The main regulations Trading Brokers have to adhere to
The activity of brokers in most countries is the subject of tight government control and various non-state associations and unions of market participants. Of course, each state may have its market regulators who are involved in licensing, but there are also international regulators whose authority is recognized around the world. The most popular in this area are the American licensors of the CFTC (Commodity Futures Trading Commission), founded by the US Congress, who regulate the trading of commodity futures and options, and the NFA (National Futures Association), which regulates the trading of futures.
Large regulators require a significant amount of equity capital from an applicant to obtain a license, conduct regular audits of brokers and even can impose disciplinary measures on them, including summons and license revocation. While for a broker, a license is a pass to the exchange, for its client, it would be a confirmation of the legality of the broker’s work. A license could even give a client the opportunity to receive compensation in case of broker`s bankruptcy. In fact, a brokerage license is a document giving the right to engage in financial activities. When a subject plans to obtain a brokerage license, first of all, it needs to choose a jurisdiction for registering a company which would be the best for him. The next step is to register a brokerage company and obtain a license. Even though the activity of brokers in each jurisdiction is regulated by specific laws, there are also the following guidelines, which are seen as general requirements:
- The requirement for the minimum size of the share capital of a brokerage company.
- Requirements for the company's staff (number of employees, their qualifications and work experience).
- Payment of the state fee, established by the government of that specific jurisdiction.
- The requirement to conduct financial transactions in the country where the license was obtained.
- The list of documents provided to the licensing authority in a particular jurisdiction. After the list of documents is submitted to the organization that regulates the activities of financial market participants, the application is reviewed and, based on the results, a regulator will either issue a license or refuse the request.
The choice of country for registering a brokerage company and obtaining a license depends on the tasks set, the specifics of the client’s business, the price of obtaining permission to conduct financial transactions and other relevant criteria. Whatever jurisdiction you would choose to conduct your brokerage trading in, Popcorn Technology can take over the organization of the whole process, helping to simplify the process for you.
If you have made a decision to become broker, then you would need the help of professional lawyers in order for the procedure of registering a company and obtaining a license to pass quickly and without unexpected unpleasant surprises. Our experienced specialists will help you, in a short time, to become a full-fledged participant in the financial markets, obtain a brokerage license, and successfully conduct operations with various financial instruments.
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