Forex licence

What the licence allows

A CIF can receive and transmit orders, execute them, manage portfolios, advise and, with the €750,000 tier, deal on its own account in forex, CFDs and other MiFID instruments, and offer all of it across the EU and EEA under the MiFID II passport. It is the EU licence most retail forex and CFD brokers apply for.

Which capital tier applies

The Investment Firms Regulation sets three tiers of initial capital for every EU investment firm: €75,000 for a firm that neither holds client money nor deals on its own account, €150,000 for a firm that holds client money or securities, and €750,000 for a firm that deals on its own account or underwrites. A broker that runs a dealing desk (a B-book) needs the top tier.

Requirements

• A Cyprus company with its head office and day-to-day management in Cyprus
• At least two executive directors and two independent non-executive directors (the four-eyes principle)
• Compliance, anti-money-laundering, risk-management and internal-audit functions, each with a named person
• A physical office and staff in Cyprus; outsourcing stays supervised by the firm
• Membership of the Investor Compensation Fund

Documents

• A business plan with three-year financial projections
• The internal operations manual and the policies: compliance, AML, risk, best execution, safeguarding of client funds, conflicts of interest
• Questionnaires, clean criminal records and non-bankruptcy certificates for shareholders, directors and key staff
• Evidence of the initial capital and of its source

Steps and timeline

CySEC must decide within six months of a complete application; questions on an incomplete file stop the clock. Count on preparing the file first, then the review with its rounds of questions, the decision, and the conditions to meet before trading starts.

Once licensed

• Capital adequacy reporting under the IFR and audited annual financial statements
• Annual compliance, AML and internal-audit reports to CySEC
• Annual supervisory fees and Investor Compensation Fund contributions
• Transaction reporting and product governance under MiFIR and MiFID II

What the licence allows

The permission covers dealing in investments as principal or agent, arranging, managing and advising on CFDs, spread bets and rolling spot forex for UK clients. Retail CFD rules apply: leverage limits, margin close-out, negative balance protection and a ban on incentives.

Which capital tier applies

The permanent minimum requirement is a floor, not the whole requirement: from day one the firm also needs a credible ICARA, its own assessment of the capital and liquidity its risks and an orderly wind-down would take.

Requirements

• A UK company whose mind and management sit in the UK
• Senior Managers under the SM&CR, each approved for a named function
• An ICARA (capital and liquidity assessment) from authorisation onwards
• Client money held under the CASS rules where the firm holds it
• FSCS protection and the Financial Ombudsman Service for eligible clients

Documents

• A regulatory business plan with financial projections
• The compliance monitoring programme, the financial-crime and AML policies
• Senior Manager application forms with fitness and propriety evidence
• Evidence of capital and the ICARA

Steps and timeline

The FCA must decide within six months of a complete application, or twelve months otherwise. Most applicants spend several months preparing the file before they submit it.

Once licensed

• MIFIDPRU capital and liquidity reporting; the ICARA reviewed at least yearly
• Regulatory returns through RegData and annual accounts
• Consumer Duty outcomes and product governance
• Annual FCA fees and FSCS levies

What the licence allows

The same MiFID II permissions as any EU investment firm, passported across the EU and EEA: execution, portfolio management, advice and dealing on own account with the top capital tier.

Which capital tier applies

The Investment Firms Regulation sets three tiers of initial capital for every EU investment firm: €75,000 for a firm that neither holds client money nor deals on its own account, €150,000 for a firm that holds client money or securities, and €750,000 for a firm that deals on its own account or underwrites. A broker that runs a dealing desk (a B-book) needs the top tier.

Requirements

• A Malta company with its mind and management in Malta
• Fit-and-proper directors, a compliance officer, a risk manager and an MLRO approved by the MFSA
• A physical office and local staff
• Membership of the Investor Compensation Scheme

Documents

• A business plan with three-year projections
• Policies for compliance, AML, risk, best execution and client assets
• Personal questionnaires and background checks for owners, directors and key staff
• Evidence of capital and its source

Steps and timeline

The MFSA runs a pre-application meeting, then the formal review within the six-month MiFID II clock from a complete file.

What the licence allows

An AFS licence with the authorisations to deal in and make a market in derivatives and foreign exchange contracts for retail and wholesale clients in Australia. Retail OTC derivative issuers meet extra financial requirements (ASIC Instrument 2022/705 and Regulatory Guide 166).

Requirements

• An Australian company or a registered foreign company
• Responsible managers with the qualifications and experience ASIC expects
• Compliance arrangements, membership of AFCA for disputes, and compensation arrangements (professional indemnity insurance)
• Client money handled under the client money rules and reporting rules

Documents

• The core proofs: business description, organisational competence, financial resources
• Responsible manager CVs, references and background checks
• Risk management and compliance plans

Steps and timeline

ASIC assesses the application against its licensing kit and service charter; the time depends on the completeness of the proofs and on ASIC's questions. We give you an estimate after the consultation.

What the licence allows

Issuing OTC derivatives, including CFDs and margin forex, as principal to South African clients needs ODP authorisation; marketing them needs a Category I FSP licence with the derivatives product category. Most brokers hold both.

Requirements

• A South African company with a local office and key individuals
• Fit-and-proper directors and key individuals; compliance and risk functions
• The ODP criteria: governance, risk management, client classification, reporting to a trade repository
• Financial soundness and the FAIS operational requirements

Documents

• Business plan, group structure and counterparties
• Policies: risk management, conflicts, client money, AML (FIC Act)
• Fit-and-proper evidence for every key person

What the licence allows

The licence covers dealing in securities, including derivatives and CFDs, for clients worldwide. The FSA notes that it does not supervise the spot foreign-exchange market itself (the Central Bank of Seychelles does); the dealer licence is what forex and CFD brokers hold.

Requirements

• A Seychelles domestic company with a local office
• Fit-and-proper directors and at least one licensed securities dealer's representative
• A compliance officer and anti-money-laundering procedures under the AML/CFT Act
• The paid-up capital of US$50,000, evidenced in a bank account
• Professional indemnity insurance and segregated client accounts

Documents

• The FSA application form and business plan with projections
• Personal questionnaires, police clearance and references for owners, directors and representatives
• Policies: compliance, AML, risk, client funds
• Proof of the source of the paid-up capital

Steps and timeline

The FSA checks completeness first and publishes service standards for its response times. We give you an estimate after the consultation.

Once licensed

• Annual licence fee and audited financial statements
• Quarterly returns and ongoing AML compliance
• A licensed representative on the staff at all times

What the licence allows

A full-service investment dealer executes and deals in securities, including forex and CFDs, for retail and institutional clients, without underwriting. Underwriting raises the capital to MUR 10,000,000.

Requirements

• A Global Business Company with two Mauritius-resident directors and its principal bank account in Mauritius
• A licensed management company as administrator and registered office
• A compliance officer, and an MLRO and deputy MLRO independent of the board
• An FSC-approved auditor; segregated client funds
• Evidence of the MUR 1,000,000 capital within one month of licensing (GBC)

Documents

• The FSC application with a business plan and three-year projections
• Customer due diligence on every shareholder, director and officer
• Policies: compliance, AML, conflicts of interest, IT and business continuity
• Details of the trading platform, liquidity providers and custody of client funds

What the licence allows

A Labuan money broker brings buyers and sellers together in the money and foreign-exchange markets for a commission. It acts as an intermediary only: no dealing as principal, no market making, and no CFDs on anything outside the money and FX markets. Digital-asset brokering can be added, at 1:1 leverage.

Requirements

• An operational office in Labuan with staff for finance, records and a contact person
• At least two board members; fit-and-proper directors and principal officer
• Three years' money-broking experience, or a letter of awareness from the home regulator
• Capital deposited with a bank in Labuan or Malaysia, evidenced to the Authority
• Regulated counterparties: liquidity providers, custodians and payment providers

Documents

• Form LFB-MB with the business plan and financial projections
• Due diligence on shareholders, directors and the principal officer
• Policies for compliance, AML/CFT, risk, technology and client money

Once licensed

• Audited financial statements within six months of year end
• Client money segregated and reconciled monthly; withdrawals within three working days
• Prior approval for changes of business plan, 10% shareholdings, directors and outsourcing
• Annual licence fee by 15 January

What the licence allows

Class A covers debt securities and foreign exchange, Class B adds derivatives such as futures and options, Class C adds equities, commodities and precious metals. Class D, for digital assets, requires Classes A, B and C and a physical presence in Vanuatu with key persons on the island.

Requirements

• A Vanuatu company with a registered agent, and the Commission's physical-presence requirements
• A licensed manager and fit-and-proper directors and beneficial owners
• Details of the source of funds used to pay the capital (Financial Dealers Licensing Act, section 4)
• Risk management, custody and outsourcing arrangements per the VFSC guidelines
• AML/CFT risk assessment and policies

Documents

• The Principal's Licence application form and personal questionnaires
• Business plan, financial projections and the organisational structure
• Notarised passports, proof of address and police clearances

Once licensed

• Annual licence fee of VT 500,000 by the anniversary date
• The bond stays with the Commission; it is released only after revocation and a 90-day notice, with no outstanding investor claims
• Audited accounts and ongoing AML/CFT compliance

What the licence allows

Category 1A (dealing as agent) suits an STP broker; Category 1B (dealing as principal) a market maker. Arranging, managing, advising and custody are separate categories with their own fees.

Requirements

• A BVI business company with an authorised representative in the BVI
• At least two fit-and-proper directors; approved senior officers and significant shareholders
• A compliance officer and MLRO, with AML/CFT policies
• Capital resources adequate to the business plan and risks, with an undertaking not to redomicile without consent
• Professional indemnity insurance where the FSC requires it

Documents

• The application form, business plan and financial projections
• Personal questionnaires and due diligence for owners, directors and officers
• Policies: compliance, AML, risk, client assets, complaints

Once licensed

• Annual fees by 31 March; audited financial statements
• Prudential returns and notification of material changes
• Economic-substance and beneficial-ownership filings

What the licence allows

A securities investment business licence covers dealing, arranging, managing and advising for any client. A Registered Person may serve only sophisticated persons, high-net-worth persons and certain funds and entities, so it suits institutional and professional brokers rather than retail ones.

Requirements

• A Cayman company or registered foreign company with a registered office
• Fit-and-proper shareholders, directors and senior officers
• An AML compliance officer, MLRO and deputy MLRO
• Client funds and property accounted for separately from the firm's own
• Economic substance where the business is fund management

Documents

• The CIMA application through REEFS, with corporate documents and an organisation chart
• Personal questionnaires and certified identification for every beneficial owner and officer
• A client list or the categories of clients, and the business plan

What it means for a broker

For years brokers registered Saint Vincent companies because no licence was required. The FSA ended that in January 2023: a company that trades or brokers forex must now produce an approved licence from another jurisdiction when it registers, and existing companies had until March 2023 to comply. A Saint Vincent company on its own is therefore an unregulated broker, and banks and payment providers treat it as one.

When it still makes sense

• A group company beside a licensed entity (in Seychelles, Mauritius, Cyprus or elsewhere)
• A holding or technology company that does not deal with clients
• Low running costs and a quick registration through a registered agent

What it means for a broker

The Marshall Islands registers non-resident domestic corporations and LLCs through International Registries, but it has no licensing regime for retail forex. A Marshall Islands company offering trading to the public is unregulated, and most regulators abroad treat it as such.

When it still makes sense

• A holding company for a licensed group
• A technology, marketing or treasury company that never faces clients

What the licence allows

MISA licenses international brokerage companies on Mohéli, with fit-and-proper checks on directors and shareholders and AML/KYC policies, and publishes a register of licensees. The regime is fast and inexpensive, and correspondingly light: some banks and providers do not accept it, and it carries no passport to any client market that requires a local licence.

Requirements

• A Mwali IBC with a registered agent and office
• Fit-and-proper directors and shareholders, with police clearances
• AML and KYC policies and a business plan with projections