Offshore forex broker license jurisdictions, compared

Fees are spent. Capital stays in the company, and in several of these jurisdictions it must sit in a bank account, or with the regulator, for as long as the licence is held. Neither is the whole budget: formation, a registered agent, an office, resident directors, staff, audit and legal fees come on top, as our breakdown of where the money goes shows. The page covering the three UAE regulators adds their agent and matched principal categories.

Older articles often quote EUR 125,000 or EUR 730,000 for a European licence. Neither figure appears in the current capital rules for investment firms. In the EU, Article 9 of the Investment Firms Directive sets initial capital at EUR 75,000, EUR 150,000 or EUR 750,000 depending on what the firm is authorised to do, and Cyprus applies the same three levels. The UK's MIFIDPRU rules use the same amounts in pounds. The lowest level is only for a firm that does not hold client money. The 750,000 level applies to a firm authorised to deal on its own account, which MiFID II defines as trading against its own capital. It is only a floor: own funds must be at least the highest of that floor, a fixed overheads requirement of a quarter of the previous year's fixed overheads and, where it applies, a K-factor requirement. Which permission your business needs is a question for your adviser.

Mauritius and Seychelles are the ones most often described as balancing cost against credibility, and both carry reporting obligations. Vanuatu and Belize appear regularly on the same shortlists.

Two names that still appear on many offshore lists need a warning. The Financial Services Authority of Saint Vincent and the Grenadines states that it does not issue licences for forex trading or brokerage, so registering a company there does not give it a forex licence. The Authority says such a company must be licensed in the countries where its clients are. In the Comoros, the central bank has named the Mwali International Services Authority and the Anjouan Offshore Finance Authority among fictitious structures that claim to grant licences they have no power to grant.

Labuan sits slightly apart. As a Malaysian federal territory with its own regime, it is often the first stop for founders in Southeast Asia. Its money broking licence is narrower than it sounds: the broker may only arrange trades as an intermediary, and the licence is aimed at institutional and wealthy clients, with retail clients expected to stay under half of the client base. There is a fuller explanation on our Labuan money broking page.

None of these is universally right. The correct answer depends on where your clients are, which payment providers you intend to use and how much you can afford to maintain year after year. An offshore licence covers only what its own regulator permits. It does not make it lawful to take on clients in a country whose rules restrict them. Seychelles, for example, requires a licensee to tell the regulator every country where it offers, or plans to offer, services, and to give assurance that those countries allow their residents to deal with it. This page is general information, not legal advice.

We could not find a licence for dealing in forex or CFDs with clients in any law, fee schedule or licence requirement that Dominica's regulators publish.

The Financial Services Unit Act 2008 makes it an offence to carry on a financial services business in Dominica without a licence, and its third schedule counts trading in foreign exchange and in derivatives, for the firm or for its customers, as a financial services business. A licence under that Act, though, is one granted under the laws listed in its first schedule: offshore banking, exempt insurance, international trusts, international business companies, credit unions, building societies and the development bank. None of them is a forex or CFD dealing licence, and the Unit's published fee schedule covers credit unions, insurance, money services, offshore banks and virtual asset businesses, with no forex dealer category.

The Unit says it supervises every financial institution in Dominica except commercial banks and securities business. Securities business there is licensed by the Eastern Caribbean Securities Regulatory Commission under the Securities Act 2001 that the Eastern Caribbean states share. Its broker-dealer licence needs EC$1,000,000 of paid-up capital and two staff licensed by the Commission, but the Act defines securities as shares, bonds, rights, options on securities, fund units and anything later prescribed, and does not mention forex or CFDs. Ask the Commission in writing before assuming that licence covers a forex brokerage.

The offers sold online as a Dominica forex license that we looked at were an international business company, or a sub-licence issued by a private company that calls itself a master licence holder. Registering a company is not a licence to deal with clients, and we found no master licence or sub-licence in the Financial Services Unit Act or its fee schedule. The Unit states that entities not listed on its website are not authorised to do business in Dominica, so look up any provider's name there before you pay. This is general information, not legal advice.

For most licences it does not change your technology. The exception is a licence that does not let you keep client trades on your own book, such as Labuan money broking or a matched principal permission in Dubai or Abu Dhabi: on our platform the brokerage is the counterparty to each client trade, even when it covers the trade with a liquidity provider, so it does not yet suit those licences.

The platform is the same wherever you are registered. Instruments, leverage limits, account types, document requirements and the wording clients see are settings, and the platform is built for a brokerage that fills client orders itself.

So run these tasks in parallel. Licensing runs for months and the technology for weeks. Waiting for the first before starting the second adds weeks to your launch for nothing.

All of that runs on your own brand, your own domain and your own database, on a deployment separate from every other broker. Your clients and staff never see a vendor name, and no tenant table is shared.