The CIMA licenses firms to conduct securities investment business, which includes market makers, broker- dealers, securities arrangers, securities advisors and securities managers. This is typically defined by country. In general the rule of thumb is that registering in multiple countries can get very expensive. If you are an online company, it is possible that you will get online clients from a variety of countries beyond where you register.

At first, you may choose just to register in the countries where you are actively marketing. If you start by incorporating in Belize, for example, then just registering in the developing countries where you will initially operate is likely the most cost effective path.

However, if you find that, say, you are getting a lot of clients from a different country — it will start to make financial and legal sense to go through the regulatory hoops of the country. Below is a discussion of two example countries, Pakistan and Bahrain and also an overview of the U. registration landscape for comparison. Currently, the SBP is not specifically regulating Forex brokerages, but a good practice would be to incorporate in an area where there is Forex licensing in order to put forth a good faith effort to follow sound regulations.

Bahrain requires that if you are selling to its citizens, you need one of their citizens to be part of your partnership, or be in partnership with a local company.

Either way, you can still own the majority of the subsidiary company that is you set up in Bahrain. asp , which is essentially synonymous with being a brokerage in the Forex arena. Two organizations police the sector and step in to protect the consumer on a regular basis. These organizations are the National Futures Association NFA and the Commodity Futures Trading Commission CFTC. Of the two the CFTC is most heavily involved in the detection and punishment for fraud, manipulation and abusive trade practices in the retail Forex sector.

The www. gov website is an excellent source of information on customer protection and on-going legal disputes against brokers and other entities.

Here is a list of some of the regulating agencies:  NFA - the National Futures Association. Capital Requirements Depending on where you are registered, capital requirements will vary. Capital requirements are a catch-all phrase for the capital that countries, regulatory agencies or the country of incorporation will require in order to feel comfortable with you as a Forex institution.

In more highly regulated locations like the U. It is likely that startup brokerages will be required to have significant capital in the form of credit lines with a big bank. This is especially true in the case you would like to offer straight through processing or you would like to have a reasonable amount of risk control.

If you want to move beyond the developing country markets where you are located, you may be required to put up a higher net capital investment. See Section 5: Business Model for further discussion. It is possible to get credit lines from multiple banks at the same time to fulfill your total capital requirement. Technolog y Problems To be prepared for the situations Have backups and a where you need to act quickly.

Regulator y Existence Unknown regulatory environment which Ideally become a licensed can lead to regulatory investigation and entity where you are fines or other consequences. incorporated and know your local markets; hire appropriate legal talent. Regulator y Update Forex is relatively new and faces Focus on simple regulations that are changing daily. securities first, and then move into more complex and highly regulated securities. Location of Incorporation Incorporating in an offshore area The Cayman Islands has a usually means that you are in a less- strong reputation for experienced country for dealing with financial services.

Belize Forex issues. has a good deal of Forex experience. Both of these locations also provide more flexibility and lower startup costs than many other countries. Countries of Registra tion You may get customers from Start with countries where countries where you are not you are actively marketing, registered. then move to new countries if customer concentration increases in new places Taking Risk as a Counte r - Taking the other side of trades that Hedging trading risk with Part y go against you risks your capital.

liquidity providers. Fixed Costs Not enough income to pay the Make sure that you pay operating costs. your recurring costs from your recurring revenue.

Market Description Forex is an emerging market with many disaggregated players. The diagram below provides an overview of the major players and how they interact.

Currency trade values are in the multiple tens of millions of US dollars at a time. These trades are the ones that really set the price of a particular currency. They are used for speculation, hedging and currency exchange for international commerce. The prices are determined with less variability than smaller players. Regulation: These entities have similar regulations to large broker houses. However, in some developing countries, spreads are even larger, at Pips.

In general, this industry is still growing a great deal, and is thus in flux. Best practices are to get licensed in your country of incorporation to start, followed by a careful review of the regulations in countries where you are marketing.

Daily averages in April for different years, in billions of US dollars, are presented on the chart on the following page. institution; and, Retail traders small speculators are a small part of this market, but constitute a growth opportunity. Please see a listing of the Top Ten on the following page. This includes being a pass through, or being counterparty. Here, the broker makes money regardless of the market movements ASSUMING his technology is able to act quickly and without errors to unload the risk from the customers to the liquidity providers.

This is not zero risk! Errors can happen. Risk has to be monitored and controlled at all times. If you offer a 1. Of this, 1 of these pips goes to you, and 0. Commissions - The maximum number of pips you can realistically charge in the U. is about 2. In developing countries, you can actually charge higher commissions — up to 4 or 5 pips.

Here, we give an example of charging a commission of 1. The customer pays 1. Multiply this by the U. The customer buys from the broker and sells to the broker. If the customer makes money, the broker loses money, and the contrary. This model is simpler, but riskier. They take small profits, and let losses run. Ongoing customer acquisition is thus very important.

In this model, some of the more experienced or savvy customers will grow frustrated that they are not dealing with Straight Through Processing. Segmenting these customers out and dealing with them through a Straight Through Processing model is usually a good idea. Below we discuss such hybrid models. Technology The example below is an illustration of how a large multi-platform, multinational, multi liquidity provider brokerage organization looks.

It will usually offer multiple trading platforms, one of which will be mostly for retail maybe MetaTrader 4 and one of which will be mostly for institutional investors see red boxes. It will also use multiple specialized liquidity providers banks, in blue.

Each liquidity provider will offer different spreads for different pairs and different volumes for each pair. In general one can acquire a platform for a flat fee plus a monthly fee. MetaQuotes has developed a new platform, MetaTrader5 MT5 , and an upgrade fee should be expected.

In this case over the 1st year one will end up paying less than in the case of buying a platform but over time one will end up paying more. Tradeoffs In general the less you pay the more dependent you are on somebody else. If one purchases a platform one needs to also pay for its maintenance, add-ons, updates, and IT personnel to maintain and upgrade it. The broker who owns a platform fully controls it.

If one uses a white label one rarely has control over the minimum spread which is usually imposed on him with a markup of course. In addition the white label provider could theoretically shut down the access and the platform at all times. In the case of leasing a platform the control is somewhere in the middle. Platform features Before you choose a platform you have to decide on the features that you are looking for. Such an investment only makes sense in the case when the broker would like to have FULL control of the platform features and potential and in the case when the broker is envisioning becoming part of the top largest brokers in the world.

How to choose the platform and set of services that is right for you? We have put together a model that estimates the margin gain in each step of the value chain, and what that means for the cost to the customer of the entire transaction.

Counterparty - You need a counterparty for all your trades. You need to set this up in advance, but counterparty is a relationship for each major trade. They just take the other side of a trade, but you can switch counterparties on different trades. As counterparties, a large bank will be a market maker, whereas an ECN is just an exchange — they find someone else to make a match against you. Thus, for practical reasons, sometimes it is easiest to use a counterparty favored by your Prime Broker, because they already have a relationship.

Example: here, we have chosen ODL as our counterparty, which charges 1. Prime Broker - Your Prime Broker is your credit source — it is a bank that provides a service to you. For this relationship, you need to put money down in an account with that bank, and also pay a fee per transaction. There are several types of Prime Brokers, with varying associated  UBS, Barclays and DeustcheBank are the most expensive. These companies service fees. large companies, governments, and other large institutions.

leverage, but also the risk of losing everything. com — because time of something, against a counterparty might be ODL, or not. ODL is easier to start with. The upside of something like ODL is that it allows you to start with low startup costs. The downside is that fees are higher. The bank or prime broker that you work with will provide you leverage for trading — i. Usually, however, banks provide at most leverage. So to evaluate which credit source to use, you must look at both the leverage, and the fees per million dollars traded.

Platform As a brokerage, you offer a trading platform to your customers. You then offer that leverage to your customers. The customer trades against you via a platform, per our example Metatrader service that shows prices and charts, etc. So Metatrader charges you, the brokerage, a monthly fee, and then you translate that into a variable cost in pips that is added on to the customer fees. Options You can also add-on options given to the trader.

This package of options is chosen by the broker, you, as a business decision. You would basically add in costs to the trader, per trade, as part of your offering. With that, it is easier to place a projection on the profits you are likely going to make if you are able to successfully secure a deal to handle forex trading for a corporate client or individual client.

When it comes to starting a business of this nature, it will pay you to start from the scratch as against buying a franchise. First and foremost, before you can secure a business deal to trade forex for corporate clients, your profile will be scrutinized even if you are operating the franchise of a successful forex trading company brand.

Unfortunately, you can hardly find a franchise of a forex trading company to purchase meaning that if you want to own a forex trading business, then you must be ready to start from the scratch. This is so because the business is easy to start if you have the required expertise and it is still pretty much thriving and there are loads of opportunities available to aspiring entrepreneurs that are interested in the industry.

The truth is that it will pay you to start your forex trading company from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before choosing a location to launch the business. Please note that most of the big and successful forex trading companies around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success and of course you can build your own forex trading company brand to become a successful brand with corporate and individual clients from all across the length and breadth of the United States of America and other countries of the world.

If you decide to start your own forex trading business today, one of the major challenges you are likely going to face is the presence of well established forex trading companies and also certified forex traders who are offering same services that you intend offering.

The only way to avoid this challenge is to create your own market. There is hardly anything you can do as regards this threats other than to be optimistic that things will continue to work for your good. Generally, you have the option of either choosing a general partnership, limited liability company which is commonly called an LLC, or a sole proprietorship for a business such as a forex trading company. Ordinarily, general partnership should have been the ideal business structure for a small scale forex trading business especially if you are just starting out with a moderate start-up capital.

But people prefer limited liability Company for obvious reasons. As a matter of fact, if your intention is to grow the business and have clients, both corporate and individual, from all across the United States of America and other countries of the world, then choosing general partnership is not an option for you.

Limited Liability Company, LLC will cut it for you. For example, Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. If you take your time to critically study the various legal entities to use for your forex trading business, you will agree that limited liability company; an LLC is most suitable.

Generally, when it comes to choosing a name for a business, it is expected that you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business. If you are considering starting your own forex trading company, here are some catchy names that you can choose from;. So, it is imperative to create a budget for insurance policy covers and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your forex trading business.

Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your own forex trading business in the United States of America;. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subject to the review of attorneys as required by USPTO.

Asides from the results you produce, professional certification is one of the main reasons why most forex trading companies and freelance forex traders stand out. If you want to make impact in the forex trading services industry, you should work towards acquiring all the needed certifications in your area of specialization.

You are strongly encouraged to pursue professional certifications; it will go a long way to show your commitment towards the business. These are some of the certifications you can work towards achieving if you want to run your own forex trading company;.

Please note that the higher your qualifications and experience expertise , the easier it is for you to secure high profile forex trading deals from corporate clients. The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentation. These are some of the basic legal documents that you are expected to have in place if you want to legally run your own forex trading business in the United States of America;.

Aside from the forex required to trade with, starting a forex trading business can be cost effective especially if you choose to run the business from your home, share office space with a friend or make use of virtual office.

Securing a standard office is part of what will consume a large chunk of your start-up capital, but if you choose to start the business on a small scale, you may not have the need to go source for fund to finance the business. No doubt when it comes to financing a business, one of the first things and perhaps the major factor that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.

Here are some of the options you can explore when sourcing for start-up capital for your forex trading business;. Forex trading business and most financial services based type of businesses require that you see physically with your clients hence it must be located in a good location; a location that is prone to both human and vehicular traffic and a location that is at the epicenter of a business district if indeed you want to attend to loads of clients and maximize profits from the business.

The fact that you can operate your forex trading business from your home does not mean that location has little influence on the success of a forex trading company.

If you have taken your time to study the forex trading cum financial consulting industry, you will realize that financial consultancy agencies are willing to pay expensive rents in order to stay in a busy business district; a place where business and financial activities are at its peak. It cannot be overemphasized that the location you chose to open your forex trading business is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the required purchasing power and investment lifestyle.

If you make the mistake of renting or leasing a facility for your forex trading business in a not too visible or hidden location simply because it is cheap, then you must be prepared to spend more in promoting the business and perhaps giving direction to potential clients.

If you are new to the dynamics of choosing a location for a business such as forex trading business, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your forex trading company. So, if you are looking for a location for your forex trading company, ensure that it is a place that is located in a business district in your city, a place that is visible and easily accessible.

Of course, you would not want to locate this type of business in the outskirts of town. Your clients should be able to drive down and locate your office with little or no difficulty. On the average, there are no special technology or equipment needed to run this type of business except for customized forex trading software and social media management software applications and other financial related software apps.

The truth is that the numbers of people that register and trade on your Forex trading platform is what will determine the money you will make. In order to attract people to your trading platform, you should develop Forex trading demo; a learning tool for Forex trading. The Forex Brokerage Services industry is indeed in a mature stage of its growth. The industry is characterized by growth in line with the overall outlook of the economy, consolidation from the largest players in the industry and wholehearted market acceptance of industry products currencies from different nations and services.

The Forex Brokerage services line of business will continue to be in high demand by business establishment in the united states, most especially as the number of businesses and international trade increases.

Manufacturing industries and other corporate organizations are also expected to continue to source for Forex especially when they are involved in intentional trade or have international business partners. The Forex Brokerage Services industry is indeed a large industry and pretty much active in countries such as United States of America, United Kingdom, France, Italy, Nigeria, South Africa Japan, China, Germany, and Canada et al.

Over and above, starting a Forex brokerage firm requires professionalism and good grasp of our foreign exchange works on a global platform. Besides, you would need to get the required certifications and license and also meet the standard capitalization for such business before you can be allowed to start a Forex brokerage firm in the United States; the industry is heavily regulated to guide against fraud and criminality.

Executive Summary Freeman Jones Forex Brokerage Firm, LLC is a registered and licensed Forex brokerage company that will be located in the heart of Las Vegas — Nevada. The company will be involved in dealing in currencies from leading countries of the world whose currencies are traded in the United States of America. Aside from the fact that we will serve as a bureau de change for business and individuals who want to buy or sell foreign currencies, we will also engage in Forex trading on the internet.

We are aware that to run an all — round and standard Forex brokerage firm can be demanding which is why we are well trained, certified and equipped to perform excellently well.

We will offer a standard and professional Forex services to all to our individual clients, and corporate clients. We will ensure that we hire professionals who are well experienced in the Forex bureau firms industry with strong bias in online Forex trading. Freeman Jones Forex Brokerage Firm, LLC will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible.

We will cultivate a working environment that provides a human, sustainable approach to earning a living, and living in our world, for our partners, employees and for our clients. Our plan is to position the business to become the leading brand in the Forex brokerage services line of business in the whole of Nevada, and also to be amongst the top 20 Forex brokerage firms in the United States of America within the first 10 years of fully launching the business.

This might look too tall a dream but we are optimistic that this will surely be realized because we have done our research and feasibility studies and we are enthusiastic and confident that Las Vegas is the right place to launch our Forex brokerage cum Forex trading company before sourcing for clients from other cities in The United States of America. Freeman Jones Forex Brokerage Firm, LLC is founded by, Mr.

Freeman Jones and his family. Freeman Jones is Forex trader per excellence with adequate results to show for it. He has well over 15 years of experience working at various capacity within the financial consulting industry with strong bias for Forex in the United States of America.

Freeman Jones graduated from both University of California — Berkley with a Degree in Accounting, and University of Harvard MSc. Finance and he is a chartered account. Our Products and Services Freeman Jones Forex Brokerage Firm, LLC is going to offer varieties of services within the scope of the Forex brokerage services industry in the United States of America and of course on the global stage. Our intention of starting our Forex brokerage firm in Las Vegas — Nevada is to leverage on the opportunities available in the city.

We are well prepared to make profits from the industry and we will do all that is permitted by the law in the United States to achieve our business goals, aim and ambition. Our business offering are listed below; Trade Forex on behalf of our clients both corporate clients and individual clients Buy and sell Forex from leading countries of the world Provide other related Forex and financial consulting and advisory services 4.

Our Mission and Vision Statement Our vision is to build a Forex brokerage services brand that will become the number one choice for individuals, smaller businesses and corporate clients in the whole of Las Vegas — Nevada. Our vision reflects our values: integrity, security, service, excellence and teamwork. Our mission is to provide professional, reliable and trusted Forex trading and Forex brokerage services that assist start — ups, corporate organization, manufacturing companies and non-profit organizations in sorting out their foreign exchange and financial related concerns.

We will position the business to become the leading brand in the bookkeeping and payroll services line of business in the whole of Nevada, and also to be amongst the top 20 bookkeeping and payroll services firms in the United States of America within the first 10 years of operations. Our Business Structure Freeman Jones Forex Brokerage Firm, LLC, is a Forex brokerage cum Forex trading firm that intend starting small in Las Vegas — Nevada, but hope to grow big in order to compete favorably with leading Forex brokerage cum Forex trading firms in the industry both in the United States and on a global stage.

We are aware of the importance of building a solid business structure that can support the picture of the kind of world class business we want to own. This is why we are committed to only hire the best hands within our area of operations. Ordinarily we would have settled for two or three staff members and settle for just online Forex trading services, but as part of our plan to build a standard Forex brokerage services firm in Las Vegas — Nevada that will also be involved in buying and selling of Forex, hence we have perfected plans to get it right from the beginning.

The picture of the kind of Forex brokerage services business we intend building and the business goals we want to achieve is what informed the amount we are ready to pay for the best hands available in and around Las Vegas — Nevada as long as they are willing and ready to work with us to achieve our business goals and objectives.

At Freeman Jones Forex Brokerage Firm, LLC, we will ensure that we hire people that are qualified, hardworking, and creative, result driven, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders the owners, workforce, and customers.

As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more as agreed by the board of trustees of the company.

Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs. Defines job positions for recruitment and managing interviewing process Carries out staff induction for new team members Responsible for training, evaluation and assessment of employees Responsible for arranging travel, meetings and appointments Updates job knowledge by participating in educational opportunities; reading professional publications; maintaining personal networks; participating in professional organizations.

Oversee the smooth running of the daily office activities. Marketing and Sales Executive Identifies, prioritizes, and reaches out to new partners, and business opportunities et al Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of relevant projects.

Provides managements with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions. Responsible for financial forecasting and risks analysis.

Performs cash management, general ledger accounting, and financial reporting for one or more properties. SWOT Analysis Freeman Jones Forex Brokerage Firm, LLC engaged the services of a core professional in the area of business consulting and structuring to assist our organization in building a well — structured Forex brokerage cum Forex trading firm that can favorably compete in the highly competitive Forex market in the United States and the world at large.

edu no longer supports Internet Explorer. To browse Academia. edu and the wider internet faster and more securely, please take a few seconds to upgrade your browser. The following document is intended to serve as a guide for our customers who want to start their own Foreign Exchange Forex brokerage. This document will provide a roadmap to help you start your brokerage business using the Boston Technologies framework. Essentially, there are many different parts of the value chain to sort througheven with simple spot Forex, and thus many different ways to take on risk and achieve margin.

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Click here to sign up. Download Free PDF. Forex Business Plan. Abhishek Singh. Continue Reading Download Free PDF. Related Papers. Foreign Exchange Market Structure, Players and Evolution. Download Free PDF View PDF. New electronic trading systems in foreign exchange markets. Introduction The following document is intended to serve as a guide for our customers who want to start their own Foreign Exchange Forex brokerage.

The Role of Boston Technologies Boston Technologies builds, installs, maintains and supports foreign exchange software. Boston Technologies also works with our partners to help provide our customers with other related services to augment their foreign exchange businesses.

Boston Technologies is neither a broker nor a trading company. We will assist our customers with any relevant technology needs but we will neither hold end-user money nor initiate trades in any way.

Boston Technologies is NOT a trading counterparty. Starting Up Every brokerage is regulated in a variety of ways and can be started in a variety of locations. Assuming you want to start in a thoughtful, methodical way, here are the recommended steps to take: 1. Scope - Deciding on the scope of your brokerage business startup is important. We will discuss a recommendation for the scope of your startup in the sections that follow and the reasons behind the recommendation. Incorporation — You will need to incorporate your company in a location where there is a solid background in financial services and where it will be fairly simple, inexpensive and legal.

Registration - Registration brings legitimacy and credibility. Even where registration is optional, your company will benefit from being registered. Where registration is required, your company will need to be registered as a financial body in order to market in these locations. You should start by looking at all the markets where you plan to accept client funds. Capital Requirements - In general, being registered means that the local authorities will go through a due diligence process on the owner and the credibility of the project.

In addition, to secure the customer funds, many authorities will require that the owner of the entity deposit some capital in the brokerage. This capital is called Net Capital or Net Cap.

These requirements will be more described below. This means starting with securities and a set of regulations that are manageable and establishing your brokerage where you will be able to legitimately trade and compete without the danger of overstepping legal or regulatory bounds. Because of this, we recommend starting as a spot Forex company, trading over the counter, in order to become familiar with how the process works. However, the regulatory requirements and environment for these products is significantly more complex.

To jump into these right away would ultimately delay the process of creating a workable business model, in an industry — Forex — that is already early-stage and in many ways, ambiguous. Essentially, there are many different parts of the value chain to sort through — even with simple spot Forex, and thus many different ways to take on risk and achieve margin.

Given your assumed desire to be light- footed and your lack of a need for being able to market in Western Europe, we recommend starting your Forex brokerage in a less complex environment. London has an established set of regulatory hurdles and FX is therefore more difficult there. htm Offshore Financial Centers There are a number of islands such as the Cayman Islands and the Bahamas that are experienced financial services centers, though they may be less established Forex centers. Obviously, many of these locations have fairly low-cost barriers to entry and certain tax benefits, although many of them require that the institutions they license appear to have some sustainability.

asp compare. aspx  Cayman Islands, which has the largest value of AUM in offshore funds, and is also the strongest presence in the U. securitization market. Regulation and supervision of the financial services industry is the responsibility of the Cayman Islands Monetary Authority CIMA. The CIMA licenses firms to conduct securities investment business, which includes market makers, broker- dealers, securities arrangers, securities advisors and securities managers.

This is typically defined by country. In general the rule of thumb is that registering in multiple countries can get very expensive. If you are an online company, it is possible that you will get online clients from a variety of countries beyond where you register. At first, you may choose just to register in the countries where you are actively marketing.

If you start by incorporating in Belize, for example, then just registering in the developing countries where you will initially operate is likely the most cost effective path.

However, if you find that, say, you are getting a lot of clients from a different country — it will start to make financial and legal sense to go through the regulatory hoops of the country.

Below is a discussion of two example countries, Pakistan and Bahrain and also an overview of the U. registration landscape for comparison. Currently, the SBP is not specifically regulating Forex brokerages, but a good practice would be to incorporate in an area where there is Forex licensing in order to put forth a good faith effort to follow sound regulations.

Bahrain requires that if you are selling to its citizens, you need one of their citizens to be part of your partnership, or be in partnership with a local company.

Either way, you can still own the majority of the subsidiary company that is you set up in Bahrain. asp , which is essentially synonymous with being a brokerage in the Forex arena. Two organizations police the sector and step in to protect the consumer on a regular basis. These organizations are the National Futures Association NFA and the Commodity Futures Trading Commission CFTC.

Of the two the CFTC is most heavily involved in the detection and punishment for fraud, manipulation and abusive trade practices in the retail Forex sector. The www. gov website is an excellent source of information on customer protection and on-going legal disputes against brokers and other entities.

Here is a list of some of the regulating agencies:  NFA - the National Futures Association. Capital Requirements Depending on where you are registered, capital requirements will vary. Capital requirements are a catch-all phrase for the capital that countries, regulatory agencies or the country of incorporation will require in order to feel comfortable with you as a Forex institution.

In more highly regulated locations like the U. It is likely that startup brokerages will be required to have significant capital in the form of credit lines with a big bank. This is especially true in the case you would like to offer straight through processing or you would like to have a reasonable amount of risk control.

If you want to move beyond the developing country markets where you are located, you may be required to put up a higher net capital investment. See Section 5: Business Model for further discussion. It is possible to get credit lines from multiple banks at the same time to fulfill your total capital requirement.

Technolog y Problems To be prepared for the situations Have backups and a where you need to act quickly. Regulator y Existence Unknown regulatory environment which Ideally become a licensed can lead to regulatory investigation and entity where you are fines or other consequences.

incorporated and know your local markets; hire appropriate legal talent. Regulator y Update Forex is relatively new and faces Focus on simple regulations that are changing daily. securities first, and then move into more complex and highly regulated securities. Location of Incorporation Incorporating in an offshore area The Cayman Islands has a usually means that you are in a less- strong reputation for experienced country for dealing with financial services. Belize Forex issues.

has a good deal of Forex experience. Both of these locations also provide more flexibility and lower startup costs than many other countries. Countries of Registra tion You may get customers from Start with countries where countries where you are not you are actively marketing, registered.

then move to new countries if customer concentration increases in new places Taking Risk as a Counte r - Taking the other side of trades that Hedging trading risk with Part y go against you risks your capital. liquidity providers. Fixed Costs Not enough income to pay the Make sure that you pay operating costs.

your recurring costs from your recurring revenue. Market Description Forex is an emerging market with many disaggregated players. The diagram below provides an overview of the major players and how they interact.

Currency trade values are in the multiple tens of millions of US dollars at a time. These trades are the ones that really set the price of a particular currency. They are used for speculation, hedging and currency exchange for international commerce. The prices are determined with less variability than smaller players.

As a Forex brokerage company, your responsibility is to provide Forex trading platform for retail Forex traders. aspx  Cayman Islands, which has the largest value of AUM in offshore funds, and is also the strongest presence in the U. Therefore, you can make a lot of money from the forex trading business without investing too much. Over and above, you would need a minimum of 8 key staff to effectively run a medium scale but standard forex trading company. Even where registration is optional, your company will benefit from being registered.

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