There is no doubt about it. Forex trading is hugely popular. $5.3 trillion is traded on the currency markets every single day. The competition continues to grow, but there is plenty of room for a savvy start-up brokerage looking to grow and make a massive profit.
Launching a Forex brokerage is an exciting and challenging endeavour. As with any business, you will need to do your homework and put in the hours to earn yourself a reputation and win over new customers. One of the first and most important decisions you will need to make as the founder is whether to start a brokerage from scratch or choose a white label solution.
Read on to discover what it takes to start a new forex brokerage.
Starting a Forex Brokerage from Scratch
This option will most certainly require a significant initial investment. Turnkey platforms and bespoke client management systems can be costly to design and maintain. This route will also significantly increase the time it will take to launch the business as testing and commissioning your systems will be required.
Some of those systems will need to integrate with third-party systems also. For instance, your brokerage will need to be connected to a liquidity provider and a payments processing provider.
Connecting With a Liquidity Provider
All successful brokerages are connected to tier one liquidity providers.
A liquidity provider is an institution which behaves as a market maker.
A tier one liquidity provider allows for lightning-quick execution times which benefits you and your traders.
Partnering with a Payment Processor
Your traders will likely be based around the world, and your brokerage will need to work with a reputable payment service provider to keep transactions secure and at a minimal cost. Trust is paramount in the financial industry.
Using White Label Services
Starting a brokerage from scratch is a lengthy process due to the complexities involved, but the good news for you is that there is a more straightforward and cheaper way to get this done.
For example, Popcorn Technology provides an out of the box solution for start up brokerages. They are a white label service provider which means that they have developed most of the services and systems for you. They provide a professional trading platform, back-office functionality and traders room, and all of these systems are integrated with an expert CRM, payment service providers and a liquidity provider. Essentially, a white-label service means you can pop your logo onto the software and pass it off as your own, which helps your brokerage to stand out from the competition.
The main advantage of using a service like Popcorn Technologies is that it is proven to work. All the systems are currently in service elsewhere and have been tested over several years. There is very little technical know-how required, minimal implementation times and no ongoing maintenance requirements either.
As you can see, there are two distinct paths to achieving your goals, and both have their advantages. You will need to choose which path is right for you, but it will be highly dependent on the resources you have available to you from the start.