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Avoiding the pitfalls of launching a forex brokerage


Heather McLean discovers that starting up a new electronic foreign exchange brokerage is a task littered with pitfalls, bear traps and electronic fences. However, approaching this entrepreneurial mission well researched means you will be well armed to overcome the problems and take the strategic decisions that lie ahead.


W


hen asked to identify some of the main hurdles associated with


starting an FX brokerage Doron Cohen, co-CEO of Leverate, notes: “Many aspiring brokers


would like to start their own independent online forex brokerages, but it can be difficult to anticipate the full extent of what is involved in the process of starting this type of venture.


Te first most challenging aspect of starting a forex brokerage is the legal requirement. Obtaining the appropriate legal structure for a forex firm, such as meeting regulatory requirements, opening the corporate bank account, and company incorporation, all present an obstacle for new brokers. Tis, coupled with proper configuration of the platform, accessing liquidity providers and partnering with fast, accurate feed sources, can cause delays for firms as they start their own operations.” Cohen adds that apart from


22 | INSTITUTIONAL FX SERVICES - THE BROKERS HANDBOOK 2012/2013


the technological and legal hurdles, many new brokers spend countless hours and resources looking for the best providers for various different products and services, such as website design, marketing services and live chat, to name a few. He continues: “Te importance of having a competitive edge over other brokers is the key to success when entering this industry, and there are many companies that can be found offering ‘turn key’ solutions, however most do not encompass every aspect of starting a brokerage firm. Partnering with an IT solutions company that offers not only a true turn key solution but also a one stop shop for all the necessities required to start a brokerage, is the ideal way to minimise the obstacles in starting a brokerage firm.”


Brokerage Operations


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