Starting a forex brokerage: structure and timeline

The last part of the guide is the most practical: the departments a brokerage needs, what each one is responsible for, and the twenty-one steps from the first document to the first revenue, in the order we run them for our clients.

A flat structure

A brokerage works best as a flat organisation: a chief executive and seven departments that report to them and depend on one another as stakeholders. A flat structure coordinates faster in a market that trades twenty-four hours a day, five days a week, and each department can grow into several levels later without the company having to decentralise. Technology is usually outsourced to the platform and bridge providers, which is why it is the smallest team on the chart.

Chief executive

Drives the brokerage's growth and takes the decisions with the least impact on the rest of the company, relying on marketing, sales, support, finance and compliance for the facts.

Technology

Keeps the servers, the network, the telephony and the workstations running, backs up every sensitive record and holds the plan for an outage. Stability is not optional in online trading.

Marketing

The website's content, the advertising, the promotions, the newsletters, search optimisation, social presence, seminars and expos, and the data gathered from all of them. A good marketing team adapts to new channels as they appear.

Sales

Attracts and converts new clients, keeps existing ones satisfied, and runs business development and the introducing-broker relationships. A large share of a broker's revenue comes from traders who are pleased with their broker. Three eight-hour shifts, because the market is worldwide.

Support

Real-time help with questions and with account requests: deposits, withdrawals and closures. Also in three shifts.

Finance

Every monetary decision. The business model decides how predictable the revenue is (an agency broker's is easier to forecast than a dealing desk's), and every other department works with finance, so its staff must understand the whole business.

Compliance

Every legal aspect: the licence conditions, anti-money-laundering, client-money rules, trade audits, disputes and, when they come, lawsuits. A brokerage moves large sums; compliance is a department, not a part-time task.

Human resources

Recruits with the department heads so that every job description reflects the real skills, writes the employee handbook, handles leave and conflicts, and manages the office and its vendors.

The twenty-one steps

Planning and documentation

1. Write the business plan.
2. Write the company procedures, policies and strategy.
3. Sign the partnership or shareholders' agreement.
4. Choose the company name.

Entity creation

1. Incorporate and register the company where the licence wants it.
2. Open the bank account and fund the capital.

Office infrastructure

1. Choose the office, physical or virtual, as the regulator requires.
2. Set up the telephone numbers.

Technology set-up

1. The office network: server, workstations, printers.
2. Internet, telephony and messaging.
3. Choose and register the domain.
4. The website, the mailboxes, the client area and the CRM.
5. The online payment integration.

Operational infrastructure

1. Set up the trading platform.
2. Test the platform against the standards in part 3.
3. Sign the liquidity and coverage agreements.

Staff

1. Hire the departments.
2. Train them on the platform and the procedures.

Revenue

1. Finalise the marketing plan.
2. Set the marketing targets.
3. Acquire the first clients.

The licence application runs in parallel with steps 5 to 17: the regulator reviews the company, the office, the platform, the agreements and the people, so each of those steps produces a document the application needs.

Where to start

If you are starting from nothing, start at step 1 and the forex industry route: company, licence, accounts, payments. If you already have a company, we check whether it can hold the licence you want. If you hold a licence, we start with the accounts and the payments. The original research plan behind this guide is in the knowledge base, and the regulators' current figures on the forex licence page.