Before you choose a licence, a platform or a liquidity provider, you need a clear picture of the market you are entering and the place a new brokerage takes in it. This guide is the one we give our own clients. It started as the research plan behind Apexum's brokerage technology and we have kept it current since.
How big the market is
The foreign-exchange market is the largest financial market in the world and the only one that trades around the clock from Monday morning in Wellington to Friday evening in New York. The Bank for International Settlements measures it every three years: in April 2025, trading reached about US$9.6 trillion a day, up 28% on 2022, with four centres (the United Kingdom, the United States, Singapore and Hong Kong) handling three quarters of it.
Retail trading is a small share of that total, but it is the share a new brokerage competes for, and it is served by hundreds of brokers rather than a few dozen banks. That is why the retail market rewards two things above all: trust, which a licence and a regulator provide, and execution, which technology and liquidity provide.
The four layers of the market
It helps to see the market as four layers. Each one sets prices for the layer below it and takes a margin for doing so.
The interbank market
At the top sit the large banks, trading with one another and with central banks. They quote the tightest prices in the market, measured in fractions of a pip, and they deal only with counterparties that carry a credit line. A new brokerage does not trade here directly.
Prime brokers
A prime broker is a bank or large institution that lends its credit to clients: hedge funds, large brokerages and, through intermediaries, smaller ones. It settles their trades in its own name against the interbank market and charges for the service. Access requires a substantial deposit and a track record, which is why most new brokerages reach the interbank market one layer down.
Prime of prime
A prime-of-prime provider holds a relationship with one or more prime brokers and aggregates their prices for brokerages that are too small to have their own. Spreads here are still tight, typically a fraction of a pip on the major pairs, and the provider adds a small markup or commission. For most new retail brokers, the prime of prime is the liquidity provider: it is where client orders go when the broker passes them through.
Retail brokers
Retail brokers give individual traders a platform, leverage and prices. There are hundreds of them. They earn the difference between the price they receive from their liquidity provider and the price they show the client (the spread), a commission per trade, or, when they take the other side of client trades themselves, the client's losses. In our experience the spread a retail broker charges on the major pairs is usually between one and three pips, and wider in markets where competition is thin.
Where a new brokerage fits
A new brokerage enters at the retail layer and buys its prices one layer up. Three decisions define it from day one:
- The business model: whether to pass every client order to a liquidity provider, to take the other side of client trades, or to do both (part 2 of this guide).
- The licence: which regulator will supervise the brokerage, and therefore which clients it may accept and which banks will open accounts for it (part 4).
- The technology: the trading platform, the bridge to the liquidity provider, the client area, the CRM and the partner system (part 3).
Everything else, from the marketing plan to the company structure, follows from those three.
What regulation does for a broker
A licensed brokerage keeps client money in segregated accounts, answers to a regulator that hears complaints, and publishes its capital. Traders notice: regulated brokers attract clients that unregulated websites cannot, and banks, payment providers and liquidity providers treat them differently. Part 4 compares the regulators brokers choose between, with their capital and fees as the regulators publish them.
Apexum's role
Apexum is a consultancy. We help brokers plan the company, apply for the licence, open the bank and client-money accounts and set up the payments; the regulators grant the licences and the banks open the accounts. We are not a broker, we do not hold client money and we never act as a counterparty to a trade. The guide continues with the business model. The original research plan is available as a download.
Sources
Topics
- Forex brokerage
- Market structure
- Liquidity
