Bulgaria Forex License
At King Terry, we are experts in helping Forex brokerages obtain an FX license from the Bulgarian FSC.
Since 2003, the Financial Supervision Commission has been Bulgaria’s regulatory body in charge of maintaining stability and transparency within the non-banking financial industry. This body ensures the protection of consumers through legal, administrative and informational assistance.
Why is Bulgaria a good choice for obtaining a Forex license?
Bulgaria is a great choice for brokers seeking regulation because as the country is part of the European Union, becoming licensed in Bulgaria allows FX brokers to operate within the EU. Additionally, Bulgaria has an incredibly favorable corporate tax rate of only 10%, reasonable incorporation and licensing fees and access to a highly qualified workforce for one of the lowest salaries in Europe.
Bulgaria is not only part of the European Union, but it is also an active member of the Markets in Financial Instruments Directive, MiFID, the commission in charge of developing standards of good practice in the non-banking financial sector, throughout the European Union. While regulation throughout the various European jurisdictions vary, MiFID harmonizes the regulation of different countries members of the EU. They do this by providing brokerages with passport rights that allow them to carry out business in any Member State as it has been authorized by their home State regulator.
What exactly is the FSC?
The FSC is the Bulgarian Financial Supervision Commission and it is the country’s financial regulatory entity in charge of issuing Forex licenses after examining documentation provided by companies as part of their applications for permit issuance, amending license status in the event of non-compliance, and enforcing regulation to ensure that organizations that hold an FSC license follow all rules & regulation to which they are bound.
The FSC also sets rules regarding:
Capital amount requirements and structure
Origin of the funds with which the share contributors are paid
Relationship between individuals and/or legal entities in accordance with the legal provisions
Requirements to the members of managerial and supervisory bodies
Supervision by the FSC:
The Financial Supervision Commission supervises brokerage’s activities through both off-site and on-site examinations of any and all market participants’ activity. The purpose of the supervisory activity from the part of the FSC is to ensure the prevention and/or termination of any legal violation. This protect the interest of investors by ensuring the operator’s compliance of all legal requirements, but also ensuring the operators’ financial stability and that the information they provide to consumers is accurate and reliable.
What are the general requirements for obtaining an FSC Forex license in Bulgaria?
Forex companies wanting to operate and get licensed in Bulgaria must be registered as an investment intermediary in the country and become licensed by the Bulgarian Financial Supervision Commission. This statutory body operates under the umbrella of the European MiFID. Forex companies abide by the rules set forth by MiFID with some specific national rules.
Capital requirements: The required capital for a Financial Supervision Commission license is BGN 250,000 (about 125,000 EUR) for the brokerage license, payable as follows: 25% must be deposited prior to filing of the application form and 75% must be paid within 14 days of approval.
For a full license, which allows operators to be market makers, the full license has a capital requirement of BGN 1,500,000 (000 (about 750,000 EUR). An additional payment of 1% of the capital must be made to a further guaranteed fund.
The FX brokerage must have two directors who possess proper higher education in a field related to finance or economics, proven experience in the financial field, a clear criminal record, and they cannot be related to one another (relatives or partners in life or in another company).
Directors may be foreigners.
The company must have the necessary appropriate software, equipment and technology in order to successfully operate and provide service to customers, or otherwise contract such infrastructure with third party providers.
The company must provide the FSC with a detailed and solid business plan including income forecast, expected P&L, etc.
The operator must have a physical space in Bulgaria to function as an office.
The process of obtaining a license through the FSC takes about 4 months from the moment the complete application is filed.
Types of licenses granted by the Financial Supervision Commission
There are two types of licenses granted by the FSC which are applicable to Forex brokers. Depending on the type of activity that the FX broker will conduct, a broker should obtain either a brokerage license or a full license.
01. A brokerage license:
This type of license gives the investment intermediary the opportunity to hold traders’ money and securities and to provide any of the following services:
Receive and transmit 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
The minimum capital requirement for this license is BGN 250 000 (about EUR 125 000)
02. Full license (a Market Maker license):
This type of license grants the investment intermediary the opportunity to deal on their own account
The minimum capital requirement for this license is BGN 1 500 000 (approx. EUR 750 000)
Types of licenses granted by the Financial Supervision Commission
Documentation and Paperwork:
Prepare the AML Procedures and other custom-made business plan.
Submit reports and all applicable documents of FSC, Bulgaria to initiate the registration process.
Open an account in a Bulgarian bank which provides the capital requirements. This may require submission and preparation of bank forms, due diligence and other corporate documents. The bank may request that the shareholder or director visit the bank personally in order to proceed.
Create ad-hoc support and provision of secondary documents that serve as an important requirement of the process.
Prepare all the initial corporate documents, statutory declarations by the shareholder/director to the FSC of Bulgaria.
Collect and prepare all the required papers and documents including due diligence reports.
Assist with transfer of funds for local bank in order to meet the capital requirement for license intermediary fund.
Additional Services (Optional)
Assisting you to with Bulgarian company formation.
Facilitate the establishment of a local office to meet foreign jurisdiction requirements.
Help with appropriation of Bulgarian employees for the company.
Assist in finding an auditor for the company’s audit reports.
To learn more about setting up a forex license and registering a company in Bulgaria, contact us today.