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Obtaining Forex license in Bulgaria
Bulgarian Forex broker MiFID EU passporting
Bulgarian Forex license 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.
There are two types of Forex licenses in Bulgaria which are applicable to brokers, depending on the type of activity:
- Brokerage license – BGN 250 000 (approx. EUR 125 000) minimum required investment capital – that type of license gives the investment intermediary the opportunity 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 (Market Maker) license – BGN 1 500 000 (approx. EUR 750 000) foundation capital – that type of Forex license gives Bulgarian investment intermediaries the right 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 in Bulgaria and the remaining amount within 14 days from receiving the approval by the Financial Supervision Commission.
Apart from the capital requirement, there are other requirements that can be summarised in several categories:
- Requirement towards the directors (managers) – they must be professionals of good reputation, with proper higher education and experience in the field
- Requirements towards the shareholders and the origin of funds of the share capital – as above shareholders can be persons/companies of good reputation, showing clear criminal record and clear origin of investment capital
- Capital adequacy requirements
- Requirements towards staff, organizational structure
- Requirements towards internal control, audit
- Technical requirements
The Forex licensing procedure in Bulgaria is relatively fast and takes approximately 6 months. The applicant needs a couple of months 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 license (different depending on the type of license) and comes up with a decision within 3 months from the date of application.
There are some new moments which any company applying for Bulgarian Forex license should take into consideration. They are related to the newest 2017 requirements and recommendations by the European Securities and Markets Authority and include the following issues: EU passporting of services and cross-border operation, poor practices in this relation, involving third parties in acquiring retail clients, operating in different jurisdictions without branches, etc.