How to Become a Forex Broker

If you have decided to invest time and money to become a Forex broker, the following information will help you get started.

Your new brokerage company set-up plan would include:

1. Registration of your company in a local or offshore jurisdiction.
2. Application for a Forex broker license at the U.S. Security and Exchange Commission (SEC) if you plan to do business in US.
(If you want to open and operate outside the US, request an information kit from your local financial authority).
3. Opening a bank account within the jurisdiction to collect funds from clients.
4. An application for receiving online payments, if you’ll be accepting online funding.
5. Preparation of legal documents, including dealing manuals & agreements, anti-money laundering policies, conflict of interest policies etc.
6. Pay registration fees and meet a minimum capital requirements for opening a brokerage business (Broker-dealer applicants and registrants must have and maintain the minimum net capital required by Securities and Exchange Commission Rule 15c3-1 and comply with SEC Rule 15c3-3 governing customer protection, reserves and custody of securities).
8. Find liquidity partners, clearing company(s) that will clear your trades. (A clearing company will look for your to deliver a certain trading volume per month: e.g. a total amount of lots your clients will be able to trade each month).

Every step will include a set of documents to be prepared as well as qualifications to be passed. The package of requirements will depend on a jurisdiction where you choose to register a company.

Registrants must be prepared to pass thorough background investigation, pass examinations on general securities principles and state securities laws (NASD series 7, NASD series 63, 66). Among others, the following criteria are considered during registration application:
– financial solvency;
– conviction of a crime;
– evidence of past inequitable or fraudulent business practices in the sale of securities.

Related documents and links:

Guide to Broker-Dealer Registration by U.S. Security and Exchange Commission (SEC)

Registration Overview for Retail Foreign Exchange Dealers, IBs etc. by National Futures Association (NFA)

Forex Brokerage Roadmap (pfd) by Boston Technologies

Approximate costs of Starting own Forex Company

1. Company registration – $2000
2. Opening a corporate bank account – $500 – $3000
(To be noted that larger banks might require a minimum account balance (deposit) to be made and maintained throughout operation. The amount can vary from $50,000 to $500,000 USD).
3. Opening a physical office (if planned) – $10,000 – $30,000
4. Developing a website – $1000 – $25,000
5. Choosing a trading platform – $5000 – $150,000
(MT4 platform license would come around $100,000 – 150,000+/year. While IB/White Label solutions could result in $0 fees).
6. Hiring staff (support, IT, legal, other) – based on your local salary rates

White Labels and IBs

If you aren’t ready to buy your own Trading platform license, you can start with an IB or a White Label solution from a Prime broker (your Clearing company).

As a White Label you’ll be offering trading services under your company name.
A Prime broker will customize the interface and platforms for you, so that you’ll be running under your own logo.
Your Prime broke will also arrange a trading server for the platform and clearance of all clients’ trades for you. You can also leave the handling of deposits and withdrawals for your Prime broker, so that all you need to do will be: marketing (to bring new clients) and customer support (to keep those clients).
As a White Label you’ll be able to customize your own fee structure and dealing spreads to earn higher income.

As an IB (Introducing broker) you’ll be sending/referring all clients to your Prime broker, where they will eventually open a trading account. As an IB your goal will be to refer as many clients to your Prime broker as possible, because it’ll directly affect the income stream (commissions) you’ll earn for each referred client.
For this type of business you’ll need no licensing or registration. All you’ll have to do is find and refer clients, which can be done via any website (most common way), word of mouth, including conferences and seminars, by utilizing own existing client base etc.

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79 Comments

Yes, it’s different.
An affiliate doesn’t need to be a Broker. An affiliate doesn’t even have to have own website. An affiliate can post referral links on forums, other sites etc and earn commission from referral sign-ups.
While Introducing Broker is a more serious partnership. An IB is essentially another Broker – you need a website at the very minimum. Then you’ll create a plan with your prime broker about client referrals, handling of sign-ups, customer support and even handling of deposits/withdrawals (although the last one is usually done by prime brokers).

how do i become an introducing broker, is it different from being an affiliate??

Swiss brokers are all banks.
Bancofx – is not a bank, although their name sounds like one.
This broker is not regulated, although the’re in UK and should be registered wit FCA UK, but they are not, which makes it difficult to enforce anything on them.

Hi broker guru.
Where do I find out at what bank a forex broker bank. I want to know where does bancofx bank. They refuse to pay me back my money and profits. I have been requesting and trying for 4 months. If I can get the info my police department can get the info if they are
Having money. Frankly I think they just scamsters. I need help please

Definitely before becoming an Introducing broker, it’s better to find out all details about the Prime Broker. How? By simply asking them to provide that information.

The only other information readily available would be broker reviews – a good indication how broker treats its clients, whether it honors withdrawals and if there are any other problems.

I am an introductory broker of a forex broker. But I still not sure this forex broker reliability in terms of financial standing and transparency.
How can I gain more information on forex broker such as the ownership and annual financial performances….

Hello Deepak,

answering your questions directly, yes, any broker can cheat.
Forex agents are not going to directly oversee your trading. The goal of a Forex agent is to bring a client (you) to the Main broker. If successful, Forex agent will earn commission.
After that you’re trading and dealing with the Main broker, and the agent is nowhere to push pries to reach your stop loss or shift the trend. It’s all up to the main broker how to deal with your trades, and yes, “cheating” as you named it can happen.

I wanted to know about forex agent.

Is they can cheat to people?

1. If will put stop loss, they can push to reach there.
2. Thread to going on one direction, while you will start threading suddenly they can moved to opposite direction?

Let me know anyone help for this question.

-Deepak

Hello William,

promoting your business with us can be done via banner ads. Thank you!

i work for company that make forex solution … any one need information about it please enter to the website

wiliam

i work for a FX Broker based in london and looking for people to do IB, WhiteLabel or just want to trader forex. We can work in any countries.

[email protected]

francesco

Hi Guru
Can u assist me plz m intending to trade as a forex/ib or white label in south africa,for the first time can u advice me where n how to start my email is [email protected]

Hi I want to trade forex but I can’t find a broker here in South Africa.Can you sugge
st some?I want someone who will break it down to rands.

hi
i want to become forex broker in india and what is the procedure step by step

I want ib programm broker . I have international level client is available. [email protected]

how can I find any good law firm who can help me to register as a broker in Seychelles or any cheap country

I can provide you complete forex solution with license/bank account website and all.
Please contact me if you want to see the demo of the other brokers I am currently setting Up.My email : pankaj.singh(at)swissmail.com

Hello Sir,
I want to become a White Label Broker. But I don’t know the process of White Label Broker.
Kindly provide me the complete knowledge about this. I also want to know that is it legalized in India or not.
Thanks & Regards

please please tell me with detail that how i can open a broker account? please tell me with detail with procedure…. i m from pakistan…

I wish I knew such steps for every country, but I don’t, I’m truly sorry.

hello borex guru

plz tell me in details ( step by step ) how to become a borex broker in hong kong ?

regards
p rana

Hello every one,

I am working with FOREX company in South East Asia I just feel that they are charging clients too much. I’d like to deal with company that has solid track record with a very competitive pricing.

Yes, Pankaj
it’s legal to trade Forex in Hong Kong for both residents and non-residents.
Besides, Hong Kong is among the largest foreign exchange markets in the world.

hi forex guru
i want to know that is forex trading in hong kong is legal , can non resident can trade in hong kong ?
regards
pankaj

To become a White Label you need to register a company, yes.
You can register a company in any country, including your own country. It doesn’t need to be registered in the same country as your Forex broker.

hi

i’m a individual person not having any firm/company, if i want to become a ‘White Label’ do i need to registered any company or it works just an IB , if yes then in my country should i registered a company or in that country where the main broker is registered . plz guide me .

Hi,

both are brokers. A white label is a partner broker (think of a franchise company), but instead of being a branch under someone’s name, a white label broker operates under its own name.
After that you can be a great “franchise” with exceptional customer service etc, or a not so great one, all depends on your business goals.

Hello BrokerGuru

What is the main different between while label and broker?

Mr. Please tell me…the step to setup brokerage firm? thank

Setting a Forex brokerage – means opening and running a business obviously. Which means you’ll be earning profits by attracting clients who will pay spreads for trading through your company.

Hi Mr. BrokerGuru

Would you like to tell me what kind of benefits that I get if I set up broker firm?

If you need to become a broker. You can either purchase the entire platform MT4/MT5 or just a white label. However in a white label you share the profits with your broker. Contact me for the licensed platform Skype- metaquotes_ancilla or 919619824272

Sorry, Sanjay

we don’t have such data at this time.

hell0 sir i sanjay kumar from patiala punjab(india),want to know about how much fund is require to become a fx broker firm under financial service authority(UK)

Offshore capital requirements tend to change.
Thus it’s always better to contact local regulatory bodies – it’s their job to provide comprehensive information on that.
Regulatory bodies list:
Forex regulation

Investment in Forex trading is a risky business.
Your clients should be very well familiar with trading Forex = e.g. be traders themselves, before considering any investments. If they never traded Forex themselves, it’s absolutely not advised to invest in Forex trading.
Once decided, you should look at Forex managed accounts options & focus on finding a good account manager.

hello sir
i have many client who can invest money but what is good for them and how can i do that i am not a broker

Could you provide the offshore options for getting various licenses in different jurisdictions, with capital adequacy requirements for these licenses.

Thanks

Unfortunately, we don’t have such information, sorry.

Hi,

I seek information about how difficult is to open a forex broker company in South Korea if anyone knows.
I found related laws and sites about the procedure but beyond that i could use a tip of general view in the korean market.

Thank you.

See here: IB vs White Label forex brokers
comment form September 8, 2011 and next

i want know the fees of new broker in the forex how much minimum money for the new person who want be the broker in forex ?

Hi Everyone,

I need to hire a AP(Associated Person) to apply introducing broker(IB) in NFA. If any of you or know any one would like to join as AP for us please contact me [email protected] very much appriciate!

May

The short answer: Yes, you can.
The long answer: Depends if you’ll be able to find liquidity providers. They will want to see high volume. If you alone won’t be able to generate this trading volume, then it’s also an option to create a group of traders/investors to meet these goals.

I am trader who can do volumes and make a big investment, but Can I set up a seperate firm (brokerage house) privately and have a tie up with liquidity providers.

A – you need to study trading. This can easily be done online with the vast number of online resources teaching the basics. If you’re totally new to Forex, you can even start with this basic school: http://www.babypips.com/school/

B – start trading on a demo account. Demo accounts don’t require any deposits. On this account you’ll test your skills and knowledge received while studying.

C – in order to start trading with real money you don’t need lots of capital. Nowadays, you can find brokers that offer even so called “Cent accounts”, where you can trade with cents (http://www.www.100forexbrokers.com/mini-micro-accounts-comparison Scroll down tot he bottom of the article to find a list of brokers who offer Cents accounts).
You can invest anywhere from $10 to $1000 or $10,000 depending on your skills and the risks you’re willing to take.

D … Z – that’s all the costs. If you’ve got what it takes to become a succesful trader, you’ll earn money, but if your skills aren’t strong enough, you’ll lose a few first deposits before making any profits. That will be the only cost of your trading. Good luck!

Please provide a complete details on becoming a forex trader from a to z , with its costing , thanks

there is no difference.

Dear BrokerGuru,
Can you tell me the difference between Clearing House and Broker House. Please tell me !
Thank you

Thank you for the feedback!

We won’t be able to recommend/give names of specific brokers, as our policy requires us to remain fully unbiased.
However, for your goals you’ll need to look for brokers who are at least 7-10 years in business.
They will provide stable and guaranteed rewards with many flexible options to chose from. They also have the largest base of IBs and a large number of offices worldwide, which is an important factor too.

Hi, Wow…wonderful site.

Lots of useful information here. Not sure if you know the answer to this, but I was wondering if you know any firms I can sign up with as an Introducing Broker that (not white labeling) that :
a. pays commission on volume for both Forex & Futures (Forex/Futures is a must…but out of curiosity, do US equity brokers provide similar volume based fees as well?)

b. ability to enter OCO orders that reside on the server (ie. if you enter the order, the ‘client’ computer doesn’t have to remain ‘on’ for the order to be tracked an executed)

c. has global offices to cater for clients wishing to open accounts from anywhere in the world.

Would be great if you have any recommendations on this.

Many thanks.

You need to look for White Label Forex solutions, such as:
Integral.com

I am interesting for working as a Forex broker. How to become a Forex broker ? I am a LICI’s Agent and a Mutual Fund Broker.

Supriyo Mahalanobis
[email protected]

There are already some great companies out there that will basically start a brokerage for you. Leverate got some great reviews leverate.com and there’s also Panda (not sure what their site it). They all offer different products. Just make sure their private label offering has everything you need… like a web trader, mobile trader, liquidity provider etc.

The best broker? This site doesn’t rate brokers. Sorry.

i want u trade in this market…but i m not getting an idea..which company is best among all ? i m an indian and in india it is to difficult to trade in forex.

Details and conditions are specific for each broker. Find a broker you’d liek to do business with and ask them to send you documents etc.

i need details about whitelable also sent cost , [email protected]

hello
I want to know – how can you connect to the Currenex himself without a broker, I do not (leverage) nuzho his shoulder and Transaction Fee

how to do this?

I know that there is an FSA regulated Broker in London who have information on white labels and IB solutions for VertexFX Trader and Meta-Trader 4 (MT4)

For further details:

Web address:
http://www.abshire-smith.com/partners/

RBI is not clear on their policy or rule.If they realy want to protect the indians from the forex trading then why they allow a few forex brokers to operate in India? FXCentral,Boston Merchant,4xprime,Forex Control,Money Rain(MRC Markets) all they opened their offices in India.RBI should clear in what basis they allowing forex brokers and restricting individuals to forex trade?

Forex in India is not allowed according to the Reserve Bank of India:
http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=23941

RBI Advisory on Overseas Forex Trading through Electronic / Internet Trading Portals

The Reserve Bank of India has today clarified that remittance in any form towards overseas foreign exchange trading through electronic/internet trading portals is not permitted under the Foreign Exchange Management Act (FEMA), 1999. The Reserve Bank has also clarified that the existing regulations under FEMA, 1999 do not permit residents to trade in foreign exchange in domestic / overseas markets.

Residents are, however, permitted to trade in currency futures and options contracts, traded on the stock exchanges recognised by the Securities and Exchange Board of India (SEBI) in India, subject to the conditions specified by the Reserve Bank from time to time.

Background

The Reserve Bank had noticed advertisements issued by electronic / internet portals offering trading or investing in foreign exchange with guaranteed high returns. Many companies even engage agents who personally contact gullible people to undertake forex trading/ investment schemes and entice them with promises of disproportionate / exorbitant returns.

The Reserve Bank of India cautions the public not to remit or deposit money for such unauthorised transactions. The advice has become necessary in the wake of many residents falling prey to such tempting offers and losing money heavily in the recent past.

Alpana Killawala
Chief General Manager

Press Release : 2010-2011/1196

Can i become an online foreX broker from india ? Using e curriencies such as alertpay,liberty reserve,etc ? And to allow my traders to trade in eur/usd,jpy/usd. Coz onl9 trading does not include currencies like inr ? Thank u in advance

At our site we don’t suggest/recommend any brokers, our web policy requires us to stay 100% unbiased.
Our goal is to collect information about brokers and provide traders with ready facts and data in order to help them make own choice.

PLS SUGGEST ME FOREX BROKER

White Labels can be useful not only for finance professionals/companies who want to start forex brokerage, but also for established brokers who want to offer new services. http://www.forexbrokersolutions.com/ offers Metatrader 4 and brokers, using a different trading platform, can use their White Label Solution to offer Metatrader 4 platform as additional service.

As a rule, those who want to become a White Label seek for suitable brokerage companies. You’ll just need to contact a broker that you’re interested to partner with and tell them that you’re considering to become a WL. The rest is arrangements and contracts.

i want to operate white label, were can i get one? contact me on adminatlivetradecenterdotcom

Thank You BrokerGuru, the information is indeed very helpful.

Thanks once again

MJ

There is plenty of work to be done to open a brokerage company in India. To help you get started:

Useful links for starting Forex brokerage in India:

Reserve Bank of India: Guidelines on trading of Currency Futures in Recognised Stock / New Exchanges:
http://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4410&Mode=0

SEBI: contact them to obtain the Guidelines/Manual with the registration procedure.
http://www.sebi.gov.in/

Some discussion about the Financial budget (just for the general guidance, I can’t confirm anything from the posted numbers):
http://www.forex-tsd.com/raw-commercial-ideas/20933-partners-required-starting-forex-brokerage-firm-india.html

Great to hear from you again, RahmanSL!
Thank you for all your help and answers on the site!

BrokerGuru, looks like quite a number of people wants your free advice & time to do their leg work/internet research for them. : )

RahmanSL

Hello BrokerGuru

Thanks for the lsit of regulatory bodies in different countries. I would highly appreciate if you can guide as to which regulatory body to approach to set up a white lable forex business in India. It would also be really helpful if you can give a fair idea of what the financial budget could be.

Thank you in advance

MJ

Regulatory requirements will differ for each country/regulatory institution.

Forex regulatory bodies

You should check up with local financial authorities about the exact rules and requirements that apply in your country.

Hi

Please guide on the financial and regulatory requirement on setting up a “White Label” forex business under a regulated broker. How do we find out what regulatory requirement are applicable in a particular country.

Thanks

MJ

The CFTC report Oct 31, 2010.
You need at least 1,000,000 USD if you’re looking to open an CFTC and NFA compliant U.S. brokerage firm.

a lot 🙂

How much money is involved with this type of business?