Author Archives: startfadmin

  • 0

How to get FX license in Bulgaria?

Category : MiFID License

Sofia Night2

If you  want to start a forex brokerage you should ask yourself a few important questions before that:

  • What is the best location to form a corporation to operate a new Forex business?
  • Where should I get the license?
  • How quickly do I want to start my Forex brokerage?

Taking in consideration the pros and cons, Bulgaria seems a viable answer to all this questions.  With its attractive tax regime, coupled with its EU Member status, its implementation of the Markets in Financial Instruments Directive (MiFid) and regulatory regime, Bulgaria has proved to be a good jurisdiction for incorporation and operation of FX companies.

With this article we aim to bring clarity to the procedure of obtaining a MiFid license, needed to operate a FX brokerage in Bulgaria.

According to the Bulgarian legislation only licensed and registered  investment intermediaries can provide FX trading/investing services. Such companies need to apply for licensing with the Financial Security Commission (FSC) as a investment intermediary and comply with the legal requirements set out by the Markets in Financial Instruments Act (MFIA), some of which are: minimum capital, requirements about the directors of the firm, etc.

The procedure begins with submitting a written application and filling in a registration form. Your application should be accompanied by a set of documents, specified in MFIA.

Based on the submitted documents, the FSC will determine whether you fill the requirements for a license. If the submitted data and documents are incomplete or irregular, or additional information or evidence for correctness of the data is needed, the FSC will send you a message to require additional information and documents.

FSC should decide on the application within three months from the moment you file it.

If the decision is positive, the FSC will issue written license that gives you the right to perform certain services and activities, depending on the type of license you applied for.

The license entitles you to perform the specific services and activities within the European Union and European Economic Area, directly or through branches of your licensed company.

  • 1

Bulgarian regulator relaxes rule on how brokers retain client documentation, February 2016

Bulgaria has during recent years become home to a number of retail FX brokerages, most of which are located in the nation’s capital city of Sofia, and some in Varna, along with a support network of platform firms, web integration companies and digital marketing entities.

The regulatory structure in Bulgaria is not one that is widely recognized by the mainstream FX industry and its commercial partners, however those operating in the area have built up significant businesses by benefiting from being in a region which is very much integrated as part of the European Union, as well as being able to operate within Russia and the former Soviet Union nations, now known as the Commonwealth of Independent States.

Bulgaria’s regulatory authority for non-bank financial services firms, which is called the Financial Services Commission (FSC) had some differences between its methodology and that of European regulators in regions which are populous with retail FX brokerages, such as CySec in Cyprus.

Among such differences is the procedure by which client documents are retained on record by brokerages.

Until now Forex brokers regulated in Bulgaria, which the authorities deem to be “Investment Intermediaries” were not allowed to use scans when signing agreements with clients. This was the major obstacle for the FX business in the country.

This was changed two weeks ago and now the Bulgarian license gives FX Brokers the same options as UK or Cyprus license – to work with scanned copies of ID document and proof of address. The required capital for BG license is BGN 250,000 for the so-called “Middle”license (which can be used by STP brokers) and BGN 1,500,000 for a full licensed, which can be used by market makers. These are among the cheapest EU licenses, which combined with a corporate tax of 10% make the country attractive for starting FX companies.

The full amended ruling can be seen by clicking here.