The foreign #exchange ( FX ) market is the most liquid market in the world, with a daily turnover of more than $5 trillion per day and is unique in that sense that it is:
Continuous operation 24/5Low margins of relative profit compared to other markets of fixed incomeLow barriers to entry, meaning #FX brokers have comparably lower minimum deposit requirements compared to other financial products
By establishing a Forex brokerage, you can tap into the opportunities of this market by offering online trading platform and tools for your clients.
Clients will then pay you for this service through either a commission fee or a spread markup applied by you on currencies traded.
What you need to consider when starting your Forex brokerage
So you have made your research, defined your customer segment and finally decided to launch your #Forex #brokerage.
There are then five main areas you need to consider getting your #business set-up and running smoothly:
1.License ( or not),
2. Website,
3. Back office,
4. Liquidity solution,
5. Payment solutions.
1. Company incorporation and license
The first thing needed before launching your Forex brokerage and signing up clients, you need to register a company in the right jurisdiction. Once you are incorporated, you may also consider being licensed to provide the credibility expected by traders to send their funds to you as deposits for trading.
When deciding what license to choose, you need to within multiple factors such as:
Geographical regions of your target audience Initial capital requirements by the regulator Application time for license processing Ease of access to banking facilities
To start a brokerage you could consider to get onshore or offshore licence.
2. Website
Once you have the legal part sorted out for your FX brokerage, you need to launch a website that clients can browse to in order to learn more about your services, signup for a trading account or contact you.
3. Brokerage CRM & BO
Once your potential client visits the website and completes signup, the details should be sent to your back office system, while the client continues to complete his KYC process. The KYC is a crucial step for a broker to implement in order to review the legal documents and details from a user before enabling them to trade.
Having your client relationship management (#CRM) and customer data easily accessible at all times is very convenient when it comes to other client-related procedures within the system.
Therefore, to increase the efficiency of your business, you should strive to have access to as much of the functionality within this system as possible.📷
With Fair Trading Technology’s BrokerTools, you get all of this in one platform for your FX brokerage including seamless integration between all of its other modules:
4. Liquidity
Once you have your broker management platform up, website ready and trading platform & conditions configured, you need to get a price feed and access to the Electronic Communications Network (ECN) integrated in order to show pricing for trading symbols in platform and to send order requests to market. Also, you can decide to warehouse the risk, if you are a market maker broker.
When choosing your liquidity provider (#LP) there are some things to consider:
LocationNumber of tradable instrumentsFees
5. Payment solutions
The most important part of the FX brokerage is to make sure you can accept deposits from your clients to fund their trading accounts.
You should locate payment service providers (#PSP) that can cater your needs based on geographical region and offer the methods required by the clients. It is also strongly advised to have more than one provider so that if one is currently unavailable, you can redirect clients to another account.
Since this is a crucial part of your business, you should always be on the lookout for payment providers and have a dormant account ready in case you need to activate them. Most of the PSPs don’t charge you anything for opening the account but processing fees vary.
Summary
Once all these items are there and connected to each other, you are then ready to launch your brokerage. But your work doesn’t end there, now you need to set up your #marketing strategy in order to reach those clients.
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