Launching a forex brokerage is a complex and challenging process. It requires major investments and expertise in forex markets. Speaking of the second, the brokerage founders need to be well-versed in two spheres: regulation and technologies.
The regulation requirements may vary depending on the jurisdiction, but they typically include registration, licensing, and compliance with anti-money laundering (AML) and know your customer (KYC) regulations. There is also a block of client funds segregation, as forex brokers must segregate client funds from their own operational funds. This helps to protect clients’ funds in the event of the broker’s insolvency. And many work on reporting and record-keeping, because forex brokers must keep accurate records of their transactions and report their activities to the relevant regulatory authorities. This helps to ensure transparency and compliance with regulatory requirements.
Regulation is a separate large theme, as a lot depends on the country you want to operate in.
For example, in France, forex brokers are regulated by the Autorité des marchés financiers (AMF), which is the financial regulatory body responsible for overseeing the securities markets and protecting investors in France. Forex brokers must maintain a minimum capital requirement of €730,000 to operate there. The registration process involves submitting an application and providing information on the company’s ownership, management, financials, and compliance policies.
And in England, forex brokers are regulated by the Financial Conduct Authority (FCA). Minimum capital requirement is £730,000.
Forex brokers must be registered with the Commodity Futures Trading Commission (CFTC) and become members of the National Futures Association (NFA0 to operate in the US.
Today we will speak a bit more about technologies, particularly the solutions the broker needs to operate.
There is a great variety of solutions that brokers use. Check out the example list of forex brokerage solutions – they vary from small automation tools to very complex products.
Overall, products for brokers refer to the various software used by forex brokers to provide their clients with access to the forex market and different features to diversify their trading experience.
Here are some common forex brokerage solutions:
- Trading platforms. Forex brokers use trading platforms to offer their clients access to the forex market. Popular trading platforms include MetaTrader 4 and 5, cTrader, and TradingView.
- Liquidity aggregators. Liquidity aggregators help forex brokers consolidate liquidity from multiple sources, such as banks, ECNs, and other liquidity providers, to offer their clients the best possible prices.
- Risk management tools. Forex brokers use risk management tools both to protect their own businesses and to help their clients manage their market risk. There is a great variety of risk management tools. There are stop-loss tools, hedging plugins, position limits solutions, margin calls and different kinds of alert tools, trading restrictions products, and leverage solutions.
- Back-Office solutions. Back-office solutions help forex brokers manage their operations, including client onboarding, KYC/AML compliance, and reporting.
- Payment processing. Forex brokers need payment processing solutions to facilitate deposits and withdrawals from their clients. Payment processing solutions may include credit card processing, bank transfers, and e-wallets.
- Compliance and regulatory tools. Forex brokers must comply with a range of regulations and compliance requirements, including anti-money laundering (AML), and know your customer (KYC) regulations. Compliance and regulatory tools help forex brokers stay compliant with these requirements.
- Marketing tools. Forex brokers use marketing tools to attract and retain clients. These may include social trading or bonus solutions.
Some of the most reputable solution providers for forex brokers are Takeprofit Tech, Brokeree, Tools for Brokers, Gold-i.