Opening a brokerage involves various steps, including legal and regulatory requirements, technology setup, and client acquisition. The specifics can vary based on your location and target market.
Here's what it means to be an ASIC-licensed forex broker currently:
All ASIC-licensed forex brokers are required to hold at least AUD1 million in operating capital.
Like FCA, ASIC will monitor the company continuously to ensure segregation of client funds, periodical report and audit, efficient management including AML and KYC procedures, and proper risk disclosure for clients.
ASIC Forex brokers are not allowed to have any conflict of interest with their customers. This is the reason why Australian Forex brokers usually offer direct market access through ECN or STP facilities.
ASIC allows leverage for forex and CFD trading up to 30:1.
There are at least three skills that you need to have to avoid scams:
First, you must be able to identify a regulated broker authorized by a trusted regulator. It is essential to check this aspect at the start because if the broker's not regulated to begin with, then there is a higher chance of low-quality services that lead to financial loss.
Second, you should be realistic while scanning through any broker's promotions and bonuses. Scammers tend to over-promising by offering unrealistic deals to get more clients.
Lastly, you need to understand how forex broker scams usually cheat on their clients. You will get to know their characteristics and, therefore, avoid them as best as you can.
A-book broker is where orders go directly to the market, while B-book is where orders remain in the company.
A-book companies usually get profits from the spreads and commissions, whereas B-book companies get profits from a financial outcome (everything that a trader lost, the company gained, and vice versa).