Our Head of Institutional Sales, Michael Nichols, discusses the hot topic of the costs involved in running your own FX broker and outlines how TopFX has resolved all the main challenges of startups.
The FX/CFD industry continues to develop, and it has become clear that the cost for entrepreneurs to launch their own FX brokerage has decreased. This is due to the fact that many providers are offering white label solutions to help you quickly enter the market. Entrepreneurs should remember that even though the cost is an important element to consider, it shouldn't be the only deciding factor in their list.
I believe that startup forex brokers need to evaluate multiple factors before looking at cost. First, they must ensure that they partner with a technology provider who has the right solutions and market experience to help them launch a fully functional brokerage with all the necessary tools. That is why we created the TopFX All-in One-Solution. We address all startup challenges and aim to bring you, the broker, a streamlined solution, from the incorporation of your company all the way through to generating revenues, and scaling your brokerage business.
At this stage, you define the future direction of your company starting with its incorporation and your license or regulation. Depending on your regulation, it is important to understand the running cost expected with operating a forex brokerage, from the initial application to receiving your license and the requirements set out by the regulator. Usually, regulatory requirements incur numerous expenses such as the compensation of compliance officers, directors or other employees, the cost of reporting systems and the time spent to fulfil the ongoing due diligence required by your regulator. It is crucial to work with a competent legal team to guide you on the best option for your business module.Step two: Banking and payments
At this crucial stage, new brokers need to consider the banking and payment systems that they will use. Coming back to step one, your choice of operating an offshore or non-offshore brokerage would affect your payments. Payment providers often implement different charges and processes for different regions. New brokers may find the payments market complex and challenging to navigate.TopFX has resolved this issue by including an efficient CRM and built-in cashier in the All-in-One Broker Solution. We provide brokers with all the introductions they need to navigate the complex payment systems and the tools to maximise payments efficiency.Step three: Trading platforms
Now that you have your license and your bank accounts ready, you need to decide on your technology provider. Our collaboration with Spotware has defined our All-in-one solution, and we are proud to be offering an award-winning and reliable platform. The offering includes the full cTrader Suite, which consists of PC desktop, Webtrader and mobile applications fully branded with your company logos. There's also a copy and algorithmic trading functionality to provide your clients with a platform that keeps them trading for longer instead of having multiple accounts with different brokers. The All-in-one Solution includes the cTrader platform partnered with the TopFX superior liquidity, ensuring a reliable trading experience for your clients. The cost of the platform for you includes zero upfront cost, a minimum deposit and volume fees.Step 4: Total operational cost
At this stage, your infrastructure should be complete, from your licensing to banking including website development, secure client area and CRM system, trading platform and TopFX liquidity. Now it is time to evaluate your running cost by putting together your minimum fees from your payment operators, platform provider and regulatory requirements. Now it is also the time to make sure that all critical elements are in place to support the operation. That includes everything from compliance, customer support officers, marketing and dealers for proper monitoring of your trading system and liquidity. All the above will be added to your operational cost, and you need to ensure that you have a budget in place.Step 5: Marketing budget
Now that everything is working, it is time to look at how to bring clients in. Depending on your licensing, you have different options available, ranging from in-house marketing to affiliates or Introducing brokers. Successful startup brokers tend to define a marketing budget and then seek to maximise the return on it. This is what can turn a small brokerage into a respectably sized broker.
As you venture out into assessing the cost of launching your new brokerage, the need to partner with someone who offers an all-inclusive solution becomes evident. TopFX provides all the tools and know-how available to enter the market in a cost-efficient and effective way. So far, we have helped over 100 brokers successfully launch their FX business.
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