Preface: Malta, situated in the European Union, stands out as one of the prime licensing jurisdictions for Forex brokers. With the privilege of passporting, enabling Forex trading services across all 28 EU member states, Malta offers an ideal platform for FX brokers aiming to establish a European presence. Additionally, the recognition of the local regulator, the Malta MFSA, adds credibility to licensed Forex brokers. In this guide, we’ll explore the steps involved in obtaining a Forex broker license in Malta, the various categories of licenses available, and the advantages of operating in this jurisdiction, with the assistance of Fionza Consulting, a reputable service provider in the industry.
Establishing a Forex Broker License in Malta
The process of acquiring a Malta Forex license involves several steps, and with the expertise of Fionza Consulting, this journey becomes smoother:
- Initial Documentation: Start by providing basic Know Your Customer (KYC) documentation related to your business and directors, with guidance from Fionza Consulting.
- Business Entity Incorporation: After collecting the necessary documentation, choose a suitable name for your brokerage and incorporate a local business entity in Malta, with the support of Fionza Consulting.
- License Application: Once your company registration is successful, proceed with the license application. Throughout this phase, Fionza Consulting will provide invaluable insights and assistance in preparing a robust application.
- Bank Account Setup: After receiving license approval, move establish a bank account for your Forex brokerage, guided by Fionza Consulting’s financial expertise.
Important Facts About Malta Forex Licenses
Here are key details to consider:
- Minimum Capital: Market-making businesses require €750,000 Euro in capital.
- Physical Presence: The MFSA mandates a physical presence in Malta, including opening an office and appointing local directors, a process simplified with Fionza Consulting’s guidance.
- EU Passporting: Malta-licensed Forex brokers can offer services across all 28 European Union member states, a privilege facilitated by Fionza Consulting’s expertise.
- Processing Time: The time to obtain a license typically ranges from 6 to 8 months, with Fionza Consulting ensuring a streamlined process.
Categories of Investment Services Licenses
There are four categories of Investment Services Licenses in Malta:
- Category 1a: Authorization for receiving and transmitting orders, providing investment advice, and placing instruments without holding clients’ money or assets.
- Category 1b: Authorization for similar activities as Category 1a, but solely for professional clients and eligible counterparties.
- Category 2: Authorization for providing any investment service and holding or controlling clients’ money or assets, without operating a multilateral trading facility or dealing for one’s account.
- Category 3: Authorization for providing any investment service and holding and controlling Clients’ Money or Customers’ Assets.
- Category 4: Authorization for acting as trustees or custodians of collective investment schemes.
Forex Companies in Malta
- Forex companies dealing on their account require a Category 3 Investment Services License.
- Forex traders acting as riskless principals (white label partners) need a Category 2 license.
- License holders can also operate an investment company/market operator, categorized as a Category 3 license.
The application process involves four phases:
- Preparatory: Discuss your proposal with the MFSA, provide a comprehensive description of your activity, and submit a draft application form with supporting documents.
- Pre-Licensing: After approval, finalize all outstanding matters, incorporate your company, and submit the revised application.
- Post-Licensing / Pre-Commencement of Business: Satisfy any post-licensing requirements before starting operations.
- Licensing Fees and Capital Requirements
- Licensing fees vary based on the category of the license and annual supervisory fees are calculated according to revenue.
- Share capital requirements differ for Category 2 and Category 3 license holders.
Advantages of a Malta License
- Malta is an attractive international financial center with political stability, a strong economy, and tax-friendly policies.
- The passporting system allows you to offer services throughout the EU.
- The MFSA regulates various financial services, providing flexibility in the types of services offered.
Requirements for Licensees
- Setting up a physical office in Malta is mandatory.
- Minimum capital requirements depend on the chosen license category and financial instruments used.
- Hiring qualified personnel with financial expertise is essential.
- After obtaining the license, compliance with EU directives and regular financial reporting is required.
Obtaining a Malta Forex license offers numerous advantages for Forex brokers seeking to establish their presence in Europe. With the guidance of experienced consultants from Fionza Consulting, you can navigate the licensing procedure successfully and benefit from the opportunities this jurisdiction provides.