What to reflect on before becoming a Forex Broker

More and more traders are thinking about moving on to the next level and establishing their own brokerage company. This is not a surprise since the forex market is currently thriving and there’s still a lot of room for newcomers. However, being a newbie in any situation is difficult, and therefore we decided to provide potential Forex brokers with guidelines on what to reflect on before setting up the brokerage company.

First and foremost, it is necessary to choose a country we want to register our FX firm in. The selection has to be based on thoughtful analysis, taking into account the budget we may invest and business requirements. Maybe it will be more beneficial to establish the company abroad? It is a very important decision to make, which will have to affect e.g. the amount of tax we’ll have to pay and the amount of initial capital.

Another selection has to be made with respect to the bank whose products we want to use. It is necessary for the broker to have corporate bank accounts where customers may transfer deposits and by means of which the company may effect transactions.

It is also essential to choose the business model for the FX brokerage company. We can choose from STP or Desk Dealing model or a combination of the two – a hybrid model.
It is also absolutely necessary for the FX broker to choose the liquidity provider. Here again, a thorough and detailed analysis is needed. You have to check the trustworthiness of the potential business partner, the range of products they offer and the time of execution. The system used by the liquidity provider is also important, thus we have to verify if such system fulfills high standards, especially for such events as SNB. Also, the price of the offer is worth checking and the type of reporting the liquidity provider delivers.
You also need to consider the technology you will be applying – there are many companies offering turnkey forex broker solution – maybe it is faster to choose this type of service in order to start operating the platform in short period of time.

That’s a lot to think about and each decision entails certain consequences, so it’s really advisable to carry out careful analyses, since the more time we spent on them, the better decisions we’ll be taken.

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