Forex license in UK

When applying for a Forex license in the United Kingdom, applicants must meet certain requirements and demonstrate their compliance with several critical conditions and standards. Failure to meet at least one of these criteria may result in the denial of a license. Key requirements include:

• Legal presence and management

The company must be registered in a UK jurisdiction and have a registered office. An important condition is the presence of a local director, who must have the necessary experience and competencies, confirmed by the regulator through special tests and procedures.

• Financial conditions

Different license types have their minimum capital requirements: from 50000€ for a limited broker license to 730000€ for a market maker license. Each candidate must provide detailed financial statements and an assessment of the company’s financial position.

• Documentary evidence

The required application package includes a formal application, primary information about the applicant and the company, details of key individuals, a five-year business strategy, a description of the organizational structure, and financial statements.

• Personnel and physical presence

The company must establish a ‘reasonable and supervised’ presence in the UK, which includes the appointment of a compliance officer and CEO based in the country, vetted and approved by the regulator.

• Personnel qualifications

A key factor in a successful application is the availability of qualified people who form the backbone of the company. Not only must they be highly qualified, but they must also be approved by the regulator.

Additional requirements:

• Development of a business and financial plan
• Establishment of compliance and anti-money laundering (AML) and counter-terrorist financing (CTF) procedures
• Verifying compliance with customer knowledge (KYC) requirements for beneficial owners, directors, managers, and divisions
• Organization of confirmation of professional indemnity insurance

To start a forex business in the UK, the first thing you need to do is to register your company. This can be done online, which is the quickest way to do it. If all the information provided during the application is correct and there are no comments, the issuance of the registration certificate can take place within a few working days. The limited liability company (Ltd) format is often chosen for forex firms because of its advantages in terms of protecting shareholder liability and ease of attracting investment.

The basic requirements are:

• A minimum of one shareholder;
• Appointment of a minimum of one director who may be the same as the shareholder;
• Appointment of an anti-money laundering reporting officer (MLRO);
• Identification of a registered office address within the UK for the registered office;
• Opening a corporate account.

Procedure for starting a forex business:

• Approve a unique and legitimate name for your company.
• Rent or purchase a local office in the UK.
• Prepare all required documents, including their official translations.
• Identify the director and key employees.
• Send the documents to Companies House for registration and pay a registration fee of about 12 euros.
• Open a corporate account.
• Submit documents to obtain a license from the FCA regulator.
• Register the company with HMRC for corporation tax.
• If required, register for value-added tax.

The required documentation package when registering a company should include:

• Articles of Association;
• Details of share capital;
• Consent to the appointment of directors;
• Statement of compliance with detailed information about the company;
• Information on persons with meaningful influence over the management;
• Receipts for financial receipts;
• Proof of payment of the registration fee;
• Copies of certifying documents of shareholders and directors, proof of their addresses.

To apply for a UK Forex Brokerage License, follow these steps for an efficient and structured process:

• Gather the required documents.
• Pay the application fee.
• Register with the FCA (Financial Conduct Authority), and apply online along with the application package.
• await FCA review. The regulator will assess your application, checking compliance and information with other regulators.
• Be prepared for possible additional requests for information, documentation, or face-to-face interviews during the assessment.

It will take approximately 6-12 months to process the application. Successfully obtaining a license will allow you to operate, with the requirement to maintain compliance with FCA regulations. Failure to comply may result in fines or license revocation.

The UK offers forex companies a variety of licenses tailored to the specifics of their business. It is important to carefully select the type of license that best suits the company’s operational objectives and strategy.

Types of Forex licenses in the UK:

1. Proprietary trading license (Market Maker)

Designed for companies that trade on their account.

• Diversity of revenue streams through spreads and market operations.
• Enhanced reputation and market position of the company.
• Increased control over the risks of trading operations.

2. Model Agency License (STP)

Used by brokers operating on a direct trade processing model, linking client orders to vendor liquidity.

• Growth of the client base due to transparency and honesty in the execution of transactions.
• Increased client confidence due to the absence of conflicts of interest.
• Access to a wide range of liquidity providers providing competitive spreads.

3. Limited broker license

Designed for companies focused on marketing and soliciting clients for other brokers without managing client funds.

• Specializing in marketing and promotion without having to manage client finances.
• Creating partnerships with licensed brokers, and expanding service offerings.
• Opportunity to receive referral commissions that expand revenue opportunities.

Choosing the right type of license depends on many factors, including the business model, target audience, and strategic goals of the company. Consulting with Gofaizen & Sherle attorneys can help determine the best option and ensure that all requirements are met to successfully obtain a license.