continent, outside of SEPA (Euro), or countries that are in the U.S and the EU sanction list.

Offshore!
A company has a narrow budget at first. Perhaps a few or many of those startups were a white label at first, and as they grew, they expanded their platform and regulation accordingly. It is a fact that most brokers that have been developed over the years started offshore. So no need to panic or get afraid or disappointed by hearing the name offshore!

We name a few potential offshore jurisdictions:
Vanuatu
Saint Vincent & Grenadines
Cayman Islands
Cyprus
The British Virgin Islands
United Kingdom
Seychelles
Belize
Malta and more

In this article, we consider the new startup has a confined budget, and they are trying to establish the broker with minimums, and grow the company over time. Therefore, the jurisdiction we choose is Saint Vincent & Grenadines or Vanuatu.

With an offshore broker, the broker is allowed to accept clients worldwide except the company issuer jurisdiction.

Advantages:
Except for taxes for income outside of the island.
Cost-effective
It is easy and quick to form a company.

Cons:
Bad reputation

Fees to form a new company in Saint Vincent & Grenadines or Vanuatu floats from a minimum of $1,500 to a maximum of $2,500, and they have a $1,000 to $1,500 annual maintenance fee.

In the next post, you will find out about KYC requirements for forming a new brand in the above-mentioned jurisdiction.​

Solid ECN Team
 

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Documents Required to Open a New Company


The company owner and shareholder/s ought to verify their identity and address, and they should be in good financial standing. That means no liabilities.​

The minimum requirements are:
  • Passport (original copy)
  • Passport (Notarized copy)
  • National ID (Original copy)
  • National ID (Notarized copy)
  • Bank reference letter
  • Bank statement
  • Proof of address - (any utility bill and must be notarized)
The time for processing the documents depends on the jurisdiction, and it wouldn’t take more than ten business days.

Solid ECN Team
 

sebking1986

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Do you speak from experience of setting up a broker yourself? Where did you get this info if not? An interesting read on the process for sure. I look forward to reading more.
 

Balladotus

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Great article, which enlights all the aspects of opening a forex broker I guess. I just want to add that those people who have decided to open a forex broker have to understand that they must have an experience in trading activity and it will be very difficult for them to open a broker incase they have no knowledge in this field. To my mind, the main idea here is to understand the issue from inside. You won't be able to provide traders with everything they need and listen to their needs in case you don't know what to do. The best broker is such a broker which always cares about its traders and always try to do everything in order to satisfy their needs.
 

SOLID ECN LLC

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Do you speak from experience of setting up a broker yourself? Where did you get this info if not? An interesting read on the process for sure. I look forward to reading more.

Dear Sebking,

Thank you for your comment.

The information provided on this topic is fermented over the years of working in the industry. I and my team had the opportunity to supervise, manage and co-found several CFD brokers since 2010.

There are tons of articles and topics over the internet about the Forex scam. To find out if your broker is honest with you, you ought to know how the market and a broker function, and that is my intention to write this article.

I may not be able to update this topic daily, but I will try my best to write here constantly until everything is told.​
 

SOLID ECN LLC

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Do you set up brokers yourself?

Hello Peteza,

Yes, we help potentials to start their own company. IBs and partners are attracting their leads or clients to brokers, and they receive a small commission in return. When I see a potential IB, I always suggest founding or forming their own company.​
 

SOLID ECN LLC

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Great article, which enlights all the aspects of opening a forex broker I guess. I just want to add that those people who have decided to open a forex broker have to understand that they must have an experience in trading activity and it will be very difficult for them to open a broker incase they have no knowledge in this field. To my mind, the main idea here is to understand the issue from inside. You won't be able to provide traders with everything they need and listen to their needs in case you don't know what to do. The best broker is such a broker which always cares about its traders and always try to do everything in order to satisfy their needs.

Hello Balladotus,

Thank you for your comment.

Indeed yes, who opens a forex broker must be a professional trader. We will know more about it later in the dealing desk topic. However, keeping every trader happy is impossible.

A broker has hundreds of active clients, and each one of them could trade with a different strategy. On the other hand, the market cannot execute all types of trading strategies. This conflict may cause brokers to ban some traders and vice versa.​
 
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