What is needed to setup a forex brokerage firm?

While setting up a forex trading firm, you might come across various challenges. Besides needing profound market knowledge and industry exposure, you need to have plenty of resources to get started.

You may also think whether you should start from scratch or buying a turnkey forex brokerage firm would be a better option. In this piece, I discuss some essential tools that you need to become a forex entrepreneur. 

forex brokerage firm1. Business plan

Drafting a business plan is a prerequisite for any startup. It would help if you considered various elements, including initial capital, recurring cost, legal formalities, and tax implications while setting up a road map for your currency trading business.  

2. Legal requirements

After finalizing a business plan, you need to register your forex business. Depending upon your jurisdictional area, the legal formalities may vary. Ideally, a less-regulated environment works well for a new forex broker. Not to mention, you can hire the services of law firms to help you formalize the necessary documentation and registration process. 

3. Setting up a website

Mostly forex trading occurs online. Therefore, setting up a website early in the startup phase is crucial. Companies offering turnkey brokers might also offer a website for your forex business. However, there is a high chance that those companies use the same template for other websites. Therefore, it is better to hire a professional website developer to help you build a customized website. 

4. Opening a bank account

Being a forex entrepreneur, you need a business bank account. However, opening a bank account for a forex company can sometimes become difficult. Especially, banks resist offering a business account to non-registered forex brokers. However, you can try talking to your liquidity providers to refer to a bank that accepts forex companies willingly. 

5. Source of liquidity

Liquidity is one of the most crucial elements of forex businesses. Owing to certain regulatory requirements, regulated brokers need to maintain enough capital funding to maintain high liquidity. However, the survival of a non-regulated firm facing liquidity issues can also become difficult. Not to mention, the liquidity provider can also affect the spread cost that you plan to offer to your clients.  Therefore, choose the liquidity provider that comes with tight spreads and liquidity abundance. 

6. Payment gateways

Forex brokers receive hefty deposits from clients. To make the process efficient and convenient, you may need to offer multiple payment methods to your customers. Remember, Payment Service Providers (PSPs) charge a flat rate on each transaction. To offer the best rates to your clients, your payment service providers must charge a lower fee. 

7. Trading platform

Being a forex brokerage firm, you need to offer a trading platform to your clients. You can obtain a license directly from MetaQuotes – the company behind the invention of the world’s most popular trading platforms MT4 and MT5. Alternatively, you can opt for a third-party white label forex provider. Not to mention, MetaQuotes does not offer a license for MT4 anymore. Therefore, a white label forex provider will be the only option for enabling your customers to access the MT4.

8. Trader’s room or clientele portal

A clientele portal allows traders to access their funds, watch their trading history, navigate the platform, submit the verification documents, etc. The clientele portal is also sometimes referred to as a trading interface or trader’s room. Good forex brokers always have a user-friendly trading interface. Besides being easy to use, it should be accessible in multiple languages. Branding options for integration with marketing websites and third-party software will be a plus. 

9. CRM tool

Client relationship management software (CRM) helps a business manage different tasks effectively using a single software. Often CRM comes being a part of the clientele portal. However, sometimes companies prefer to have a separate back-office tool to calculate revenue and manage fees. CRM also allows a forex broker to manage interactions with clients and partners. It can also have marketing tools and activity logs. Since a forex broker holds clients’ personal and financial information, the CRM of a forex brokerage firm is more sensitive. Therefore, when choosing a CRM for your forex brokerage firm, you should not compromise on technology.

Final words

Since starting up a forex brokerage business involves a lot of factors to consider, it might sound a little hectic. However, things become easier when you break down different factors into smaller chunks and pay close attention to each element individually. Don’t hesitate to hire the services of other professionals to help you set up a forex business.