43 forex brokers that obtained new licenses in 2016

43 forex brokers that obtained new licenses in 2016

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The online forex market, the largest financial market globally, is decentralized, meaning there is no location where investors can go and trade currency pairs. In different countries, the market is subject to different regulatory requirements. In most  reputable legislations, forex brokers are regulated and required to hold a license from the relevant authorities.

In 2016, the market was dynamic, with many forex brokers expanding or entering the market, and others ceasing operations or parting with their licenses.

Let us take a look at some of the most interesting forex markets and the brokers that obtained licenses there in 2016:

UK market still attracts new licensees despite Brexit vote

The UK is the world’s largest forex hub, accounting for 37% of the world’s forex market, with a trading volume exceeding $2.4 trillion as at April 2016. However, that is about to change, as the country is expected to lose its right under the EU single market directive once it exits the EU and many brokers are already set to fleet out of the country. Under the EU Markets in Financial Instruments Directive (MiFID), a company licensed to provide financial services in any EU member state is free to operate in all countries of the European Economic Area (EEA). If the passporting rights are waived, UK-regulated companies would loose access to all but the UK markets.

Global forex broker Exness, regulated in Cyprus, acquired in the second half of the year a license by the Financial Conduct Authority (FCA). It said at the time it would launch operations by the end of 2016 and expand its operations across Europe. In addition, the broker announced plans to launch business-to-business (B2B) solutions.

Recently, multi-licensed XM, a brand of Trading Point Holdings, acquired, through its subsidiary Trading Point of Financial Instruments UK, a license and launched operations in the UK. The company obtained a license in May 2016, registered its brand name in June and launched operations with the opening of an office in London in November. In addition, XM group companies are authorized in Cyprus and Australia.

Blackwell Global Investments, another broker regulated by the Cyprus Securities and Exchange Commission (CySEC), also received an FCA license earlier in 2016. It is present in more than 90 countries across Europe, South America and the Middle East. The FCA has also granted license to Land-FX UK Ltd., part of the LandFX brokerage group,which also operated a unit regulated in New Zealand by the Financial Market Authority (FMA).

In addition, a newly-set up forex broker, eqlx, has also commenced operations under the cap of brokerage group ACM Group, aka Alpha and also trading as Alpha Capital Markets. What is interesting about this broker is its strategy to split 50/50 its net profit with active traders on a quarterly basis.

The list of forex brokers that obtained license from the FCA in 2016 is not exhaustive, since the regulator has stopped issuing notices when granting a new license.

As we mentioned before, many FCA-regulated forex brokers are seeking alternative legislation that would provide them access to the EU markets once the UK exits the union. In regards to this, France’s financial regulatory bodies are preparing to attract UK-based financial service providers that wish to relocate their business in other EU countries by simplifying and speeding up the licensing procedures for entities licensed by the FCA.

Cyprus remains destination of choice for brokers seeking expansion in Europe

Cyprus is an interesting country in regards to financial regulation. The Cyprus Securities and Exchange Commission (CySEC), which is in charge of the market, leads a somewhat laxer and more flexible regulatory policy than other countries in Europe.

There are two types of Cyprus Investment Firm (CIF) licenses – limited, under which the financial company can execute orders on behalf of clients, but not on its own account, and full which allows an entity to act on both its own behalf and that of clients. Most forex brokers that have applied for and received a license with the CySEC so far in 2016 are market entrants with no prior history.

The number of newly-licensed CIFs is growing. Since the beginning of the year, the Cypriot regulator has announce the granting of 30 CIF licenses, but the number includes providers of other types of services different from forex, as well. In comparison, for the whole 2015 a total of 25 entities obtained CIF licenses. The regulator publishes license approvals with a few weeks delay and the number of licensees might grow by the end of the year.  Following is a list of forex brokers that have obtained a CySEC license in 2016:

South Africa is also gaining popularity among forex brokers

South Africa is another attractive market for expanding forex brokers. The market is growing in volume and value, reaching a turnover from over-the-counter (OTC) forex trading of $21 billion as at April 2016, up from $10 billion in 2004.

Since the beginning of 2016, four forex brokers – AvaTrade, HotForex, ForexTime (FXTM), and Xtrade have obtained licenses from the Financial Services Board (FSB). XM has also applied and is still awaiting approval.

Russia and Belarus introduced forex regulation in 2016

With the start of 2016, Russia introduced a new forex regulatory framework, requiring locally-registered brokers to obtain a license from the Cental Bank of Russia (CBR) in order to operate in the country. So far, the CBR has licensed Finam Forex, TeleTrade, TrustForex, VTB24 Forex, and Forex Club, the last one of which got licensed on a second try. Meanwhile, Alpari, the largest forex broker in the country, was denied a license for no specific reason. It is reapplying.

Note that foreign brokers can still target Russian citizens and operate even without holding a CBR license. In fact, the majority of brokers transferred their Russian operations to abroad subsidiaries.

Belarus followed Russia’s example with its own law amendments in the sector that came into effect in mid-2016. To operate in the country, forex brokers need to be registered with the National Bank of the Republic of Belarus (NBRB) and to comply with certain forex software requirements. The NBRB has registered, hence authorized, six entities as forex brokers –
OpenFX, Forex Club, TeleTrade, FTM Brokers, Alpari and Gerchik & Co. Belarusian lender MTBank has applied, through its forex broker arm MTBankFX, for entering the register and is awaiting the NBRB’s decision.

US retail forex market remains stagnant with just one new participant

The US forex market is has been shrinking with nearly no new market participants. The only broker that obtained in 2016 authorization to provide forex services in the country was TD AMERITRADE Futures&Forex, part of multi-asset brokerage TD Ameritrade. It obtained the last needed authorization documents in February and launched forex operations in March.

 

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