How to Start an Offshore Broker Business

Aren’t the regulations  of brokerage businesses increasing day-by-day? Are n’t the smart brokers, such as the Forex brokers and the stock brokers, all over the world reincorporating businesses in a much regulated environment?

In this blog, we will discuss how to start an offshore broker business and what are the things you need to know regarding offshore broker business.

What do you mean by a Business Broker?

business broker is the one who acts as a buffer between the buyer and the seller. A broker winds up with a productive discussion by telling certain things to a buyer and certain things to a seller. The broker discusses with the owner that the price is too high, very openly communicates what has to be done to make a deal, and discusses how the differences in viewpoint can be brought out effectively.

Why are the Brokers Looking to Reincorporate Offshore?

With the increased regulations, brokers from all over the world are looking to reincorporate offshore in a less regulated environment. The reasons are as follows :

Easy to Set Up

It's quite easier to get a broker's license as "Offshore" than it is Offshore.

Less Set up Cost

This means that more amount of money is available for the development of your business to register offshore company

Fewer Rules

This means that less money is required for administration and reporting. The time required is also very less.

Greater Trading Freedom

This means that you can provide better terms of margin to your clients in offshore company formation with bank account

Tax Benefits

There are many offshore Financial Centres that offer very low tax operating environments for Brokerage Businesses.

Licensing Options

 If you are planning to invest other people's money, that is said to be a licensable activity. It is also possible to perform such activities even without having a license in some of the jurisdictions. If you are ready to follow the licensing road, that would be a brilliant idea as it will offer you a much broader range of banks and brokers to choose from.

We have discussed that in detail as follows:

Non-licensed Options:

  1.  You could establish a “White Label Brokerage” if your main objective is to be a middle man between the actual trader and the investor. This could be achieved by incorporating a basic International Business Company.
  2. You could establish a Private Closed-End Fund.  A Private Closed-End Fund is a Limited Company that provides shares to a fixed number of investors who devote themselves to invest for a minimum investment period. The investor can either withdraw his profit or reinvest it for a long period further at the end of the agreed investment period.
  3. You could utilize an IBC. It can be shrunk to trade an investor's money in the broker's account under the Power of Attorney. In this case, a Power of Attorney is given to the trader. This enables the trader to trade the investor's money. The Trader and the Investor also enter into an acquiescence where the trader agrees to trade the funds of the investors.

Licensed Options:

If you need the widest choice of brokers, you should also consider obtaining the following:

  1. A broker’s license in an offshore company in Belize
  2. An broker’s license in an offshore company in Seychelles
  3. An broker’s license in an offshore company in BVI
  4. A Panama Financial Services Company
  5. A Licensed Private Fund in Seychelles

Brokerage Licenses

Following are the details that you should need to know before starting an Offshore broker business:

Company Details

  • A share capital of approximately $100,000 is required for the offshore company setup
  • Registered shares are only allowed. Bearer shares are prohibited
  • Nominees are not permitted

Application Procedure

  • You must open an offshore bank account at the location where you are looking for a broker business. The applicant must deposit an amount of $100,000 in the bank and leave it undisturbed for the duration of the license.
  • You must complete the IFSC application form.
  • You must complete the biographical affidavit.
  • You must submit the biographical affidavit, company documents, proof of deposit, and application fee of $500 to IFSC.

Requirements

  • Financial projections for the upcoming five years
  • Overall description of all the activities, including markets
  •  Illustration of organizational structures, and details on the executive team
  • Offshore company with the bank account
  • Bank application form
  • Notarized copy of passport
  • Bank and professional reference
  • Utility bill
  • A CV of your experience in forex

Payments

  • Application fee of $500
  • Annual license fees of $5,000
  • Annual fees should be cleared by 1st of January every year

Timeframe

  • The Formation of the business takes only one day
  • An offshore bank account approval is needed upon a receipt of approved application forms and KYC documents. It takes around 3-4 weeks.
  • The offshore bank account funding time varies, depending on how quickly the client sends the funds. From the time of approval, you have to wait for the bank account to be funded. Then your deposit will be confirmed by the bank.
  • When the funds are confirmed, the IFSC takes up to 4 weeks to permit the license.

We hope that this blog will help you to start an offshore broker business. If you need any further assistance in starting an offshore broker business, then you can contact us! We’d be glad to assist you.

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