It is true that a Forex license can increase your online and offline presence. But all Forex licenses do not have the same value and are certainly not priced the same way. Different jurisdictions have different opportunities and drawbacks. This is why you should do your research before you apply for a Forex Broker License.
How to choose the jurisdiction for a forex brokerage license
Before we discuss the best jurisdictions around the world, it is also important to know what factors go into picking a jurisdiction. This will help us add more value to the list below.
Four things go into picking a forex broker license jurisdiction, namely:
- Banking Options
A cheap license may not always be a good choice. You may apply for it to save money, but the license may be cheap because you might not get the banking solution for that, which is critical now. Hence you must consider all factors before picking a licensing jurisdiction.
Secondly, with so many competitors in the forex market, there are many fraud license providers out there. So, if you get a deal where the license is cheap and easy to get we would suggest you conduct thorough research and check reviews of that place.
Lastly, because of the new and stringent AML policies, many banks don’t allow funds from individuals if you are regulated & do not follow AML policies.
Our experience in this industry has enabled us to compile a list of 3 authentic & affordable jurisdictions to get a forex broker license. Here’s why we think these places are worth your purchase:
Seychelles includes more than 113 islands and is located in the Indian Ocean on the east of Africa. Being in the Asian, African region, a license in Seychelles is not as expensive when compared to other jurisdictions like the BVL.
A contract for Difference (CFD) functions are highly regulated in Seychelles but it remains one of the most popular jurisdictions for CFD brokers.
Without a license, there are few opportunities available in Seychelles. However, with a license, you can buy, sell and trade liquidities, manage client investment portfolios, etc.
This license is used by many reputed forex brokers.
Mauritius has recently gained a lot of popularity amongst forex brokers largely because of the number of traders, bankers, and investors operating from this area. The license costs are fairly reasonable and they have imposed strict confidentiality laws. Therefore making it one of the safest places for a Forex license.
The best thing about getting a license in Mauritius is that they have a favorable environment for Forex brokers. Fewer taxes are imposed on buying, selling, and trading Forex commodities and there are so many options so choose from.
There aren’t any major drawbacks to getting a license in Mauritius. The waiting time for a Broker license in Mauritius is 6-8 months, which is fairly quick. Once you have a license you can reap the benefits of Forex trade with low taxes.
Many reputed forex brokers got the license in this jurisdiction.
Labuan is third on our list because it is fairly easy to set up a brokerage in Labuan. Once you are eligible for a license, it would take you 3 – 4 months to get a broker license. However, in order to become eligible, you must take a test and produce documents to prove that you have enough capital to start a Forex Broker in Labuan.
Though it is not compulsory to issue a broker license, it is mandatory for brokers to maintain 300,000 Malaysian Ringgit in all their reserves.
The costs to set up an office and operate as a broker in Labuan is much cheaper than other parts of the world. This is why many novice brokers choose to operate from Labuan. Once you become a broker in Labuan, the opportunities are endless.
The rules and regulations imposed on brokers make it a safe environment to trade. There are enough traders and bankers willing to work with brokers and the taxes on Forex trade is much lower than other countries (approximately 3% of all audited profits).
So, here’s our list of three jurisdictions that we feel are the best for a forex broker license. Licenses in first world countries like the UK, Cyprus & Malta are quite popular. However, they are really difficult to attain and are quite expensive.
The jurisdictions above are unique in their own ways and quite ideal for a first-time broker. Some are more expensive than others while others take a little more time to get in your hands.
At the end of the day, it all comes down to your requirements. What do you need? Do you want to get up and running as soon as possible or do you want to make sure everything is perfect when you cut that ribbon!