The United Kingdom in the 70s stood at the origin of the new international currency system Forex. Now it already has the status of a forex state and controls 38% of the entire market, ahead of Singapore and the United States. The Bank of England in 2020 showed statistics of daily currency trading volumes – more than 2.4 trillion dollars. The top broker “” is also certified in this jurisdiction, which confirms the highest level of this system. Rich experience in the financial sphere has helped the British to develop a good regulatory framework with many legal acts that protect investors and their capital to the maximum extent possible.

The Financial Services Authority (FCA), created from the reorganization of the previous regulator FSA in 2013, oversees over 50,000 financial firms, including several industry leaders such as CMC Markets, FIBO Group, IG Group, Saxo Bank, and Plus500.

The FCA has been given broad enforcement powers as well as regulating, monitoring, and enforcing the legislation, and requirements of the financial industry. As part of its activities, it issues licenses to investment companies, and exchanges, investigates complaints, and protects users’ rights.

The FCA’s work is fully paid for by the fees of all industry participants, the state does not finance this agency in any way.

UK Forex Brokerage License guarantees its holder official rights of a Forex market participant in this jurisdiction and confirms reliability to potential investors. To conduct business and maintain a business reputation, the broker needs to adhere to a wide range of industry rules, otherwise the Regulator may revoke its decision.

Advantages of obtain a Forex license in the UK

Proven authority in the market.
A financial ecosystem with advanced technology and a strong regulatory framework has made the UK the epicenter of global forex trading. Forex licenses in the UK are held by the leading corporations in the industry.

Access to the EU area.
The EU Markets in Financial Instruments Directive (MiFID) Article 31 states that companies with European financial instruments can provide their services throughout the EU area.

Safe trading environment.
Investors trust forex brokers, as they can only obtain a license by meeting established standards, confirming the transparency of their operations, safeguarding funds, and adhering to AML/CFT.

Favorable taxation system.
For forex market participants, trading through Individual Savings Accounts (ISAs) is not subject to capital gains tax. Profits from spread betting are also exempt from taxation.

Requirements for obtaining a license in the UK

The FCA, based on the Financial Services and Markets Act (FSMA) of 2000, sets out the criteria and standards that an applicant must meet to be authorized to conduct forex activities in the territory. Failure to meet at least one of the UK forex license requirements may result in a negative decision of the Regulator.

Norms for obtaining a license:

  • Start-up capital. UK forex license costs depend on the type of license: limited license – 50 000 euros, intermediary license (agency license) – 125 000 euros, dealer license (full license) – 730 000 euros.
  • The presence of a legal local office
  • The founder can be a non-resident
  • The executive director must be physically located in the territory of authorization, have relevant experience, and pass FCA testing
  • Full business disclosure: data on co-founders, and management.
  • Business Insurance
  • Submit business and financial forecasts for 3 years
  • Draw up AML compliance procedure
  • Issue a letter of recommendation from the bank

Process of obtaining a Forex license in the UK

  • Stage 1

Document collection

The process of obtaining a forex license from the FCA can take from a minimum of 6 months to a year. The length of time is dictated by the large number of people wishing to have a license in this jurisdiction.

The FCA license is the gold standard in financial regulation, so the process of going through all the stages is quite complicated and consists of several steps, but first, the company must determine the type of license.

  • Stage 2

Submission of the application and full package to the Registrar

The full package of documents of the company is submitted. It is important that the time to pass the verification of the company itself, its activities, business strategy, data of all authorized persons and organizational structure, and payment of the authorized fund, may take from 4 to 6 months.
Then applications and questionnaires to the FCA are filled in and in case of a positive decision from the Regulator, the company becomes a license holder.

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Setting up a company in the UK

The stages of setting up a legal entity in the UK:

  • Determine the name of the company, and register it at the Registration Chamber. There are certain prohibitions on the name: words consonant with the names of the royal family are not used. Most often choose the legal form of LTD.
  • Hire staff, the director can be only one person (must be physically present on the territory of the state, during the process of reviewing documents, there are no requirements for citizenship), in the organizational structure must be a compliance officer, and his duties will include control over the implementation of all legal provisions of the enterprise and interaction with the Regulator.
  • To pass the registration in the tax state body (VAT) and PAYE (social contributions).
  • Register a legal entity in the commercial register (only after all fees have been paid).
  • Open an account, is allowed to have a bank account in one of the EU countries.

Provided the documents are submitted correctly, registration may take from a week to 10 days. The Director and Compliance Officer must be in the United Kingdom during this time.

The FCA sets high requirements for the executive director, who must prove his qualifications, and experience in the financial market and reside in Britain (there are no citizenship requirements).

FCA criteria for the company’s office: availability of physical premises with all communications.

FCA standards for authorized capital: the amount depends on the chosen activity, but the entire amount must be deposited before filing the documents for registration.

How to apply for a Forex license in the UK

Documents for a license are submitted to the FCA in English.

The set of documents includes:

  • A correctly completed application form, on a form designed by the FCA
  • A questionnaire with data about the company
  • A questionnaire (Form “A”), which includes details of the managing and compliance officer
  • All registration documents of the firm, its founders and key employees, UK forex license fees paid
  • Detailed business forecast for 5 years
  • A description of the organizational structure of the company, indicating the entire managing director and co-founders
  • Financial report
  • Company’s financial condition assessment form
  • AML procedures

The regulator may require additional statements, reports, and certificates.

Types of Forex licenses in the UK

For financial companies engaged in trading, buying/selling currencies, and securities on the territory of Britain it is mandatory to obtain a Forex trading license UK.

Forex brokers can choose from the following categories:

  • Dealer (market-making) or full license, which allows to conduct of full brokerage activities with all financial instruments
  • Agent/Intermediary. Equivalent to an STP license. Operations are carried out via ECN.
  • Limited authorization. It is possible to trade and market, but not to retain clients’ money.

Advantages of full and intermediary licenses:

  • Issue contracts (CFDs) and earn income from the spread, markup of the price of currencies, futures
  • Increases reputation in the market
  • Increases the number of clients, investors

Advantages of unlimited license:

  • Broker receives income from commissions
  • Focus on marketing without managing clients’ capital, expand partnerships

Forex license regulation in the UK

Following reform in 2013, the Financial Services Authority (FSA), Britain’s financial market regulator, was renamed the Financial Conduct Authority (FCA) with expanded functions. The FCA is funded by levies from financial industry participants and has a head office in London and another in Edinburgh.

The FCA’s activities are based on the principles of the Financial Services and Markets Act 2000 (FSMA) as amended in 2012, the Markets in Financial Instruments Directive (MiFID II), and the FCA Handbook. The law stipulates that the actions of the Regulator should be aimed at maintaining financial stability, protecting the interests of clients, market integrity, and ensuring transparency of business conduct.

The FCA has enforcement teams within its structure that have the power to penalize companies for non-compliance with financial regulations. In their activities, they are guided by: The Anti-Terrorism Act 2008, Proceeds of Crime Act 2002, Market Abuse Regulation (MAR), Money Laundering, Terrorist Financing and Transfer of Funds Regulations (MLR 2017).

The FCA has a particular interest in offenses such as:

  • Financial crime, market manipulation
  • Unscrupulous behavior by a company
  • Misconduct by the company’s management
  • Conducting activities without proper authorizations

Taxation for forex companies in the UK

Taxation in Britain is handled by the HM Revenue & Customs (HMRC).
Tax on forex activities is determined automatically based on several factors (amount of income of the company, category of the company, etc.):

  1. Income tax (from 20% to 45%), depends on the tax group
  2. Capital Gains Tax (CGT) – 20%
  3. Stamp duty (in case of buying shares)
  4. Trading through an Individual Savings Account is tax-free, as is spread betting.

FAQ about UK Forex License

Is Forex trading legal in the UK?

Yes, only if you have obtained official authorization from the Financial Services Authority (FCA). A forex license from the FCA indicates that the broker’s activity complies with all regulations of this jurisdiction.

How to get a forex broker license in the UK?

The local regulator FCA must review the application, and the full package of documents to issue a license to the applicant and make a decision.

How to open a forex trading company in the UK?

Collect a package of documents, according to the chosen status of the company, and submit it to the FCA. The registration process itself may take up to 10 days.

How long does it take to obtain a Forex license in the UK?

To obtain authorization in the UK you need to go through a complicated and long process, which can take a minimum of 6 months and up to 1 year.

How much does a Forex license cost in the UK?

The cost depends on several factors: type of license, status of the company, etc.

Is forex regulated in the UK?

The FCA broker license is considered to be one of the most reputable in the world (the USA is in 1st place). This is due to strict local legislation, fulfillment of international norms, and EU directives by all market participants.

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