StartFXbroker, a new management consultancy that helps forex brokers start a MiFID business in Bulgaria, has commenced operations, according to forex news provider Finance Feeds.
The company offers a full set of services needed to launch a forex brokerage in Bulgaria, including preparation of license documentation, legal and consulting services, establishing a call center, as well as back office support in partnership with accounting, audit, real estate and IT companies.
The company has been founded by Stefan Pashaliyski, a former investment consultant at global online trading broker BMFN, according to the media. He also owns ForexJobs.com, a recruiting company in Bulgaria for forex and binary options professionals.
The forex regulation in Bulgaria is in the jurisdiction of the Financial Supervision Commission (FSC). Forex brokers are not allowed to operate in the country without a license from the FSC or the relevant regulatory bodies of any other EU country. On its part, a license in Bulgaria is in line with the Markets in Financial Instruments Directive (MiFID) and grants access to the markets in all other member states. MiFID forex brokers can lawfully open offices, target clients in, and provide financial services in all member states without having to meet additional requirements, while falling under the regulation of a single authority.
In case of default of a Bulgaria-regulated broker, its clients can claim their money back under the Investor Compensation Fund (ICF). The ICF guarantees payments of compensation of up to €20,000 only to clients of licensed Bulgarian-registered entities and their foreign branches in case they are unable to pay their liabilities or have been delicensed.
To obtain license in Bulgaria, investment intermediaries, forex brokers included, need to meet minimum initial capital requirements of € 125,000 for companies that provide investment services and can execute orders on behalf of clients or of €750,000 for a full license which allows companies to deal on their own account. The initial costs for applying for a license in the country vary between €2,150 and €5,100.
While in some countries like Belize ($500,000) and the UK (€730,000) the minimum capital requirements are lower than in Bulgaria, in most other countries the amounts are higher. For comparison, in Cyprus companies need to present an initial capital of at least €200,000 for limited license or €1 million for full license. In other countries capital requirements are even higher – $1 million in Australia, $20 million in the USA and CHF 20 million in Switzerland.
Source: Finance Feeds