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An easy guideline on how to get a Forex license

An easy guideline on how to get a Forex license

Obtaining a Forex broker license is a crucial step in starting a business. This not only increases the credibility of the company but also provides traders with guarantees. However, you must first select a license in order to have a right to operate on the Forex market.

The rise of interest in the international forex market against the backdrop of a decline in key interest rates has led local regulators such as SEC, FINMA, and FCA to tighten the rules and decide to prohibit traders from transacting in currencies, assets, and derivatives such as CFDs.

How to get a Forex license, and which one should you choose? What do brokers need to do for a license to work on the foreign exchange market? 


Starting Your Own Forex Broker: Where to Start?

If you already have a brokerage firm or are planning to start one, then you need to go through a few important steps. For starters – choose the Forex license type to obtain it and organize trading. The absence of a license hurts the confidence of users in the company but poses certain risks that can affect both the company and its clients as well. Getting a Forex license increases the transparency of the company and contributes to successful business development, which is unlikely for an unlicensed broker. Below are a few simple steps that will help create fertile ground for establishing legal services for your Forex brokerage business and provide legal guarantees to protect client funds.

Starting Your Own Forex Broker: Where to Start?

Figure out which license you want to get to open a Forex company

In order to obtain forex licenses from specific regulatory bodies such as the US’ CFTC or UK’s FCA, you can only offer services to traders in those countries. This is because each regulator sets its own rules. They also set the procedure for reporting and rules for taxation.

At the same time, the company is obliged to strictly adhere to the regulator’s rules and policies. For example, the CFTC limits the leverage for private traders in CFDs to 1:20 for major currency pairs and 1:50 for others.

The good news is that your choice of jurisdiction is not directly tied to your office’s physical location: you can open a company in the US or UK and choose an offshore jurisdiction to obtain a Forex license. Many FX brokers prefer neutral zones for their business, such as St. Vincent and the Grenadines, New Zealand, the Cayman Islands and the Republic of Georgia, Vanuatu, and so on.

On the one hand, having an FX license issued by a major regulator such as the FCA in the UK or the CFTC in the US will keep traders’ confidence in your financial services very high, which will help attract new clients more actively, and also simplify the process of opening bank accounts for your Forex business transactions. On the other hand, establishing an offshore company will enable the flexibility of the services offered and reduce the cost of the Forex license, as establishing a company in certain jurisdictions requires not only high costs but also the development of a more complex business plan.

Jurisdiction’s choice to open your brokerage business is fundamental: it determines how easy and stable the business will run. You should remember that with a large number of strict regulatory requirements, you may encounter many problems and risks that will significantly complicate the process. In the following sections, we will explain the tiers of Forex licenses in more detail.

Other factors also play a role in choosing a Forex license. Determine if you have enough start-up capital to purchase licenses. If you want to work in the Forex market internationally and obtain licenses from local regulators, the costs are high. In addition, local regulators impose high capital requirements.

Perhaps it would be better to obtain a single offshore forex license, the cost of which is much lower. The advantage of offshore licenses is not only their low cost but also the fact that they offer the possibility to provide services in many parts of the world. However, offshore companies also have their disadvantages, which we will discuss a little later. Unlicensed brokers run an increased risk not only because their activities are not registered but also because of the lack of transparency, which can discourage potential clients and hinder expansion.

Prepare documents and services for obtaining a Forex license

Each regulatory authority establishes its own list of documents and procedures for obtaining a Forex license. Some regulators impose stricter requirements, while others have a soft policy regarding Forex trading.

In order to obtain a forex trading license from a local regulator, it is necessary to contact the service that issues licenses and verifies that the brokerage firm meets the regulator’s requirements. The licensing process is lengthy and complicated, and unexpected difficulties may arise when you first apply for a license.

To simplify the process of obtaining a Forex license, services that offer services for obtaining licenses for Forex brokers will help you. You can find a list of companies providing such services on Finarm’s website.

Forex companies’ preparations to obtain licenses also include opening bank accounts. The forex broker must bring all company documentation in line with Know Your Clients (KYC) and Anti-Money Laundering (AML) guidelines; then, you need to open a company account, connect a trader account, and so on. In other words, fully prepare the service to work.

To start a forex business, you also need liquidity to allow traders to trade conveniently and attract them. So a Forex broker needs to find a liquidity provider that connects it with a market maker – banks, investment or hedge funds, or other financial institutions. The quality of the service provided by the Forex broker depends on the choice of liquidity providers. Use only reliable market makers that are able to provide sufficient liquidity to the brokers.

Finarm provides brokerage companies with assistance in selecting market makers that will be able to ensure high liquidity for traders. Moreover, with Finarm, you can easily and quickly find the market maker in any market, be it forex or crypto. Consultations are available as well.

Prepare documents and services for obtaining a Forex license

Obtain a license

The last is obtaining a Forex license. Afterward, the brokerage firm can attract clients and expand its business. The higher the license category, the greater the confidence in the broker, but the higher the costs. Moreover, obligatory restrictions may discourage some clients.

The difficulty of obtaining a license from a local regulator is that Forex brokers must pay taxes and report their financial results once a quarter.

In any case, a licensed Forex broker, even in an offshore zone, will be able to provide legal guarantees to traders and increase clients’ loyalty.

Finarm will help companies in choosing and obtaining a license to ensure legal Forex trading.


What are Forex licenses?

Financial institutions, forex brokers, and banks provide investment services enabled by licenses issued by financial regulators. Only after obtaining the required license can a brokerage firm operate in the Forex market.

Regulation of the Forex market in different jurisdictions is carried out according to the rules set by local financial regulators. Another difference is that some regulators allow you to do business only in your own country within your own legal framework, while others are not limited to a single jurisdiction. There are two main categories of licenses for Forex brokers: offshore licenses and licenses from local regulators.

What are Forex licenses?


Licenses of local regulators

These types of licenses are, in turn, divided into subcategories by level. The higher the license category, the greater is the trust in a broker, but the requirements for forex business are also stricter. Let us take a closer look at the individual license categories of local regulators for Forex brokerage.

First-Class Forex Jurisdictions (Level A)

These are the jurisdictions with the highest level of scrutiny and strict regulation of financial markets. Commodity Futures Trading Commission (CFTC), Futures Commission Merchant (FCM) and The National Futures Association (NFA) regulators in the US, and the Financial Services Agency (FSA) in Japan are in this category.

In order to obtain a Class A Forex license, you must meet high capital requirements, provide segregated client accounts, and maintain your financial records strictly in accordance with the regulations of the regulatory bodies. In case of non-compliance with the prescribed requirements, the retail foreign exchange dealer runs the risk of receiving heavy fines, which may even lead to the suspension of business operations. At the same time, however, forex brokers with a Class A license are the most trusted ones not only by private traders but also by large ones.

Forex jurisdictions of the second class (Level B)

Countries belonging to this class have less stringent requirements and rules for Forex brokers. The same applies to company financial statements and authorized capital requirements. The licensing procedure is also simplified, but the cost can be higher – up to $50,000. Another disadvantage of Level-B jurisdictions is that you often have to be in a certain country to obtain a license.

The Level B category includes the regulators of the Financial Services Authority (FSA) and the Financial Conduct Authority (FCA) of the United Kingdom, as well as the Australian Securities and Investments Commission (ASIC).

Forex jurisdictions of the third class (Level C)

The third category includes countries that have even looser regulations for forex brokers compared to level B countries but still reliably protect both the companies themselves and their clients. The cost of licenses in these countries varies from 40,000 to 100,000 euros.

You can obtain a Category 3 Forex license from regulators such as the Malta Financial Service Authority (MFSA), Cyprus Securities and Exchange Commission (CySEC), and Cyprus Investment Firm (CIF), as well as Financial Service Providers (FSP) in New Zealand. As with Categories A and B, the forex broker must maintain an office branch in the country whose regulator issued the license, but the requirements for financial reporting and monitoring are much less stringent. At the same time, traders’ trust in Forex brokers working in these countries is still rather high.

The only real drawbacks are the high capital requirements, similarly to the first and second-tier countries, and the long time required to obtain a license for a brokerage firm (up to six months or more). The minimum capital to obtain an MFSA license is €730,000, for example.


Pros of obtaining a license from a local regulator

  • High level of trust. The higher the license category, the more confidence clients will have in the service. A licensed forex broker that offers legal guarantees will be able to attract many large-volume traders.
  • Legal protection of clients and their money. Users of brokers licensed by a major regulatory authority enjoy the most reliable protection.
  • The ability to use comprehensive financial instruments for Forex trading. However, regulators set limits for investors and traders, such as trading volume and/or leverage.


  • Limited opportunities for business development. Forex brokers that have obtained Class A, B, and C licenses may only operate in certain countries and provide services, functions, and trading platforms to residents.
  • Financial restrictions. A licensed broker has to follow the rules and impose restrictions on clients in accordance with the laws of the country in which it operates. Companies that violate these rules may be fined or otherwise sanctioned. The restrictions relate to limits, the ability of traders to register with a forex broker or open an account in a particular jurisdiction, limits on CFD leverage, and other trading conditions.
  • Difficulties in getting the license. More “prestigious” Forex licenses are harder to obtain. The same applies to the duration of the procedure – obtaining a license can take up to six months or more. And brokers with Class D and E licenses are less trusted.
  • The need for a specific physical location of the office. Usually, it is required for a brokerage firm to be located in the jurisdiction to obtain a license. In addition, Class A-C jurisdictions require not only the presence of an office in the country but also the payment of all relevant taxes.


Offshore forex licenses

These legal zones are good because they do not require actual presence to obtain a license, and in some cases, a license is not required at all, although this option is not suitable for companies who want to establish themselves as a reliable Forex broker. On the other hand, offshore regulators have minimal capital requirements and the cost of the licenses themselves, which usually take up to 3 months to obtain. In rare cases – up to 4-5 months.

Offshore forex licenses

Forex jurisdictions of the fourth class (Level D)

Category D includes countries with the loosest policies and regulations on licenses for foreign exchange and securities dealers. Vanuatu and the British Virgin Islands are good examples. These countries allow really fast obtaining of a Forex license. Registration usually takes up to three business days, and forex trading licenses are issued within three months.

Category D licenses have not only a lower capital requirement, but also the procedure for opening corporate accounts is simpler compared to higher categories.

Forex jurisdictions of the fifth class (Level E)

Category E is characterized by low cost and quick obtaining of a license, but at the same time, it is not even necessary to obtain them. For example, to obtain a Mauritius foreign exchange license (FSC), you must have a capital of at least $20,000. Companies registered in Level E countries are the least trusted, but starting a business this way and opening a bank account is much easier, especially if this is your first business.

Class 5 jurisdictions include St. Vincent and the Grenadines and Seychelles. The initial fee is only $200, and the annual fees are $1000. This is one of the cheapest options to open a brokerage business in the foreign exchange markets.

Unfortunately, these jurisdictions do not have a good reputation, so few clients entrust their funds and open accounts with companies registered in these countries. This is because the lack of licenses opens room for fraud and money laundering. Moreover, there is a risk that the company itself becomes a platform for laundering illegally acquired funds.


Advantages of obtaining an offshore Forex license

  • Low cost and high speed of receiving the license.
  • Simplified licensing process.
  • Minimum capital required.
  • Minimal or no restrictions on trading.
  • No need to be physically present, and the geography of services is not limited to current offshore jurisdictions.


The biggest disadvantage of offshore jurisdictions is that traders are reluctant to trust the companies registered there, as some brokers turn out to be frauds and deceive their clients, and regulators in these countries do not monitor reporting and business practices of companies. And the risks are not only for the clients but also for the companies themselves.



Choosing a license is an important step in starting and growing a brokerage business. You must determine which type of license is best for your capital and goals. You can also combine licenses depending on which jurisdiction you want to work in. For example, if your primary market is Canada, then it is advisable to obtain a license from the Investment Industry Regulatory Organization of Canada (IIROC) to offer brokerage services in that country, and for clients from other countries, choose something more favorable – for example, the jurisdiction of Vanuatu or Seychelles.

Whichever type of license you choose, Finarm will select a service for you that will help you obtain a license and find liquidity providers so you’ll be able to work effectively on the Forex market.

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