Labuan Forex License | Definitions and application requirements

 

The Labuan Forex License gained a lot of respect after the very recent changes in the regulatory regime of more reputable jurisdictions, just like our very own European MiFID ii, which made it inevitable for forex brokers to look into other possibilities to rest their brokerage operations.

Supervised by the Financial Services Authority (Labuan FSA), the arm of the Labuan International Business and Financial Centre (IBFC), a money broking license allows a Forex Broker to operate uninterrupted within a low tax regime, limited restrictions in the corporate structure and a relatively quick setup (relative to the complexity of each case and compared with other jurisdictions).

 

Firstly, to answer the most frequently asked questions we receive regarding a Labuan Forex License:
  • Local office and employees are a requirement
  • The capital requirements of RM500,000 (approx. $125,000) can be used as operating capital

 

So how does someone start the process to obtain a Labuan Forex License?

Same as with most licenses, the process starts by collecting/submitting documents. After receiving conditional approval by the Labuan FSA, the capital requirements as well as the office set up must be arranged.

Find out which brokers are registered in Malaysia today as well as the country’s latest economic data.

 

In this regard, the documents required are more or less the same:

  • Notarised copy of Passport
  • Recent government Utility Bill (water, electricity – no older than 3 months)
  • Reference letters for Shareholder(s) and Directors from a Bank and a CPA
  • Bank statement not older than 3 months, confirming the funds required for the capital requirements (RM 500,000 equivalent to approximately $125,000)
  • A certified copy of Academic qualifications (true copy stamp from the university/college is enough) for Shareholder(s) and Directors

Important note: The documents must be in the English language – if they can’t be provided in their original form in English, a notarized English translation must be sent as well.

 

Looking to obtain a Labuan Forex License? Contact us to look into the details

 

Information on the corporate structure requirements of a Labuan Forex License

The Shareholder of the company can be a legal person, unlike the minimum 2 Directors (that must be pre-approved by the Labuan FSA) and appointed on the board. The 2 Directors must have proper backgrounds and experience and their approval is at the discretion of the regulator. The Shareholder(s) and Directors are not required to be residents of Malaysia. There are also no restrictions to where the board holds its meetings although the minutes must be signed by a resident secretary.

An office with minimum annual expenditure of $20,000 and 2 local employees is mandatory, as well as audited financial statements and the filing of annual and tax returns. A RM 5,000 (approx. $1,500) yearly license renewal fee is due before the 15th of January of the next year.

The Labuan FSA offers a very discreet and private environment for licensed entities, allowing for strict confidentiality and no public disclosures of the beneficial owner’s info.

 

Recent Changes

After announcements on guidelines, changes and updates on the conduct of business of forex brokers (that came into effect on January 1st, 2018), an approval from the authorities of countries intended to do business in, became mandatory. The Labuan FSA will require this before allowing the broker to commence operations. Transactions in the Malaysian Ringgit are prohibited as well as soliciting Malaysian residents. There are margin requirements and leverage restrictions (although not as bad as Europe and US) that are capped depending on the experience of the trader. Segregated client accounts, time frames for client withdrawals, a detailed business plan and compliance with the AML/CFT Act on money laundering issued by the Central Bank of Malaysia (CBM) are part of the mandatory supervised operations.

Link to the guidelines

 

Why a Labuan Forex License?

Some key characteristics of the Labuan Forex License include but are not limited to the very low costs compared to most regulated jurisdictions, the stability of Malaysia’s political environment, its strategic location relative to potential target countries as it shares the same time zone with major Asian countries like China, Hong Kong, parts of Russia & Indonesia, Philippines and also a small 1 hour difference with parts of Russia, Indonesia, Cambodia, Laos, Bangladesh, Japan, South Korea, Thailand, Myanmar, Vietnam.

If you have Institutional business as a network and operate through a forex IB or White Label program, jurisdictions like Malaysia are a great option to start your own brokerage, before moving forward into more complex and expensive alternatives. Unlike working unregulated, a Labuan license will provide comfort to your clients who need a regulated broker to support their trading needs.

 

Time frames to get the license:

Although people/offices will try to convince you that they can get your setup up and running within 4 months (or less), we will refrain from making any promises since it’s in the discretion of the national regulator to approve, ask questions or even reject any application depending on its complexity and structure. Usually our initial internal assessments are enough to identify problems (if any) in the early stages, thus maintaining excellent time frames.

 


 

How allFX-Consult can step into this picture:

allFX-Consult is a boutique forex consulting agency, catering to quality rather than quantity. For over a decade, our Directors have been connecting with some of the best individuals/professionals, service providers and brokers the industry has to offer so that we can meet any forex corporate challenge.

Because of this, allFX-Consult always has a counterpart/partner for any corporate structure. Before we make any recommendations, we thoroughly examine all possibilities. We’re chosen for being discreet, detail oriented and deadline driven.

Contact us for a private conversation to discuss your case through the contact form or one of our emails at info@allfx–consult.compartners@allfx-consult.com.

#forexlicense #offshorelicense #labuanforexlicense #forexib #whitelabel

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Tied agent | Definitions and registration requirements

 


 

What is a Tied Agent?

A Tied Agent is a person (natural or legal) established in a Member State, who, acting under the full and unconditional responsibility of only one Investment Firm (the “IF”) of a Member State, on whose behalf it acts, promotes investment or/and ancillary services, attracts Clients or prospective Clients, receives and transmits Client orders in respect of investment services or financial instruments, places financial instruments or/and provides advice to Clients or prospective Clients in respect of those financial instruments or services.

 

We are copying below Article 29 of MiFID2 regarding Tied Agents, directly from the ESMA website (link provided below):
  1. Member States shall allow an investment firm to appoint tied agents for the purposes of promoting the services of the investment firm, soliciting business or receiving orders from clients or potential clients and transmitting them, placing financial instruments and providing advice in respect of such financial instruments and services offered by that investment firm.
  2. Member States shall require that where an investment firm decides to appoint a tied agent it remains fully and unconditionally responsible for any action or omission on the part of the tied agent when acting on behalf of the investment firm. Member States shall require the investment firm to ensure that a tied agent discloses the capacity in which he is acting and the investment firm which he is representing when contacting or before dealing with any client or potential client.
  3. Member States may allow, in accordance with Article 16(6), (8) and (9), tied agents registered in their territory to hold money and/or financial instruments of clients on behalf and under the full responsibility of the investment firm for which they are acting within their territory or, in the case of a cross border operation, in the territory of a Member State which allows a tied agent to hold client money.
  4. Member States shall require the investment firms to monitor the activities of their tied agents so as to ensure that they continue to comply with this Directive when acting through tied agents.
  5. Tied agents shall be registered in the public register in the Member State where they are established. ESMA shall publish on its website references or hyperlinks to the public registers established under this Article by the Member States that decide to allow investment firms to appoint tied agents.
  6. Member States shall ensure that tied agents are only admitted to the public register if it has been established that they are of sufficiently good repute and that they possess the appropriate general, commercial and professional knowledge and competence so as to be able to deliver the investment service or ancillary service and to communicate accurately all relevant information regarding the proposed service to the client or potential client.
  7. Member States may decide that, subject to appropriate control, investment firms can verify whether the tied agents which they have appointed are of sufficiently good repute and possess the knowledge and competence referred to in the second subparagraph.
  8. The register shall be updated on a regular basis. It shall be publicly available for consultation.
  9. Member States shall require that investment firms appointing tied agents take adequate measures in order to avoid any negative impact that the activities of the tied agent not covered by the scope of this Directive could have on the activities carried out by the tied agent on behalf of the investment firm.
  10. Member States may allow competent authorities to collaborate with investment firms and credit institutions, their associations and other entities in registering tied agents and in monitoring compliance of tied agents with the requirements of paragraph 3. In particular, tied agents may be registered by an investment firm, credit institution or their associations and other entities under the supervision of the competent authority.
  11. Member States shall require that investment firms appoint only tied agents entered in the public registers referred to in paragraph 3.
  12. Member States may adopt or retain provisions that are more stringent than those set out in this Article or add further requirements for tied agents registered within their jurisdiction.

 

See the complete article directly on the ESMA website.

 

Should you become a tied agent?

To answer this question, like with any evaluation on what to do next or how to get bigger, we need to examine your current standing and if tying your business to a regulated Investment Firm is needed at this stage. Maybe you are a White Label or large forex IB that has prospective business in the EU and needs a “vehicle” to enter legally. Most would think that the only way is through a full license, but maybe you’re not ready to take on such costs and compliance demands. Or maybe you tried to get regulated and found difficulties to be approved or even worse, got rejected and you need to identify plausible and feasible next steps.

 

Do any of the above scenarios describe your current status? Contact us now to look into the details

 

If your business is ready to enter the EU area, no matter the reasoning, becoming a tied agent requires minimal cost, hassle free registration process and it’s a great stepping stone, to evaluate if it’s worth it to go for a full EU license on your own. It will support your reputation, build your brand’s name, give you credibility with PSPs and banking institutions and create history for future use with a regulator (if you decide later to apply for a full license).

 

You need to take into consideration that operating as a Tied Agent under MiFID2, means you are obliged to offer trading conditions as a European regulated broker. The marketing and sales plans, the client protection, the tight trading conditions are only part of the regime, so it would be wise to have a solid plan and a European client base (or a prospective European business) before looking into such a concept. Its important to note that no EU regulated broker will accept to connect/tie their business if it doesn’t make sense – not only compliance wise (to have a clear standing with your operations) but also relative to the income you will produce with them.

 

What is the process to become a Tied Agent?

Firstly you will seek registration with the national regulator to be appointed as a Tied Agent of a specific Investment Firm and be registered in the Register of Tied Agents.

Check out CySEC’s register of Tied Agents here 

 

Some of the details you will provide in this regard will include the following (The complete list of needed documents will be provided on a case by case basis and depending on the status of the company applying to become a Tied Agent):

  • Name of the Tied Agent and/or Trading name(s)
  • Notarised company documents and contact information
  • Your agreement with the Investment Firm with estimated revenues
  • Personal questionnaires and documentation for shareholders, directors and employees of the Tied Agent who will provide Investment Services

 

It’s then in the discretion of the national regulator to ask further questions, documents and clarifications. It’s usually a fast procedure, taking just a few months to finalise but if your operations fit in this scenario, it’s definitely worth taking it into consideration. As a Tied Agent, you will learn a lot about the EU target audience, the EU regulatory framework and if it makes sense to invest and get a full license of your own.

 

What does it cost to apply for a Tied Agent registration?

Firstly you need to find the Investment Firm willing to tie itself with your operations. Not all licensed brokers will want to do this, especially if they don’t have enough information regarding who they are tying with and that this new partnership, will not jeopardise/burn their license.

Looking for an EU licensed broker to tie your operations with? Talk with one of our partners today

 

So it is typical that exchange of information will take place, several calls and meetings before any actual numbers/costs are brought forward and reviewed. When it’s all said and done, the cost for the application to the regulator is quite small and can be handled through our office. From experience, what matters the most is the final arrangement on profit share that depending on the size of the licensed broker, can vary significantly. It would be irresponsible to throw random percentages of profit sharing, because each case is different.

 

Lastly, the Tied agent will need to employ a Head of Reception and Transmission that needs to be a certified professional (in the case of Cyprus, the employee needs to be registered in CySEC’s Public Register of Certified Persons (the “Public Register”) which has a salary cost as well as a small application cost, for the regulator to approve the person.

 

How allFX-Consult can step into this picture:

allFX-Consult has done extensive research on the topic and brokered quite a few deals concerning Tied Agents. In many cases, we recommended alternative solutions/partnerships because as mentioned above, not all cases fit the scenario of a Tied Agent. Some cases were ready for a full license and therefore were handled as such. Some others required simpler structures/partnerships/compromises, used as milestones to reach future long term licensing goals.

Our process is simple – we will examine each case separately and provide realistic recommendations based on our findings. All deals brokered by allFX-Consult, eventually resulted in obtaining a full license (either in Cyprus or abroad) or remained successful partnerships (Tied Agent partnerships or other) that to-date benefit all parties involved.


 

About allFX-Consult:

allFX-Consult is a boutique forex consulting agency, catering to quality rather than quantity. For over a decade, our Directors have been connecting with some of the best individuals/professionals, service providers and brokers the industry has to offer so that we can meet any corporate forex challenge that comes our way.

allFX-Consult always has a counterpart/partner for any corporate structure. Before introductions/connections take place, we thoroughly examine all possibilities.

Contact us for a private conversation to discuss any forex related topic through the contact form or one of our emails at info@allfx–consult.compartners@allfx-consult.com. We specialise in training sales teams and forex corporate structures for individuals that want to Start a Forex Brokerage.

#tiedagent #forextiedagent #forexlicense #offshorelicense #euforexlicense #forexib #whitelabel

 

Useful links

Check our comprehensive list of worldwide supervising authority bodies (includes all member states of the EU)

What are the application requirements for a CySEC license?

Cyprus Forex Brokers – comprehensive list of CySEC regulated brokers and country stats 

 

 

 

Forex ECN | A walk through the types of brokers


 

What is a Forex ECN?

Straight forward definition, not very different from what you will find online, ECN stands for Electronic Communication Network. Simply put a forex ECN is a type of execution that allows a trader to place orders through the Interbank Market, in a more transparent and direct manner than trading against a single forex broker. As we all know, trading against a single broker can have disastrous results in a trader’s account, with so many of them running clandestine dealing rooms in a dark corner of the world.

That being said, not everyone’s the same – through our Sales Training service, we’ve come to get to know market makers that run amazing backend operations, big enough not to worry about specific accounts but rather decide on a daily basis the strategy they will use to handle their overall volumes. Irrespective of their size though, the term market maker still implies a fully operational dealing room in who’s discretion, trades are being executed with strategies in favour of the mothership.

Before we look deeper into the nature of a forex ECN, ponder this – a broker that attracts traders onto its ECN platform is looking for a “cleaner” relationship, since profits are derived from volumes traded and not money deposited in the trader’s account. True ECN brokers are indeed on the side of the traders, supporting their winning strategies, knowing that it will inevitably increase trading volumes.

 

How does a forex ECN work?

Throughout the years, technological advancements supported the development of systems that helped to facilitate dealing in OTC derivatives such as currency exchange rates. Back in the day, only a handful of companies were able to provide bridges that connected trading platforms with liquidity providers.

The Interbank Market, the market that ECN connects to, consists of Banks and large financial institutions that push their liquidity and volumes of transactions in a manner that allows transparency, anonymity and reliability to each trade that requires its liquidity.

Through a forex ECN trading platform provided by the broker, a trader gains access to deeper liquidity and an execution policy unlike any other. Once an order is placed by a trader, irrespective of buying or selling, the system will provide the best possible (best bid or best ask) price available at that instant.

So the system itself is acting as a dealer, therefore cancelling the manual dealing rooms that are normally handling trader’s quotes in a market making environment. A forex broker that does not operate a dealing room is also referred to as a No Dealing Desk or NDD broker.

 

Technology behind Forex ECN

What’s better than receiving orders in fractions of a second (milliseconds) as if you were placing your order standing (or sitting) with your laptop at the major data centres in New York and/or London?

The Equinix data centres with their fibre optic cables are recognised to be the fastest, most reliable price sources in the world. Low latency connections, lightning fast executions, reliable trading conditions are some of the advantages that NY4 and LD5 provide and it’s the reason that leading true forex ECN brokers use them for connections and advanced price aggregations with major liquidity providers and pools.

 

Trading with a Forex ECN account

All brokers that claim to offer forex ECN accounts should show order information and exchange rates in real time. This includes orders processed as well as the prices offered by banks. It ensures transparency in a world where most forex brokers used to run chop shops in dark corners of the world and profiting from the “not so known” price aggregation and price filling at their discretion.

For scalpers and traders that follow high market volatility, typically due to major fundamental announcements (like the Non-Farm Payrolls report), a forex ECN account is the best option since it basically eliminates price manipulation and the dreaded re-quotes. Re-quotes occur especially during high volatility, where the forex broker rejects a price asked from a trader (claiming the market moved) and provides a re-quote that rarely benefits the trader.

This “no-human intervention” is also what defines an STP (Straight Through Process) broker, that uses no dealing room but instead sends the quotes straight through to liquidity providers or an ECN, and only acts as an intermediary. It might be wise to ask a forex broker that claims to offer an STP model, which liquidity providers are used, in order to have a clear picture of the relationship. If looking into a forex ECN account, the term STP/ECN usually go together since the connection is done by straight through process into an ECN trading environment.

Another term introduced with forex ECN is the Direct Market Access or DMA, which refers to the connection of a trader to “a” market (not necessarily an ECN environment, but trades could also be sent directly to major liquidity providers/market makers) that would essentially fill the price. So it’s important to differentiate DMA with ECN unless specified by the broker and substantiated by the order information/real time exchange rates that normally characterise a forex ECN broker.

 

Spreads in a forex ECN account

A forex ECN account should actually have no spreads marked up by the broker, but instead commissions charged per single transaction (not so much the case nowadays). Since the broker does not benefit from risk management and hedging activities, these commissions serve as compensation for bridging the traders with the Interbank Market. Spreads in a forex ECN account can reach 0 and in extremely rare cases it could even go below 0 (not sure if this even happens anymore, except when ECN was first introduced) – very similar case with the Inverted Spreads (a major recession indicator) where a long term instrument yields less return than a short term instrument, resulting in an inverted scenario. In the past, our Sales Training “borrowed” the term Inverted Spreads to point out to our Sales Reps how real and non-manipulated ECN prices can be.

 

Disclosure

All information included in this article is for informational purposes only – it does not intend to provide advice to anyone to follow or not a specific type of broker or services.

 

You might also find this interesting:

All forex regulators by region

Forex White Label  – Should you go for one?

Understanding the nature of a Forex IB


About allFX-Consult

allFX-Consult is a boutique forex consulting agency, catering to quality rather than quantity. For over a decade, our Directors have been connecting with some of the best individuals/professionals, service providers and brokers the industry has to offer so that we can meet any corporate forex challenge that comes our way.

allFX-Consult always has a counterpart/partner for any corporate structure. Before introductions/connections, we thoroughly examine all possibilities.

We’re chosen for being discreet, detail oriented and deadline driven.

Contact us for a private conversation to discuss any forex related topic through the contact form or one of our emails at info@allfx–consult.com, partners@allfx-consult.com. We specialise in training sales teams and forex corporate structures for individuals that want to Start a Forex Brokerage.

 

Seychelles Forex License | Definitions and application requirements


A great offshore forex license option, the Seychelles forex license established itself among one the best to have. With a medium sized capital requirement that can later be used for operations, a corporate bank account coming with the package (unlike registering a company in St Vincent and the Grenadines or Marshall islands), no restrictions in the number of clients you can accept, a good reputation in trader communities (compared to other offshore jurisdictions).

 

Firstly, to answer the most frequently asked questions we receive on a Seychelles Forex License:
  • Local office with at least 1 employee is a requirement
  • The capital requirements are $50,000 and can be used as operating capital

 

How does someone start the process to obtain a Seychelles Forex License?

Same as with most licenses, initially a Seychelles company will need to be incorporated followed by the process of collecting/submitting the necessary documents and finally evaluation and approval/rejection of the license by the regulator. Further questions, documents might be requested throughout the process but with the final approval of the license, the license fees are paid to the regulator and the steps for opening a corporate bank account to deposit the capital requirement can start.

If you have Institutional business as a network and operate through a forex IB or White Label program, jurisdictions like Seychelles are a great option to start your own brokerage, before moving forward into more complex and expensive alternatives. Unlike working unregulated, Seychelles will provide comfort to your clients who need a regulated broker to support their trading needs.

 

Find out which brokers are registered in Seychelles today as well as the country’s latest economic data.

 

In this regard, the documents required are:

  • Notarised copy of Passport
  • Recent notarised government Utility Bill (water, electricity – no older than 3 months)
  • Notarised reference letters for Shareholder(s) and Directors from a Bank and a CPA
  • A certified copy of Academic qualifications (true copy stamp from the university/college is enough) for Shareholder(s) ad Directors
  • Director(s) and Shareholder(s) CV
  • Clean criminal record

Important note: The documents must be in the English language – if they can’t be provided in their original form in English, a notarised English translation must be sent as well.

 

Information on the corporate structure requirements of a Seychelles forex license

There will be a minimum of 2 Directors (that must be pre-approved by the Seychelles FSA) and appointed on the board. The 2 Directors must have proper backgrounds and experience and their approval is at the discretion of the regulator. A compliance office must be appointed that will submit the same documents mentioned above and it can be either a director or an externally appointed person. A local employee will be the point of contact with the regulator and maintain all records. The FSA will visit and make sure the offices are fit for approval. Same as with a Vanuatu forex license, a professional indemnity insurance is required as well as a legal advisor.

Although the application process is straight forward, high demand and increase in number of applications are making it impossible for the regulator to fast process everything. Therefore inevitable bureaucratic delays push the time frames a lot longer (we’ll avoid giving actual examples but in some cases it took an extremely long time), a fact that supports the resale of already approved licenses in hopes to speed up the process.

 

Time frames to get the Seychelles forex license:

People/offices will try to convince you that they can get your setup up and running within 6 months (or less) but we will refrain from making any promises since it’s in the discretion of the national regulator to approve, ask questions or even reject any application depending on its complexity and structure. Usually our initial internal assessments are enough to identify problems (if any) in the early stages, thus maintaining excellent time frames.

 


 

How allFX-Consult can step into this picture:

allFX-Consult is a boutique forex consulting agency, catering to quality rather than quantity. For over a decade, our Directors have been connecting with some of the best individuals/professionals, service providers and brokers the industry has to offer so that we can meet any forex corporate challenge.

Because of this, allFX-Consult always has a counterpart/partner for any corporate structure. Before we make any recommendations, we thoroughly examine all possibilities. We’re chosen for being discreet, detail oriented and deadline driven.

Contact us for a private conversation to discuss your case through the contact form or one of our emails at info@allfx–consult.compartners@allfx-consult.com.

#forexlicense #offshorelicense #seychellesforexlicense #forexib #whitelabel

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Offshore Forex License | Myths, truths and facts that not everyone will share


Tagging Forex IB and Forex White Labels, as well as individuals looking to start a Forex Brokerage.

Throughout the years allFX-Consult has been establishing and supporting Forex brokerages, it’s now more obvious than ever, that the lengths people will go to and the stories they fabricate to close business is more or less equal to the service they will actually deliver. To start a Forex Brokerage with or without an offshore forex license requires compromises and costs you’re most probably unaware of and comes with limitations no one will share in full, until you’re already on-boarded on a service.

A large portion of our client base in 2019, came looking for help in getting out of impossible situations other providers put them in. Frozen funds, blocked accounts, 2+ years waiting for a license that would never come, incorporated companies intended to become forex brokerages rendered useless because of banking problems and so much more…

 

Before we continue, keep this rule of thumb in mind:

“Never go forward with the first choice presented to you. Get second/third opinions and validate the information until you finally converge everything into a feasible next step”

 

Choosing a jurisdiction to rest your forex brokerage operations will play a significant role in what type of business you will attract as well as how far you can go with it, so it’s important to consider the reasons you’re expanding as well as your limitations. From what your target audience will be to what trading conditions each jurisdiction allows, detail your plan before you evaluate the possibilities.

If this plan doesn’t fit in any solutions currently offered in the industry, you can start by compromising certain aspects of it with short term solutions, always keeping in mind the bigger picture and working towards a medium to long term plan. Even if this compromise requires partnering, all of our setups get full autonomy (operate independent from other providers/brokers) within a maximum time frame of 2 years.

“Failing to work within a short term frame that’s part of a larger one, ensures stagnation and lack of growth. In 2-5 years, you will be exactly where you first started…”

 

So who is looking to start a forex brokerage?

The most successful cases we encountered, involved medium to large Forex IBs and White Labels (with consistent monthly deposit volumes between $100K to $1 million), looking to further enhance their operations by setting up their own Institutional structures. We’ve also seen smaller networks that also succeeded to start a forex brokerage with the support of external funding and a solid, down to earth business plan.

Are you a Forex IB or White Label looking for better structures? Discuss your options with professionals today

 

With trading conditions getting tighter in more reputable jurisdictions, offshore forex license alternatives sent everyone into a frenzy, thinking that it’s the solution to all their institutional problems. And in most cases it is… each jurisdiction comes with limitations though and you don’t want to spend 30K-40K on a setup, for them to be revealed. Moreover, just by registering a company (no license) in an offshore jurisdiction does not mean you’re good to go since you will be lacking a very crucial element, the bank account. Banks will not open a bank account for an unlicensed forex brokerage, no matter how hard you try. If you already did though and you’re stack, talk with us to look into your options.

 

To put things in perspective, here are some institutional options (with and without licenses) with their attributes:

 

Belize / Labuan / Cayman Islands / Seychelles / Mauritius / Bahamas / Vanuatu / BVI
  • License: Yes
  • Can be expensive to register and maintain, you will receive quotes from $25k-$50k
  • Time frames to get a license and start: minimum 1 to 2 years mostly due to bureaucratic delays
  • Solid banking structures and PSPs are working uninterrupted
  • Physical office is a requirement, except Belize, Cayman Islands

Capital required:

  • Belize – $500k
  • Malaysia – $125k
  • Bahamas – $120k-$300 depending on license type
  • Cayman Islands $100k
  • Seychelles – $50k
  • Vanuatu – Security bond of $50k
  • Mauritius – $30
  • BVI – No capital requirement. Only proof of minimum 1 million in shareholder’s bank account to back up the company if needed

 

St Vincent and the Grenadines / Marshall Islands (This involves registration not a license)
  • License: No
  • Time frames to register/incorporate: less than a month
  • No banking, no PSPs. People/Payment “specialists” might advise to use a paying agent (in most cases another company within the EU) but as the deposits start piling up you will need a truckload of excuses and finally you will be shut down. Also keep in mind that using a paying agent only transfers the banking problem to your paying agent so essentially you’re back to where you started.
  • Capital required: No capital required
  • Cheap to run but with no working banking structures, what will you do with it? (we have solutions for this but it’s a compromise – make sure to contact us to look into the details)

 

Use another offshore forex license as an umbrella – practically acting as a forex IB but with your own brand
  • You can start immediately, no license required
  • No start-up costs, no capital required
  • Support from the licensed entity on the technical and banking level
  • Since the licensed entity will be responsible for compliance, KYC, client funds and liquidity will pass from them so there’s no real client ownership
  • You will be looking into a Revenue Share type of deal

 

Get a forex White Label using another offshore forex license as an umbrella
  • You can start as soon as the White Label is created, no license required
  • Start-up costs depend on the White Label providers usually between $5K-$12K
  • Monthly costs (technical support) also depend on the providers, no less than $3K
  • The licensed entity will still be responsible for compliance, KYC, client funds and liquidity will pass from them so again, no real client ownership
  • You will be looking into a Revenue Share type of deal

 

Lease an offshore forex license
  • Yes, this is also a possibility although rarely (almost never) offered
  • Expensive to operate (not disclosing amounts here because each case is different)
  • You need to prove you have existing flow of operations above $500K monthly
  • Depending on how you attract business, the only requirement would be not to burn the license so you will be going through stringent evaluation.
  • Could combine this with an agreement of buying into the company with each monthly payment. An expensive but excellent compromise with viable future, if it becomes an option.

 

Purchase an existing offshore forex license
  • Buy all the shares
  • Partner up and buy a shareholding percentage
  • Costs between $100K-$250K

 

From experience, a combination of the above can do wonders and the saying “two birds with one stone” is the most accurate assessment when calculating the next step.

Fact 1: you don’t want to wait until you get an offshore forex license (that is IF you get a license, since central banks of offshore jurisdictions are causing massive delays in authorisations)

Fact 2: you don’t want to be a forex IB for the rest of your life, so you need to get ahead of your own game

 

Looking into what your next steps might look like? Contact us to look into the details

 

When you weigh the cost of operating your own structure Vs sharing revenue Vs not doing either, you will see that it’s all needed but at the correct timing. No need to force one over the other when you can set it up with milestones and basically use it all… every tool in your disposal.

Last but not least, pricing/cost is important but shouldn’t dictate your every move.

Any experienced business owner can relate to the fact that “Complete setups come with higher costs and its normal. Lower costs mean incomplete structures that might (or might not) get the job done”.


 

How allFX-Consult can step into this picture:

Whether the decision is a full license (EU and/or offshore) or connecting with one of our partners, our solutions aim long term.

As our worldwide client base increases, Forex IB and White Label plans emerge that allow institutional networks to work with some of the best professionals the industry has to offer.

  • Newly established forex brokerages with strong finance background and solid funding, offering very flexible terms to support their new ventures.
  • Well established investment firms offering partnerships for tied agents, regional partners and more complex structures.

Alternative to full license – Start a Forex Brokerage by:

Connecting offshore: With clients in Belize, Seychelles, the Caymans, Martial Islands and St. Vincent offering the most flexible IB and White Label solutions.

Connecting in the EU: With clients in 15 out of the 28 member states offering strong partnerships to individuals and corporations with existing client base, looking to connect.

 

allFX-Consult always has a counterpart/partner for any corporate structure. Before we make any recommendations, we thoroughly examine all possibilities.

Contact us for a private conversation to discuss your case through the contact form or one of our emails at info@allfx–consult.com, partners@allfx-consult.com.

#offshoreforexlicense #startaforexbrokerage #ib #forex ib #white label #tied agent #regional partner #licensing

Forex White Label | Requirements and options


 

What is a forex White Label?

A full license to purchase your own forex platform is very costly and unless you have the operations to support it, then it is common practice to connect through a forex white label program of another provider (usually a forex broker or a prime broker) and market it as your own, with certain conditions.

This enables you to start your own forex brokerage operations, market your very own forex brand and access banking, technical and technological support for a fraction of the huge cost required to do this on your own.

Important note:  look into your banking structures and any regulatory obstacles before you move ahead with any forex white label deals.

 

Part of what brokers provide with their forex White Label solutions are:

 

  • Trading Platforms, Affiliate Software, CRM and in many cases a website (if the broker thinks it’s worth it)
  • Low one-off cost, with average monthly technical support fees (in most cases you only pay the cost of the platform provider so check if there are any mark-ups on these costs)
  • Access to their pool of instruments (make sure the instruments your clients trade are part of this pool)
  • Access to deep liquidity (in some cases you get access to tier 1 bank liquidity)
  • Market spreads from 0.0 pips (depending on the broker)
  • Enhanced execution of orders (even on large scale although you need to meet monthly volume criteria)
  • Bridge to LP (some offer this free of charge and some not so make sure you look into this)
  • Support with Sales – Training your sales team
  • Competitive revenue plans

Are you looking for all of the above features and more? Talk with one of our partners today

 

Should you go for a forex White Label?

If you are a networker in the forex industry, you most definitely have to give a forex white label, a go! Setting up one’s own structure is where everyone in this industry wishes to end up. We must always push ahead with viable plans, as long as these plans are based on realistic expectations and educated decision making processes.

On the other hand, depending on the development of your operations, maybe a forex White Label is not the immediate answer to your next steps. It most definitely must be in your plans, but maybe after strengthening the core of your business in order to handle the costs and requirements (more on this below). Like always, at allFX-Consult we tend to look into compromises that keep costs low but at the same time promote growth and reach milestones that will eventually lead to a predetermined target.

 

From another article we wrote on obtaining an offshore forex license “Failing to work within a short term frame that’s part of a larger one, ensures stagnation and lack of growth. In 2-5 years, you will be exactly where you first started…”

 

To explain this better, let’s take the case of a large forex IB looking into expanding his/her operations – If the number of new clients introduced and monthly deposits are not constant (or fall lower than average), maybe there are more important issues to fix before adding fixed monthly costs and attempt to operate on a larger scale through a forex White Label.

By examining further and looking into the income funnel, we might identify weaknesses in the online/offline client acquisition, weaknesses in the product offered to the target countries (audience), sales under-performance or language barriers, issues with trading conditions, bad execution from the partner broker, failing reputation of the partner broker, shifts in the trader’s demands for conditions not allowed by the partner broker and much, much more.

So although it’s understandable that every networker in the industry wants to start a forex brokerage, it’s crucial to ask the right questions and receive the right answers (not wishful thinking) prior to going ahead with a new arrangement, like a forex White Label.

Searching for answers on what your next steps should be? Contact us to look into the details 

 

What does a forex White Label cost?

No forex broker will publicise their cost (for the obvious reason of fierce competition) but the pricing ranges between $5k-$12k one-off cost for getting the platform(s), and no less than $3k monthly, for support.

These numbers are not set in stone, because of the large number of providers, the added products they might provide within their solutions and of course the different terms they require prior to partnering up. That being said, side products are also known to be offered like “grey labels” or “soft white labels” that are less demanding than a fully fledged forex White Label so make sure you have a clear understanding before you enter into discussions.

The cost depends a lot on the size of your forex operation as well – it makes sense for a forex broker to charge more on setup if the operations of the white label are small (in order to compensate the trouble). It also makes sense to charge less (or even nothing) if the operations of the white label are big. The forex broker stands to gain a lot more from the monthly operations/volumes of the white label, rather than the setup costs so the product becomes more attractive for the white label looking to gain the most with the least possible cost. In many product setups allFX-Consult was consulting on, we advised our clients (forex brokers) to give a $5k worth of platform for free after assessing the size of the white label’s operation, by adding certain liquidity terms into their forex white label package. And by taking this simple (but costly) step, they would gain smaller/average sized networks of $50k-$100k.

Searching for the correct forex product, saleable to your target audience? Reach out to discuss options

 

A forex White Label by an allFX-Consult partner

Looking into your next steps with an experienced partner like allFX-Consult, ensures that you don’t get caught up in unwanted structures and wasted time trying to identify what to do next. Brokers (and their sales teams – we should know as we trained a great number of them) will push their own agendas and products, irrespective of whether these are good for you or not.

Its the nature of the game – we tend to think we know it all, so we put ourselves in situations that make it difficult to get out of or worse, destroy the prospect of a solid business before it even begins.

Don’t put all your eggs in one basket – look outside the spectrum of your own knowledge and seek the advice of others who stood where you now stand. If a forex White Label doesn’t fit in your current operations, don’t force it. If it does, do it right with a clear entry and exit plan (just like with a good trading position).


How allFX-Consult can step into this picture:

As our worldwide client base increases, Forex IB and White Label plans emerge that allow networkers to work with some of the best professionals the industry has to offer.

  • Newly established forex brokerages with strong finance background and solid funding, offering very flexible terms to support their new ventures.
  • Well established investment firms offering partnerships for tied agents, regional partners and more complex structures.

Start a Forex Brokerage by:

Connecting offshore:

With our clients in Belize, Seychelles, the Caymans, Martial Islands and St. Vincent offering the most flexible IB and White Label solutions.

Connecting in the EU:

With our clients in 15 out of the 28 member states offering strong partnerships to individuals and corporations with existing client base, looking to connect.

allFX-Consult always has a counterpart/partner for any corporate structure. But before we connect anyone or make recommendations, we thoroughly examine all possibilities. We’re chosen for being discreet, detail oriented and deadline driven.

Contact us for a private conversation to discuss your case through the contact form or one of our emails at info@allfx–consult.com, partners@allfx-consult.com.

#startaforexbrokerage #ib #forex ib #whitelabel #forexwhitelabel #tied agent #regional partner #forexlicense #forexoffshorelicense

Further reading

What is a Tied Agent – Information and registration details

Understanding the nature of a Forex IB

Forex jurisdictions – with country stats and registered brokers lists

 

Forex IB | Understanding the nature of an Introducing Broker


What is a forex IB?

Any legal person, individual or company that introduces/refers potential business to a Forex Broker and receives remuneration based on Revenue Share, CPA, CPL or P&L is considered to be an Introducing Broker (forex IB).

 

Should you become a forex IB?

To answer this question, you first need to look into the nature of your current business and understand what makes you good in attracting new business.You could be anything from:

 

  • A simple website owner that uploads forex related content like news, broker lists/reviews, signals, opinions, videos etc
  • A high traffic website (although this falls better in a forex affiliate program, if certain conditions are met you can put your site under a forex IB program)
  • A forex trader that accumulated a number of followers over the years
  • A forex trainer, providing traders and other industry participants insights into forex trading
  • A forex industry participant who had some success in referring some people under smaller programs and wants to take it to the next level
  • An existing forex IB that wants to evaluate other options and forex brokers
  • An employee in the forex industry that has a portfolio and wants to start own operations
  • A business in a different line of work with strong networks
  • A forex enthusiast, who even though never traded and has nothing to do with the industry, is fascinated and wants to give this a shot – don’t laugh 🙂 that’s how we all started in the first place

Do any of the above sound familiar? Contact us to start your forex IB journey

 

As you can see, the forex IB program is suited for anyone, small or big irrespective of their current status. Your next milestone is to grow with your new partner (forex broker) and not to just deposit a portfolio with no retention or growth potential. Forex Brokers with opposite opinions that apply pressure are just not worth your time. They are also the ones to give you generously a higher commission, a fact that should raise a red flag all by itself. In the end you will be out there again looking for a suitable partner or even worse, saying goodbye to your forex operation.

“Your client portfolio doesn’t define you, how you handle it and what you do with it does”.

 

Although some individuals or companies are in position to receive more commissions as a forex IB than others, this doesn’t cancel the fact that you could be that individual/company in the near future.

“Remember that professional traders today were beginner demo leads a few years back and some of the established forex brokerages of today, were no more than simple networkers and IBs in the past” 

 

So how does one succeed in a forex IB business?

Irrespective of what we talked about above, to win in this game you must face a simple truth. It’s always been and always will be a number’s game. From experience, a forex IB that is not happy in a current partnership is least likely to push this business forward and produce good numbers. And by good numbers, we don’t mean active clients, deposits or commissions earned. With good numbers we mean qualifying more and more potential leads that can be turned into rewarding revenue over time by simply talking about it and not being afraid or embarrassed to add it in a conversation.

Thus, it is imperative to work with a partner (forex broker) that you are comfortable with and a business deal that makes sense for you to work with. Once this is out of the way, the path is simple. Make sure that your network, old, current and new is aware that this is something you are deeply involved in and set the parameters of how you can provide support.

Now how you provide support brings us to another great point that answers how to succeed in a forex IB business. Your network (active and not) is not just numbers in a system and money in a bank account. They are people that join your program because you add value into their path for a successful trading experience. This added value could be your shared experience in trading or by connecting them with more experienced traders in your network, introducing them to educational webinars and workshops that aim to create traders and not burned accounts.

In addition you cannot and must not EVER promise or guarantee profits and make sure you’re there when they need you the most. A forex broker deals with a lot more than just your network and sometimes in the rush of the day they omit things, delay processes and fall victims of other minor daily issues that you can step in and fix so that your clients can have a hassle free experience.

Another important factor that determines the success or failure of your forex IB business is the pricing and charges that your clients incur, by being under your IB structure. By connecting with a broker under your IB program, your clients must feel that they connect as part of a larger network and therefore receive better pricing and charges, than if they connected on their own. If this is not the case, your forex IB business could be finished before it even begins.

 

What to look for, when searching for a potential partner (forex broker)?

 

  • Reliability through extensive market experience
  • Safety of funds through a reputable regulated environment
  • Customer centric through their educational material online and offline
  • Customer support and care when dealing with client issues
  • Professionally trained sales reps to deal with your clients
  • Strong platform, fast execution, competitive trading conditions
  • Fast process of KYC, deposits and withdrawals
  • Languages (support and website) to support your target audience
  • Ability to support your forex IB business both offline and online

Is your broker not giving you what you deserve? Talk with one of our partners today

 

What payout makes sense in a forex IB business?

Well the answer to this question depends greatly on how the broker makes the money to pay your commission. If they offer high payouts, they will want to be compensated for it and that’s where the problems start. A forex broker, either you like it or not, will always be on the winning side of both relationships (Trader-Broker and IB–Broker). So sometimes less is indeed more because it ensures long lasting relationships within a long term plan, rather than short term gain that results in losing sight of things and ends up with a burned business.

In all scenarios, there will be a scaled compensation depending on the volumes traded by your network, and so it might be better to reach higher payouts through higher volumes by retaining your portfolio with the added value support we explained above, rather than forcing high commissions on smaller volumes that can only result in the broker misbehaving and burning your business.

 

Finding the perfect IB program with allFX-Consult

There’s so much clutter in the industry.. how do you separate good from bad, profitable from sinking ships, long term from short term partnerships? Well, that’s why agencies like allFX-Consult exist. To do the hard work for you and be a point of contact when everything else seems to be failing.

Most of our forex IBs and White Labels, after experiencing exponential growth through our connections, today they are fully fledged brokerages with complete departments, offices and teams.

Reach out to a broker with an experienced partner and get the product you deserve, not the product they want you to get. Treat your network with the respect it deserves and make the most out of the experience as well.

Our network, our clients, our friends are here to support you all the way through.

 


How allFX-Consult can step into this picture:

As our worldwide client base increases, Forex IB and White Label plans emerge that allow networkers to work with some of the best professionals the industry has to offer.

  • Newly established forex brokerages with strong finance background and solid funding, offering very flexible terms to support their new ventures.
  • Well established investment firms offering partnerships for tied agents, regional partners and more complex structures.

 

Start your Forex IB business by:

Connecting offshore: With our clients in Belize, Seychelles, the Caymans, Martial Islands and St. Vincent offering the most flexible IB and White Label solutions.

Connecting in the EU: With our clients in 15 out of the 28 member states offering strong partnerships to individuals and corporations with existing client base, looking to connect.

allFX-Consult always has a counterpart/partner for any corporate structure. But before we connect anyone, we thoroughly examine all possibilities.We’re chosen for being discreet, detail oriented and deadline driven.

Contact us for a private conversation to discuss your case through the contact form or one of our emails at info@allfx–consult.com, partners@allfx-consult.com.

#startaforexbrokerage #ib #forex ib #whitelabel #forexwhitelabel #tied agent #regional partner #forexlicense #forexoffshorelicense

 


You might find this interesting

Forex White Label – Discover it all, requirements and options

EU Tied Agent – Should you consider it or not?

Forex jurisdictions – EU and Offshore with country stats and listed brokers

Redefining speculation; where are we really going, regulatory speaking?

Redefining speculation; where are we really going, regulatory speaking?

It’s indeed gloomy to see the “speculative” ecosystem collapse on itself, while it undergoes dramatic changes in its regulatory regime. Looking back to 2004 when MiFID I was created to ensure a harmonised, more contextual framework and as such industry participants saluting its posh, arrogant posture, one has to wonder “Where are we really going, regulatory speaking?”

Following last Friday’s ESMA statement in relation to CFD’s and after the diverse opinions in comments we received on our recent article about MiFID II, it is true that we are deviating more and more from what the word speculation means in its core. Google (and who can argue with Google) says that speculation is “the forming of a theory without firm evidence” and as such, “investment in stocks, property, etc. in the hope of gain but with the risk of loss.”

Speculation is part of our everyday life, whether you’re buying groceries (recent example of salmonella found in baby food products), a TV, kitchen appliances, a laptop, accepting a new job, riding a motorcycle, driving a car or even climbing a tree to show off to your girlfriend (not sure to whom this applies for, thought it would make a valid point). Although you might have some information on what you’re about to do, you’re still speculating on whether the outcome will be beneficial for you or not – my wife this morning speculated that a “frozen” box with sandwiches would be humorous (photo above); and it was… nothing humorous about the sandwiches though, those things were seriously delicious!

And although the sentiment projected by news outlets shows a positive people’s view towards tighter regulations and investor protection (even though these same people lose more and more market share and are in danger of closing shops), it seems that industry participants have other views as well that they don’t publicly share… why, I do not know. It’s not constructive not to express one’s thoughts therefore we decided to do it for you.

When you go into buying property, does the seller give you – without being asked – a file with the property’s historical breaks and fixes (a.k.a. fines disclosed on a broker’s website), does he tell you what’s about to be broken (plumbing, electrical, tree roots that will slowly elevate your house),do you know if there’s a cat buried in the yard? Where are the corresponding directives/authority guidelines in this case, limiting the leverage, the distribution and/or sale accordingly?

When you get into a casino and you’re about to lose your life savings, is there anyone limiting the amount of chips you can use on tables? Is there a risk warning hand-stamp on entrance and/or on the casino sign and/or on the chips and/or on the tables in front of you saying “gambling involves significant risk of loss?”, is there a prohibition of specific tables that you’re not allowed to go and empty your wallet?

When you go buy a car and you’re about to damp 30-50K on a second hand SUV or a shiny looking vehicle imported from a dark corner of the world, is there a limit on the incentives the seller is providing to get the thing off his hands? Is there a negative protection rule in case you need to spend double the money fixing that shiny looking piece of garbage?

My point is that more than a decade in the financial services industry can testify to the fact that investors that look into speculative markets, get into them knowing exactly what the risk vs. reward ratio is. Putting in place a framework that colours a personality on a faceless sinkhole is a great idea, welcomed and supported by every single participant. Shouldn’t we be careful though not to deviate too much from the point of it all and as a result redefine words like speculation? It’s a Google definition after all…

Not to level everything, we were never really advocates of specific products ourselves like binary options and we always urged caution towards them. We were also against vile marketing/sales practices that turned more and more people against the idea of FX trading, we were against lists of leads being harassed and funnelled like dirty laundry.

That being said, contracts for difference (CFD’s) and margin trading are exactly what their names imply. Trading on contracts with the use of margin, maximising your potential gains/losses through leverage and you being the sole decision maker of when you want in/out. And so industry participants with opinions they don’t share, would want the leverages where they are – more like back to where they’ve been – they wouldn’t want prohibition but instead regulation on the marketing, sale and distribution of financial instruments, they would want a strong framework fearful enough to any party not willing to comply. They also wouldn’t want taken away, the thing that makes the market tick.

And I don’t mean supply and demand, but the ups and downs of traders, beginners or not, who even though they constantly complain to the regulators (because they can), they get angry because they lost a trade or even broken because they lost everything they own, we all have to remember that these same people will eventually register with another broker, they will demand high leverages, lower stop out levels, bonus on their deposits, referral incentives and lower spreads and so the cycle goes on and on.

Just like there are no limitations in the examples above, maybe there should be grounds for more exceptions in the speculative world of financial instruments as well. But in the end, who are we to consult on how laws should be drafted, we just gave our 2 cents to anyone who cared to read.

#carebearwhoreads, #frozen, #cfds, #mifid, #regulation, #speculation

MiFID II / MiFIR ladies and gentlemen – if you’ve got an issue, here’s a tissue… with a twist

MiFID II / MiFIR ladies and gentlemen – if you’ve got an issue, here’s a tissue… with a twist

Following a decade of regulated activities that MiFID I introduced when it became law in 2007, participants of the financial industry are now facing one (more like two) of the biggest challenges they faced to date. “Dr. Evil” – MiFID II – accompanied by “Mini-me” – MiFIR – have been the subject for debates, lobbying and groovy contests these past few years. Are you ready to face reality?

The new Directive and Regulation were created back in 2014 and will become law in January of 2018, following a series of uncanny practices (Libor and FX fixing/rigging – in this doc referred to as “situations” which is French for situations), relating to deeds of banks and institutions whose greedy, slimy fingers are a disgrace to what the industry stands for. Who can really blame though someone (some more than one) who, given the opportunity to pocket gazillions, his/her conscience is not enough driving force to stop them? Oh well, maybe (and I say maybe) if we were in their shoes we would probably do the same, but since we’re not, we might as well keep name calling and blaming them for everyone’s misfortune.

Past the name calling though, we thought a good idea to share our understanding and views on the matter, written in plain English for the faint hearted and allow room for simple yet beautiful brains to comprehend. Remember magistrates of the world, that we train sales teams. We don’t draft laws so give us a little credit for understanding this much. So here it goes:

 

In simple words, MiFID I consists (ed?) of 73 Articles which cover(ed?):

 

  • Conduct of business
      • Best Execution Policy ensuring all reasonable steps were taken and enforced by institutions.
      • Suitability and Appropriateness tests, usually performed through the registration process, client categorisation, conflicts of interest identification.
      • Investment advice , inducements.
      • Handling of client orders to ensure firms are acting in the client’s best interests.

     

    • Compliance
      • Licensing, authorization and passporting.
      • Compliance monitoring, record keeping, internal and external audits.
      • Corporate Governance relating to how companies collect and store client information.

     

    • Transparency
      • Pre/post trade reporting so as to prevent market manipulation (see the irony or is it just me?)
      • Systematic Internalisers executing client orders against their own books or other clients.

 

The new-fangled monster called MiFID II consists of 97 Articles and MiFIR (mini-me) of 55 Articles, which cover:

 

  • A new regulated trading platform, abbreviated OTF, since it stands for Organized Trading Facility:

It’s a multi-lateral system (that is not an MTF or RM) and allows buying and selling in a form that creates a contract.

It aims for more transparency and structure to OTC trading.

– Through tighter exception rules (more on this later), publication of trade details using an Approved Publication Arrangement (APA), reporting of data to national authorities to vet on pre/post trade transparency/translucency/vale-on-vale-off.

– Demands more “neutral” operators; it restricts execution of client orders against the operator’s own capital. Discretion is permitted under specific circumstances.

 

  • Extended Trade and Transaction Reporting:

Under MiFID I trade reporting, the buy side could avoid reporting all together through an exception. Under MiFIR (mini-me), this exception a.k.a. expressed agreement of who has the obligation between the buy and sell sides, is not possible.

Under MiFID II transaction reporting, the buy side may rely on its broker to create a report (on top of their own) on its behalf through a transmission of order arrangement. Buy side must accept though that the information necessary to complete such a report are detailed (report field numbers sky rocketed), they are personal and may well conflict with best execution requirements. Food for thought – will all transactions – even with non MiFID brokers – be reported by the sell side? (How do you like your thoughts, rare, medium or well-done? now wait, there’s more…)

Words like MiFID I’s “reasonable” Vs MiFID II’s “sufficient” referring to the steps taken to achieve best execution results, already wreaked havoc since as ambiguous as they sound, minimum standards that are not defined must be met.

The execution per category of financial instruments must be published. Constant monitoring of the effectiveness must be in place with adequate adjustments when necessary.

 

  • Enhanced Investor protection:

By forcing firms to provide total overview of expected costs and must inform their clients about the way these costs are charged.

By forcing any “independent” investment advice to actually be independent like it should from ground zero (ground zero is the day the words independent investment advice were connected and meant just that). If it’s independent or non-independent, it must be communicated before the advice is given.

Also through enforcing research that once was offered for free by the sell sides (investment bankers, commercial bankers, stock brokers, market makers) to buy sides (mutual funds, pension funds and hedge funds) in exchange for transactions placed with their banks and brokerages, to be now paid. Some of the aftershocks of this quake aka quacker, aka quackadoudledou, aka quakabanga (see what we did here? Ninja turtles? No? ok moving on..) include but not limit themselves to these:

  • – Buy side will probably not be willing to pay for the analysis, mid-tier providers will stop producing it, distribution of a number of funds will be reduced since they will not have enough information to invest in markets unfamiliar to them, there will be lower liquidity for smaller and mid-tier stocks and finally widening of their spread (which is the opposite of what MiFID II was targeting in the first place… Ouf..now I can breathe….
  • – The ones that walk among us with the supernatural gift should begin to see the ghosts of small to mid-tier research providers whose struggle to stay in business signified their doom. To return to the living, they must match the quality of top tier research providers (here lie the ruins of your dreams to become a mid-tier research provider…)
  • – Specialists and/or niche research providers will have their 5 min of fame since buy side willing to buy research will go after their service, which might well be in competition with top quality service providers. You see their pizza is now pizza special…

 
Stricter corporate governance:

Since board of directors of institutions (including non-executives) must pay attention like good boys and girls, be aware – better yet awake – of the activities and attend their meetings for real (yes I wrote “for real” in a document that describes highly sensitive, regulation matters).

 

Algorithmic and High Frequency Trading requirements:

Systems that aim to control the execution of algorithmic trading in the marketplace.
 
Product governance and supervision as in:

National regulators can now ban and/or restrict marketing, sales, practices, activities and products they don’t agree with as they see fit. We should also see higher fines, penalties, reprimands and of course Santa not delivering gifts at Christmas.

A manufactured financial instrument must have a measurable target group whose needs, characteristics and objectives are met. The strategy for distribution must be appropriate and consistent with this target group and its potential risks to the target group consistently re-evaluated.

 

Non EU firms selling to EU citizens:

Although full harmonisation was not possible since EU member states can continue to apply national rules, it remains a choice of the national regulator to:

– Enforce a detailed set of rules set by MiFID II, designed to harmonise granting access and the compliance requirements of the non EU firm, in order to be authorised to provide services in its country (the rules don’t include dress code, food preferences and opinions on space exploration).

– In the above case, the non EU firm can provide services to these clients only through an authorised branch, compliant with these rules. That being said, MiFID II will Europeanise y’all, whether ya like it or not.

– An authorisation can only be given to branches whose mama-firm is authorised already in its own country to provide all services it’s applying for. If some of the services are not regulated in the mama country, they will be restricted in the EU Member State as well. It goes without saying that it’s a no-no to unregulated branches as well.

– A cross border service can be provided to eligible counterparties and professional clients if the non EU firm is authorised by ESMA, who will only register countries whose legal framework is equivalent to MiFID II and both co-operate on a supervisory level through the exchange of information (among other things).

– All entities trading with European counterparties will be required to obtain legal entity identifiers (LEIs) which they need to store in their reporting system. No LEI – No trade; or something like that…

 

The sales function never really saw eye to eye with compliance and laws that only add more obstacles when trying to meet your goals. It’s also a fact though, that if these laws did not exist, sales people would rule a world where there is  no more money to target since all of it would fall into the hands of a few, opportunistic corporations that target loopholes and prey on the desires of  “investors” to force their hens to lay more eggs.

 

We should be therefore grateful that we have these “watchdogs” as many times referred to by news outlets, regulating these fellows and allowing room for a healthier financial industry that enjoys its eggs in a fashionable and fabulous manner, whether runny, scrambled, omelette or poached (no pun intended).

 

#mifid, #mifir, #egg, #eggplant, #ninjaturtles, #mini-me, #watchdog, #doubleeyedog, #tomandjerryanddog

Q&A on allFX-Consult – 7th issue of Game Changers magazine

 

Published on the 7th issue of Game Changers magazine – pages 31-33

Tell us a little about your background

June of 2016 marked my 10th year in this amazing sector. With a BSc in Economics and Finance, my career path started back in 2006 within a highly competitive sales department. Loads of information to digest, not much competition market-wise, but due to the fact that the industry was still relatively “new” I still had to deal with general unawareness at the time regarding CFDs and forex trading. After 3 years of direct selling, networking and advancing as an industry participant, I looked for and challenged Executive Roles, where I managed Cyprus Investment Firms from the Director’s position, got deeper into the regulatory frameworks and gained a more complete understanding of the technological innovations that characterize the backend of a brokerage. Today, other than running the day to day operations of allFX-Consult, I also still maintain non-executive director roles on boards of Investment Firms.

 

Why did you start your business?

Although today allFX-Consult is characterised by the three parts you see on the website, that is the Sales Department setup, the Full Brokerage Solution and the Institutional Program, our core still lies in the brokerage’s business development (sales) strategies, set-up and control.

 

Before allFX-Consult materialised into a complete brand, we saw a need for correct/educated sales department planning, since many attempts from brokers to find suitable department heads had no positive results. This could be due to the broker not being challenging enough, or not paying enough, or not allowing the person to reach full potential through the brokerage’s decision making. No matter what the reasoning, there was (and still is) a lot of Sales Director position “recycling”, departments left “naked” after the head would abandon ship and any work carried out thus far, rendered obsolete.

 

In the early days, there was no allFX-Consult brand. All our trainings and services were delivered at the broker’s locations just like we do now, but as independent contractors. With the number of projects growing fast, we saw the potential that a brand with online presence could provide, which evidently formulated what allFX-Consult offers and stands for today.

 

Sales is a challenging department. Why would a brokerage choose outsourced help rather than an in-house professional?

Put very simply, because we’re the only ones who don’t approach this department solely based on our backgrounds and experience but rather on industry standards and targeted competitive analysis. Our methodology, developed and fine-tuned over the years, assesses how the brokerage came to be and where it’s planning to go, it identifies correct products/services relative to its target audience and the direct competitors, it renders the final product marketable and evidently saleable. In rare cases where the product is not saleable, perhaps the broker is unwilling to adapt or the business plans are not feasible, we will just not take on the project.

 

Once we on-board our strategies, the training does not only include employees and sales people but also the management on how to continue utilising our work after completion, without the need for us to be present. A sales department doesn’t need months to become operational. Depending on its size, the period can be a lot shorter. The fact that we carry on the work in such an independent manner, is one of the reasons we have lifelong contacts rather than clients and projects.

 

Another reason is of course the redistribution of business through our Institutional program, with our clients receiving business (as this comes to us) as high priority, a program that keeps everyone happy. So you can see why anyone that engages the services of allFX-Consult is a lot more than a client and partner.

 

What do you think about the latest CySEC decisions on the Sales and Marketing functions of CIFs?

I agree with them 100%. Through our blog or direct communication with industry participants, we always urged caution towards outsourced call centers, any so called “sales rooms” and anything scripted that takes away the personal, educated and human approach towards a potential investor.

 

How can a faraway country that doesn’t even know what the word regulation means, take on the role of the “income generator” of a broker, without overstepping boundaries, making false promises, begging and/or any other tactics they see appropriate to succeed in an aggressive industry like the forex industry. No ethical industry participant would be against these decisions unless they are themselves incapable of generating sales without offering investment advice, making fake promises, use aggressive tones and repeatedly harass their prospects.

 

This is also why we don’t take any/every project that requires our service. For example we refused a few brokers/sales teams that turned their back on education or required scripted answers from us. We also refused every binary project that knocked on our door since the first binary license was granted. Not sure if these made any difference outside our office walls, but at least for us it’s something.

 

Can you give us an outline of where the strengths of your business are?

The biggest strength of our business is our network. Over the years we managed to form a web of individuals/professionals, brokers and service providers that combine forces to offer an unparalleled service under one umbrella that we called allFX-Consult. The years of experience, the personal approach to every case as well as our principles characterises our way of work and our partners. Redistributing networks, business, projects and funds all across our network’s spectrum and setting up yearly milestones, pinned our service right into the heart of the FX industry in Cyprus and abroad.

 

Growing with these important milestones, allFX-Consult is now more committed than ever to perform not as an individual agency but as a large network of professionals and institutions that exchange knowledge, ideas, business and wealth.

 

Where is your business most applicable to; start-up or mature?

Both; any brokerage that comes to us, most definitely went through what we described above, therefore they will require exactly the same approach whether start-up or mature. We will still need to evaluate, create reports, identify strengths/weaknesses, adopt any differentiation strategies possible and most importantly train. Our training is characterised by some as “sociopathic”, reason being the emotionless approach to who is in front of the trainer, whether that is a sales person or a shareholder. When the correct answer needs to be given, everyone’s the same, irrespective if they are the ones writing our cheques. Usually if there is a problem with this approach, or we find ourselves stepping on people’s toes, then the project is doomed to fail, because apparently we’re not there to teach and/or grow with these people, but rather inflate egos and waste time.

 

What are your plans for 2017?

We’re at a point now that we can setup a brokerage from scratch; from licensing to the formulation and implementation of operational strategies, we do it all.  This happens, not only through the people behind allFX-Consult but through this amazing network of professionals, providers and brokers, each with equal if not more experience to ours, combining their expertise to create something beautiful. New technological innovations, new providers, new brokers, new people are joining the industry every day and our goal is to know each and every one of them, work with each one and deliver the best possible service to whoever needs it. And what do you know? Maybe this can be our way of giving back to this terrific industry that gave so much to so many but receives so little in terms of feedback and recognition. We invite everyone to meet with us in person and find out for themselves just how far allFX-Consult can take them.