Forex trade can be a profitable business if you spend enough time and effort on learning the rules of the game in the industry. Besides, the costs of setting up a Forex company can be different depending on what jurisdiction you choose for this purpose. This means that some serious calculations are required.
In the text below, we briefly discuss the process of registering an FX company and the choices that you have when choosing the country where you want your company to be registered. We put special emphasis on the possibility of registering an FX company in the Comoros, an offshore country in the Indian Ocean.
Documents required for registering an FX company
As a rule, the following documents are required to register an FX company:
- A notarized copy of the company founder’s passport or a similar personal ID. Besides, prospective company directors also have to supply copies of their passports.
- Proofs of residential addresses – notarized copies of recent utility bills or bank statements carrying the address.
- A Recommendation Letter from a bank or a professional (such as an attorney, for example) or an analogous document.
- Some additional documents are often required such as confirmation of the legality of the investment capital and a business plan. This is especially true for the jurisdictions with well-regulated Forex trade (see below).
Types of jurisdictions for your FX business
Choosing the right jurisdiction for your prospective FX company is one of the key factors that will have a direct bearing on success of your business. There are three types of jurisdictions as far as Forex trade is concerned: it can be unregulated, partially regulated, or fully regulated depending on the country. The type of the jurisdiction will determine the costs of company establishment and the license-related requirements.
Jurisdictions where a Forex license is not required
Some novice brokers choose jurisdictions that do not impose any special requirements on FX brokers. It is enough to register a company and open a bank account in such a jurisdiction and you can start your Forex trade operations. The process is fast and the costs are low, which is attractive for novice entrepreneurs. At the same time, the list of such countries is rapidly shortening as the industry is becoming more and more standardized.
Jurisdiction where Forex trade is partially regulated
Some offshore jurisdictions such as the British Virgin Islands, Cayman Islands, Mauritius, Belize, Seychelles, Vanuatu, and Comoros do issue Forex licenses, which means that Forex trade is regulated there. Establishing a business venture with a brokerage license in the Comoros can be attractive. All the countries listed above remain offshore jurisdictions, which means that they give more freedom to entrepreneurs in comparison to onshore jurisdictions. The process of obtaining a Forex license in an offshore country takes about 3 to 4 months and the cost is usually between 20,000 and 50,000 US dollars.
Jurisdiction where Forex trade is fully regulated
There are also a few countries where you can acquire a highly reputable Forex license. These include the United Kingdom, Malta, Cyprus, United States and Japan. Rules are stricter in these countries and the same goes for license-related requirements. However, these jurisdictions will give you access to vast markets. On the other hand, the process of acquiring a Forex license can be rather long and expensive. A local company office is going to be required too.
Pluses and minuses of establishing a Forex business in an offshore jurisdiction
Acquiring a Forex license in an offshore jurisdiction has both advantages and disadvantages. The main advantages include the following ones:
- Cost saving: registering a company in an offshore jurisdiction, you can save some money and use it for growing your business and attracting new clients.
- Tax incentives: offshore jurisdictions often charge low or zero taxes, which can decrease your operational costs.
- More relaxed reporting requirements: offshore jurisdictions often have laxer reporting requirements, which simplifies the administrative processes.
- Online Forex operations: offshore-registered brokers can carry out their operations online without having to rent a brick-and-mortar office, which reduces the operational costs even further.
The main disadvantages of registering an FX company in an offshore jurisdiction include the following ones:
- Low level of trust on the part of banks: many banks will refuse to open accounts for unlicensed brokers because they want to keep away from money laundering schemes and financial fraud.
- High risk: traders may deem it too risky to enter business agreements with unlicensed brokers even though you may be a great professional with high moral standards.
- Limited market reach: registering a company in an offshore jurisdiction may narrow down the choice of markets for you. In some countries, people are used to having everything regulated.
Therefore, you have to weigh all pros and cons when considering an offshore jurisdiction where you could register an FX company. You have to do serious research and assess the prospective costs, level of security, requirements in place, access to various markets, and so on.
An offshore-registered company can let you save on company establishment and maintenance costs but a company registered in a reputable jurisdiction will be seen as more trustworthy and therefore, it will have easier access to different markets.
Pay a visit to the Comoros
We have claimed above that acquiring a Forex license in the Comoros is an opportunity worth considering. The same can be said about paying a visit to the country sitting next in Madagascar. You will enjoy your trip to the Comoros unless you expect to find luxury and a high level of comfort there.
The infrastructure in the Comoros is not very well developed (the roads are quite bad, for example) but some locations are rather nice anyway. For instance, you could visit Chomoni Beach on the eastern coast of Grande Comore, the largest of the three islands that the country consists of. There you will find fine white sand, bungalows made of straw where you can change, and cafes where you can try local cuisine. This is also a wonderful place for snorkeling as beautiful coral reefs grow just off the shore.
You are going to love it if you put up at the Royal Itsandra Hotel. The rooms have panoramic windows that give fantastic views of the area. Besides, the hotel has a casino and a restaurant with fine seafood dishes. Sitting outside in the evening, eating some fish, drinking some white wine, and watching the sunset in the Comoros is beyond comparison.
Besides, you can find some unique flora and fauna in the Comoros. For instance, marine biologists recently found a species of fish near the islands that they had deemed extinct. The fish was swimming in the ocean 410 million years ago! The Comoros is certainly worth a visit.
