Online trading business is on the rise, as more and more people want to trade forex, binary options etc. This makes online trading a lucrative investment opportunity for many businessmen looking for a next market to expand.
It is important to understand that starting an online business is no longer as easy as it was just a couple of years ago. Due to a great number of scams, more and more regulators decided to set a strict set of rules and requirements for starting an online trading business.
In this article, we will list most important regulatory agencies for online trading and their requirements. AS it can be seen in the list below, there are regulatory agencies all over the world, but they have very different initial capital requirements and different expectations from companies they regulate.
CySEC (Cyprus Securities and Exchange Commission)
CySEC is often considered to be the most popular regulator for online trading services. In the recent past, they implemented many changes after they have been under fire by other regulators who blamed Cypriot agency for not protecting clients well enough.
CySEC offers several different CIF types, and the initial capital is determined by the type chosen. The minimum investment capital is €50.000 but can be considerably higher for certain CIFs. During the process of application, investors must deliver a business plan, operations manual, anti-money laundering procedures, and other documents. Also, every CIF must have at least two executive members and two non-executive members. The license is usually obtained within 6 months.
FMRRC (Financial Market Relations Regulation Center)
Russian regulatory agency, FMRRC is becoming increasingly popular among investors who want to regulate their online trading business in Russia. The application process is fairly easy and can be done online. Only after the initial application has been considered, the regulator delivers information about future steps and gives more info about the documents needed. Some of the requirements are 2 years present on the market, 2,500 opened accounts, 5,000 registered users, representative offices in multiple countries.
Considering recent trends in the online industry, Russia could be the new Mecca for online trading regulation, as CySEC is becoming more and more demanding.
ASIC (Australian Securities and Investment Commission)
ASIC license is also known as AFL or Australian Financial License. This prestigious license is not so popular among the online trading business owners, mostly due to a great set of criteria that is applied to every company that applies. Every business has to meet a set of standards regarding training, compliance, insurance and dispute resolution center, and maintain them or they will be stripped of the license. Keep in mind that it is impossible to get an ASIC license if you have been involved in two or more liquidated companies during the course of past seven years. The application for AFL can also be submitted online.
Offshore Regulators
Sometimes offshore regulators from countries like Vanuatu, Belize or the British Virgin Islands seem like the best choice, but keep in mind that their licenses are at the moment less prestigious that licenses coming from EU regulators. The British Virgin Islands offer license by Financial Services Commission. Many online trading business owners find this license very attractive and appealing as there is no limit for initial capital necessary to get a license. The regulator still maintains the right to check that information at any point.
On Belize, online trading companies are regulated by International Financial Services Commission and in Vanuatu, the regulatory agency is called Financial Services Commission.
When it comes to Belize, their license experienced several changes in the recent past. Instead of $5,000, it is now charged $25,000 annually, and initial capital necessary increased to $500,000 minimum. In the past minimum initial capital was $100,000. Also, licensing fees peaked from $500 to $1,000.
Vanuatu is very interesting for online trading business as it has no corporate taxes. Minimum initial capital is $500,000, but it can be kept in a bank outside of Vanuatu.
