Home > Forex brokers > Features > License


Forex Broker potential and license

The forex broker has to become a potential participant of the world's unpredictable, dynamic and largest market force- the forex market. More than 1.8 trillion dollars are traded every day in this forex business. Since the forex brokers are related to monetary institutes and banks, they need to get registered under the Futures Commission Merchant, which is currently being regulated by the Commodity Futures Trading Commission.

These banking structures or the forex brokers, on which depends the entire inter country currency trading, need to have integrity, expertise and knowledge. But at present, millions of brokers are thriving in the market. So, it gets very herculean to make the right choice. When the downfall strikes, the client not only pays the extravagant commissions of the brokers and also losses his entire hard earned money in just a second.

At the same time, if you crave to establish yourself as a forex broker and do not know the legal steps towards it, this article is just for you.

Importance of Broker license

The broker license is the accurate means of checking the authenticity and reliability of the trader. Under the FAIS act, the traders need to register themselves for licensing in the FSB, if they are trading with client's funds. This act is not applicable to the individual investors. At the same time, FIA confers the traders with evaluation of their services, forex advices and education.

Do's and Don'ts for Brokerage firms

In case, any brokerage firm provides trading training, the FSB licensing is not a measure of their credibility as it's not compulsory to have one. But then, in case the company introduces brokers to the client, it needs to be registered under FSB. It cannot advertise and pursue any financially paying processed without being registered.

It was mandatory for every brokerage firm and traders to be licensed by 30th September 2004. Any how, those traders who have marked their advent after this date have to compulsorily register themselves before they initiate their business activities. If caught, they can be punished severely. The time duration of registration and confirmation process requires at least 3-4 months time.

Most of the traders get confused to where they can register. They still harbor doubts regarding this and feel that they can apply for license through FIA. But in reality, this custom has now been changed and FSB handles the entire process of registrations by itself.

The trading and service providers who manage the forex accounts instead of the investors need to get registered for license in terms of FSP category 2 of FAIS. Those who introduce brokers and others who solicit the forex investments under their financial advice process need to be registered in FSP category of FAIS.

In case a company has several branches in different countries the process of registration differs slightly. In this case, the branch head, the training manager and the respective support manager are the basic representations in the trading executions. So, it's necessary that they are the bona fide members of the respective company and are registered under FSB. This rule is followed for all the forex brokerage firms which have different branches.

Most of the deluded brokers feel that joining any trading course serves as the needed qualification and thus donot cave in for licensing process. In reality this is not the case. On the other hand, it can be very detrimental to their career. But at the same time, one can take the registered persons examination for enhancing their skills at forex trading and can also add to their qualifications.

In a nutshell, both the clients and the brokers need to seriously contemplate on the licensing process.



Related topics: