Foreign currency exchanges (forex or FX) run non-stop across the globe through over-the-counter (OTC) markets. The global nature of this boundary-less market allows traders seamless access through a broker despite geographical boundaries.
How to Open a Forex Trading Account - Getting Started on Forex
Having a forex broker licence greatly improves your reputation with the trading community and it boost client’s trust. There are many additional benefits, too.
What’s in This FX License Tutorial?
Being a licensed broker can gives you the credibility needed to open bank accounts and establish payment processing solutions and gain relationships with trading platform providers.
The financial instrument offered by forex brokers is typically a Contract for Difference (CFD), a contract between two parties, a buyer and a seller, allowing a trader to speculate on the movement of the price of the underlying asset without actually owning the asset.
Forex regulations require a forex broker licence authorizing you to arrange and deal in currencies. In many cases, it is a financial services broker licence with permissions for various financial instruments including forex, commodities, futures and shares.
Compliance rules and regulations may vary from country to country in terms of offered leverage, required deposits, reporting requirements, and investor protections, but generally there are three models forex brokers follow.
And, depending on the jurisdiction, the regulator may have a specific authorization for the model or combine all in to one.