What is an Offshore Forex License? An Offshore Forex License is an official permit required to open an online business, i.e., Forex brokerage, in most offshore countries where online forex trading is perfectly legal. Although some countries do not recognize online foreign exchange trading as a legitimate method, such countries permit the online trade of financial products, services, or commodities through the facilitation of electronic money transfer.
For any business to operate within a country, it needs to have minimum qualifications and requirements. Most countries recognize and encourage Offshore Forex Brokerage Licence, which has resulted in the growth of many offshore forex brokerages. Offshore forex brokerages can be classified into two major categories: the ones who are licensed by their respective government and the ones who are licensed by the Offshore Financial Supervisory Authority (OFSA). The first category is much more regulated than the second, and the latter does not require a license.
The first type of offshore forex license usually is awarded to brokers/companies whose business meets the regulations set out by their jurisdiction laws. Offshore facilitation of financial transactions usually requires these agencies to meet the international standards set out by the OFSA and are therefore highly regulated by those countries’ laws. Offshore forex firms can be accredited in two ways: they may be accredited by the CFTC (Competition authority for the Counter Trades) or accredited by the AMEX (American market). Most of the Offshore Forex Brokerages that the CFTC accredits are members of the National Futures Association (NFTA). Of these firms, the majority are members of the NFTA, which makes them financially and politically independent.
Another type of Offshore Forex License is that of a white label brokerage firm. As the name suggests, these firms are an off-site operation carried out by third parties. They operate independently from their host country and can have their own set of rules and policies in place, entirely different from those of their clients. Offshore Financial Facilitators offer specialized financial services to their clients and can be classified as either full-service Offshore Financial Facilitators or specialized Offshore Financial Advisors.
In order to open an Offshore Financial Advisors firm, you will have to get a forex broker license from one of the Offshore Financial Supervisors. These licenses, which are often held by individuals or companies that do not have an active functioning business in the financial industry, are granted by the FSA (Financial Services Authority). You will find that most of these Offshore Financial Supervisors have a high standard and only select people with high integrity into their industry who meet a specific set of requirements. When you apply for your foreign exchange broker license, you will be required to fill in some papers and take some examinations. This exam is known as the ISE Test and is one of the most important exams that you will ever take in your entire life!