EU Investment Intermediary Forex brokers licensing in Bulgaria

Obtaining a Forex licence in Bulgaria gives right to the broker to operate within the entire EU either by free providing of services or through opening a branch.

Companies that want to operate Forex business platforms in Bulgaria should be registered as investment intermediaries and licensed by Bulgarian Financial Supervision Commission. They work under the European MiFID which has been implemented in Bulgarian legislation and financial institutions are regulated by the directive with some national specifics.

Forex Licensing Bulgaria Advantages

Bulgaria is currently the best country for financial services licenses. Firstly license can be passported in any other EU country; Bulgaria is a European country so any license made here will permit to do business in 30 European countries; payment institutions in EU are subject to licensing but once a licence is obtained in any member state (e.g. in Bulgaria), the payment institution can provide services on the territory of the entire EU without further licensing – Informing the relevant Central Bank – Bulgarian National Bank (BNB) of the respective member state is the only obligation. Corporate income tax is the lowest in Europe at 10%, while personal income tax is 10% only. Company incorporation and maintenance and license application fees are very reasonable by comparison to other European countries. Office rental and fitting costs and labor costs are very low while the quality of local workers or office employees is excellent. Large choice of banks (among which international banks)

Types of Licenses Capital Requirements

There are two types of licences which are applicable to Forex brokers, depending on the type of activity:A brokerage licence Minimum required investment capital BGN 250 000 (approx. EUR 125 000) This type of licence offers the investment intermediary the possibility to hold clients’ money and securities and to provide any of the following services: Reception and transmission of orders in relation to one or more financial instruments, including intermediating for conclusion of transactions in relation to financial instruments Provision of investment advice to clients Execution of orders on behalf of clients Portfolio management Full licence (a Market Maker licence) Minimum required investment capital BGN 1 500 000 (approx. EUR 750 000) This type of license offers the investment intermediary the possibility to deal on their own account. In both cases 25 % of the minimum required capital must be deposited with a bank before filing the application for licensing and the remaining amount within 14 days from receiving the approval by Bulgarian Financial Supervision Commission.

Other Requirements

Basically the other requirements are the same than in other jurisdictions that grants this kind of license. Directors must be qualified and have no criminal records, shareholders must pass a fit test, the companies must have offices in Bulgaria, and the applicants must prepare a business plan and have an internal procedure manual; The Memorandum of the Company must have specific clauses regarding the nature of this business; The applicant company must fulfil the minimum capital requirements as set out above; At least one director who is resident in Bulgaria to act as Executive director and who passes the fit and ‘proper test’; The company has physical office space in Bulgaria; Set up an internal control mechanism, the company needs to have in place internal rules and procedures to oversee potential problem areas, contingency plans, server protection, client protection etc. Suitability of the shareholders. As with the directors, the shareholders pass a fit and proper test, especially a background check whereby they must not have a clean criminal record as well as experience in the business. Also the company must have internal procedures so as to avoid any potential conflict of interest with its clients. Application Procedure (General Outline). Together with the above document bundle, a three year business plan, and internal procedures manual and anti-money laundering and know your client procedures must be filed with the application.

Timing

EU Forex licensing procedure takes approximately 6 months. The applicant needs a couple of month’s prearrangements and legal work for preparing the application documents before filing the application with FSC. The Commission charges a fee for reviewing the application and issuing the investment intermediary licence (different depending on the type of licence) and comes up with a decision within 4 months from the date of application.

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