How to become a binary options broker?
The hard way:
Stage 1: Registration of a foreign company abroad
First of all, in order to become a binary options broker, you need to register a company abroad. Most binary options brokers are registered in offshore areas such as the British Virgin Islands, Belize, Saint Vincent and the Grenadines and so on. Unfortunately, the legislation governing binary options does not apply in the CIS, which makes legal registration in post-Soviet countries impossible. Registration in an offshore can cost from $ 2,000 to $ 10,000 depending on the country and the complexity of registration.
What is needed:
- Selection of the country (jurisdiction);
- Collection of necessary documents;
- Contact the registration authorities of the selected jurisdiction.
Stage 2: Registration of a foreign bank account
Registering a bank account for a brokerage company is not such an easy task as opening a bank account for an individual. First of all, you should decide on the country and the specific bank in which you plan to open an account. Today, banks in Latvia are gaining popularity as the best in terms of reliability / high cost. To open a binary options broker account, you need to collect an extensive package of documents. It should be remembered that the bank has the right to refuse to open such an account, which implies that the registration should be approached with all seriousness. Opening an account can cost from $ 3,000 to $ 30,000, which may depend on the conditions of the bank and its reliability. However, you should not save on this moment, since an unreliable bank may one day burst, and you will not only lose your hard-earned money, but your binary options brokerage company will become bankrupt. If you do not want to work through intermediaries that use third-party processing, you will have to obtain a license for this type of activity, which will be quoted by the selected bank.
The procedure for registering and opening a bank account can take from 14 to 60 days.
What is needed:
- Choosing a reliable bank;
- Preparation of documentation and tools for opening an account;
- Passing the procedure for opening an account in a foreign bank.
Stage 3: Creating a brokerage company website
The broker's site is the face of the company that future customers will use. Website development is a crucial moment that is best left to professionals with experience in developing and promoting websites on financial topics. In order to attract customers to your broker website, you need to develop a modern design, as well as convenient services for trading (for example, an economic calendar, quotes, and so on).
If the site is convenient, with a modern interface, and is qualitatively optimized, then you can count on a stable flow of customers to your company.
You can start developing a site at any stage in the development of a binary options brokerage company, but the sooner the better. Creating a high-quality website can take from 3 months. To develop, optimize and promote a broker's site, you will need an average of $ 3,000, and with the development of an online platform from $ 30,000, which is not worth saving if you want the dynamic development of your business.
In our service "Automation of Trading" there are programmers who write software and turnkey sites for trading binary options.
What is needed:
- Selection of an experienced website developer, as well as specialists in optimization and promotion (SMM, SEO);
- Discussion of the requirements for functionality, content and design;
- Payment and receipt of the site.
Stage 4: Choosing and connecting a binary options trading platform
The next, no less important stage is the choice of a trading platform through which customer transactions will be carried out. First of all, you have to decide: will you provide access only to binary options, or are you planning other financial instruments, for example, the Forex currency market.
There are both specialized trading terminals on the binary options market and standard ones for most markets. For example, MT4 (Metatrader4) or UTIP trading terminals provide access to trading both Forex and binary options.
Connecting the most popular MT4 platform will cost about $ 100,000, while a less popular, but no less high-quality UtIP, connecting two markets (forex and binary options) will cost about $ 20,000.
If your plans are exclusively a binary broker, then you should pay attention to specialized trading terminals for binary options: SpotOptions, Sirix or Tradologic. Each platform has convenient features, an interface, and a price. Before you decide on a specific platform for your broker, you should understand each of them in more detail and make your choice. For example, connecting the SpotOptions platform will cost $ 30,000 + a commission of up to 30% of the company's profit. Thus, the purchase / rental of a ready-made trading platform will cost a pretty penny and will have a number of additional conditions on the part of developers, up to and including dependence on them. In this case, perhaps you should consider developing your own software, which will be performed according to your requirements, with a budget commensurate with the purchase / rental of a ready-made solution.
What is needed:
- Familiarization with the assortment of trading terminals;
- Pay for the connection of the program (purchase \ rental or a site together with a turnkey platform);
- Providing access to the terminal for customers on the site.
Stage 5: Opening the head office
If you went through all the previous stages of company registration, a bank account, and have a trading terminal available, then you should think about opening an office of a brokerage company.
Some may think that at the initial stage you can do without an office to save money. However, the fact is that having an office inspires confidence in future customers. Agree, it’s much safer to trade with a company whose official office you can come to, than a company that is presented only on the site (look for-fistula in the field, in which case).
You should choose an office based on the estimated number of employees (see next step). In the initial stages, a small room is suitable to provide workplaces for a staff of 3-5 people. In addition, you should think about repair and office equipment for the office.
What is needed:
- The choice of location (preferably in the city center);
- Determining the size of the office;
- Repair, purchase of office equipment and furniture.
Stage 6: Recruitment
The staff of the brokerage company is divided into front office and back office.
Front office workers are most often sales and customer service managers who will deal with information support, offer services, and enter into transactions with customers. At the initial stage, 1-2 managers are enough, but as the company expands, the staff can be increased.
The back office includes programmers who will support and modernize the site, SEO and SMM specialists, as well as marketers who will promote your company.
What is needed:
- Definition of required posts;
- Search for colleagues;
- Team building.
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So, we examined all the stages of how to become a binary options broker. In general, this type of business is quite expensive, from the point of view of start-up capital, but it has a high return on investment, many times cheaper than providing trading services on the Forex or stock market, and in the future will bring a stable and high income.