Start up FX broker with 0.1 spread - who wants to join? | Forex Factory

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Start up FX broker with 0.1 spread - who wants to join?

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  • Would you trade with us?
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  • #1
  • First Post: Edited 3:04pm Dec 8, 2014 2:38pm | Edited 3:04pm
Hi mates,

I am trying to make some steps about starting a forex broker regulated by the FCA and I was wondering if anybody out there would want to join.
The purpose would be to offer the cheapest commissions in the industry focusing from our trader's point of view.

Commissions would be $1 per 100,000 currency units or its equivalent of just 0.1 pips spread mark-up over raw interbank rates.
Scalpers and robots would be welcome, as the trading conditions would be ECN/STP without Market-Making.

Just to introduce you to capital requirements, I can tell you it would cost around €300,000 considering a pessimistic scenario including marketing investments for a whole year and not having a single client during that first year.

I am ready to invest a half of that capital. If there is someone interested about investing what is left, please leave a comment.
I think that if you like the idea and there are 10 people out of the 1,500,000 visitors per month in FF who are willing to invest $10,000 each one, we could make it happen.
You decide if it would be riskier than daytrading

If you think that you are experienced and skilled to get hired please leave a comment, as well as if you think that it looks interesting to you as a customer and you would consider to try this brokerage.

The purpose is to make it from traders to traders so taking action is in our hands to play fair!
  • #2
  • Dec 8, 2014 3:41pm Dec 8, 2014 3:41pm
I would like to join as a customer and trading advisor thumb up
Have a nice day sir
focus while relaxed to see better
  • #3
  • Dec 8, 2014 4:20pm Dec 8, 2014 4:20pm
What about us USA traders that want higher than 1:50 leverage? More like 1:500, not because we want bigger trades, but because we want the most free margin possible?
What would your spread look like on XAUUSD?
Could you get the server setup nextdoor to the liquidity provider, and allow VPS to sit in your server?
Too close for pips, switching to points.
  • #4
  • Dec 8, 2014 4:34pm Dec 8, 2014 4:34pm
I would like also to suggest a LMAX. Model .so exchange and order book ability
focus while relaxed to see better
  • #5
  • Dec 8, 2014 5:31pm Dec 8, 2014 5:31pm
Hi, just few calculations to help u in setting up your plan.

mt4 license cost 100k $ + 2250$ (technical support and mobile mt4) per month
FCA registration STP business model require 250k GBP security and Dealing Desk model requires 1M GBP deposit.
office running and operational costs + hiring of Finance and Compliance manager will set you back 150k GBP / year at least.
You will be paying minimum 5000$ processing fees per month to liquidity provider ( usually they charge 0.3-0.8 spread + 10$ commission per million lot processed)

above expenses doesn't include marketing costs.
  • #6
  • Dec 8, 2014 5:32pm Dec 8, 2014 5:32pm
Quoting Thepipster
What about us USA traders that want higher than 1:50 leverage? More like 1:500, not because we want bigger trades, but because we want the most free margin possible? What would your spread look like on XAUUSD? Could you get the server setup nextdoor to the liquidity provider, and allow VPS to sit in your server?
The best leverage I have found is 1:200, although I will keep working to get more leverage.

Regarding US customers, they would be out of our reach as the regulatory body asks for $20 millions.
So our clients could be people or institutions from all the world except US residents.

About gold spread: although our commission would be the lowest possible too, we have to take into consideration that interbank spread for gold is quite wider than forex spreads. Tomorrow I will reply with further info.
  • #7
  • Dec 8, 2014 6:43pm Dec 8, 2014 6:43pm
If this is going to be a corporation. Citizenship should have nothing to do it in the forming of your company. Better yet, are you as I think I am readying, You are forming a actual forex company so then, they would not be trading if a US citizen was a partner. So no rules would be in violation.


I am more interested in what country you would be setting this up in. The specific details you had in mind as for profit sharing. What role would you have in the company, are you planning a absentee ownership because the compliance officer is just that. They do not run the day to day operations. So, Please expand on what you are really looking for. Merely money or a working partner.

Peachpro
  • #8
  • Dec 8, 2014 6:56pm Dec 8, 2014 6:56pm
I would be interested if there are no FIFO rules, hedging is allowed (even though I do not use it), and most importantly, 200:1 leverage is a MINIMUM, and 500:1 would be killer. Would also need good customer service, attention to detail, immediate deposits, and quick withdrawals. I know that is a lot to ask for, which is why I am very picky about which broker I use. Also no dealing desk is a MUST (ie: no games or manipulation of client funds). They must have interbank liquidity/ECN. Segregated accounts too. Similar to LMAX or Fin FX.

You must also be able to prove that you are not here to scam people. That should go without saying, but it will not be easy to prove. You would have to develop a stable and reliable history first. So I guess my answer to your question is a big MAYBE.
Please check out my blog at https://from-zero-to-hero . net
  • #9
  • Dec 8, 2014 7:47pm Dec 8, 2014 7:47pm
I am highly interested and would like to join as a customer and trading advisor.
  • #10
  • Dec 9, 2014 12:07pm Dec 9, 2014 12:07pm
Quoting Thepipster
What would your spread look like on XAUUSD? Could you get the server setup nextdoor to the liquidity provider, and allow VPS to sit in your server?
Right now the interbank rate I see for XAUUSD is 1.5 pips so the final spread would be 1.6 pips in this particular case. In the case that interbank spread was 2 pips, the spread to the final customer would be 2.1 pips and so on.

Yes, our server would be at LD5 or NY4, at the same building that most liquidity providers.
I personally consider VPS as a very important feature but it would be considered later. First, it is time to find investors who would want to know more.
  • #11
  • Dec 9, 2014 1:34pm Dec 9, 2014 1:34pm
Quoting Thepipster
What about us USA traders that want higher than 1:50 leverage? More like 1:500, not because we want bigger trades, but because we want the most free margin possible? What would your spread look like on XAUUSD? Could you get the server setup nextdoor to the liquidity provider, and allow VPS to sit in your server?
US traders can R.I.P , first they need to make their Government change their stupid law and allow them some freedom and space to breath.
  • #12
  • Dec 9, 2014 1:34pm Dec 9, 2014 1:34pm
Quoting Peachpro
If this is going to be a corporation. Citizenship should have nothing to do it in the forming of your company. Better yet, are you as I think I am readying, You are forming a actual forex company so then, they would not be trading if a US citizen was a partner. So no rules would be in violation. I am more interested in what country you would be setting this up in. The specific details you had in mind as for profit sharing. What role would you have in the company, are you planning a absentee ownership because the compliance officer is just that....
The preferred location would be the UK, regulated by the FCA.

The "B plan", as capital requirements needed to incorporate in the UK are pretty high, would be starting in another country like Mauritius where it is cheaper to incorporate, willling to switch to the UK as soon as possible as it would give customers more peace of mind.

I could start the brokerage right now in that country, but I pretty much prefer to have half of the company located in the UK than the whole company in a tax haven.
I have nothing to hide so I'd rather to get regulated by the prestigious FCA.
The problem about the B plan would be that customers could be afraid of depositing their money in that country as they could think they would not get it back.
It is a regulated license but I understand that concern.
We could make an agreement with an insurance company guaranteeing their deposits so they would get their money back anyway just to make people not being afraid.
I repeat, this would only be the B plan if the A plan does not succeed. Anyway it would be a temporary solution as we would move to the UK as soon as possible.
  • #13
  • Dec 9, 2014 1:35pm Dec 9, 2014 1:35pm
Mandarina which country your planning to register , or just unregulated broker ?.
  • #14
  • Dec 9, 2014 1:41pm Dec 9, 2014 1:41pm
i thought cyprus was cheaper and easy in terms of legal difficulties .
  • #15
  • Dec 9, 2014 1:45pm Dec 9, 2014 1:45pm
Quoting XharpScalper
Mandarina which country your planning to register , or just unregulated broker ?.
The capital requirements would be to incorporate in the UK, regulated by one of the best regulators in the world.

I could start a brokerage for a lot less if I considered incorporating in some other countries like Mauritius (regulated too), it would be only if I don't find any other investor to start in the UK. Anyway I would only incorporate there temporarily until the company grows to finance the change of jurisdiction, as my will is to incorporate in the UK whatever it takes.
  • #16
  • Dec 9, 2014 1:49pm Dec 9, 2014 1:49pm
Well its good but you should keep in mind that at startup you will get few clients and it would be hard to survive in competitions with giants .
  • #17
  • Last Post: Dec 9, 2014 1:49pm Dec 9, 2014 1:49pm
Quoting XharpScalper
i thought cyprus was cheaper and easy in terms of legal difficulties .
Regarding incorporating in Cyprus, although CySEC is a quite good regulator, there is not the same level of protection than the one offered by the FCA.
They have a capital requirement of €200,000 just to keep it in a bank account a part from the working capital. Any expense is a part from that statutory capital.
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