Less regulated environments have long appealed to FX brokers seeking to offer clients higher leverage, creating a thriving licensing market in exotic locations such Vanuatu, the British Virgin Islands, Belize, Bermuda, Mauritius, the Cayman Islands and Seychelles.
Brokers looking to target Europe have in the past favoured Cyprus due to tax considerations and the availability of infrastructure and people with market knowledge. But the better-resourced brokerage firms now appear to be looking towards licensing in more expensive but also more lucrative markets such as the UK and Australia.
Demand for licences from the UK’s Financial Conduct Authority in particular is far outstripping supply, according to Chris Rowe, director of Financial Technology Consultancy Services, which specialises in buying and selling regulated brokerage businesses in the UK and overseas.
Buying an existing licence without active currency operations may not be a suitable decision
“We are also seeing an increase in demand for fully operational licences, where in the past there was more focus on dormant licences,” he says. “I think some of the larger brokers see this as a good way of buying a new client base.”
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