How to Launch a Brokerage Now: Key Points from the TFB Webinar

Author: Anastasia Taganova

Earlier this week, we hosted the first webinar in a series of online events where TFB experts will share their insights, knowledge, tips and tricks, and more about the issues important to our clients and the industry overall.

For anyone who missed the first webinar dedicated to launching a new brokerage in 2024 and is interested in starting their own business, here is a quick recap with all the main points.

What are the options for launching a brokerage in 2024?

This year, based on our experience and the experience of our clients, the three core business models aspiring brokers can choose from and proceed with relative ease are:

• Retail brokerage
• Prop trading firm
• Hedge fund

Retail brokerages have flourished over the past few years in response to growing demand from retail traders that peaked mid-pandemic. Although the volume or number of traders since then has decreased slightly in specific markets, the overall trend remains positive. More people than ever want to get into investing, and the retail broker provides them access to financial markets and lowers the barrier of entry with simple interfaces, educational content, and lower capital requirements.

Prop trading companies have been through a lot lately. First, we saw their renaissance, followed by some turbulence that is normal for any “new” financial product or format. With many regulations already implemented or on their way, there is confidence in the business model, and demand from traders is most definitely there, too.

The same goes for hedge funds. Investors who aren’t ready to spend their time day trading but don’t want to miss out on the benefits of the investing world often choose hedge funds to manage their portfolios. At TFB, we’ve seen significant growth from both potential hedge fund managers and the established funds that are looking for ways to elevate their operations.

The difference between a White Label and a Main Label

At TFB, we offer both White Label and Main Label solutions. Although they may seem identical initially, some major differences set them apart as two completely different options.

Here is a visual representation of what both entail and how they differ:

We currently offer White Label solutions for cTrader, whereas the Main Label solution is available to clients using the MetaTrader 5 and cTrader trading platforms. You can find all the details on our dedicated webpage.

Choosing a trading platform that is right for you

As pioneers of multiplatform operations, we firmly believe there’s no reason to compromise when it comes to trading platforms. Whether you choose just one or mix and match a few, our liquidity bridge will fully support you.

As you get to the stage of deciding what route to go platform-wise, make sure you follow our recommendations for the best results:

• Don’t rush. Yes, we know you are tempted to launch the business ASAP, but it’s far too crucial of a step to rush through it. Slow and steady wins the race here 100% of the time.
• Test, test, test. Whether it’s a one-day test or a week-long assessment, don’t rely purely on marketing materials and demo presentations. Solutions perform differently in different environments, and the last thing you need is a nasty surprise once you roll everything out on your servers. Generally, it’s possible to request a demo from every platform provider. Check out the client terminal as if you were a trader. How user-friendly is it? Check the broker’s terminal, too, and see if it has all the features you want. You can go to every WL/ML provider and ask for a quick catch-up session to walk through the platform and be sure you’re making the right choice.
• Go for trusted providers, but don’t disregard new market players by default. Ambitious newcomers are not always a good idea because they lack real market experience, but sometimes, new trading platforms offer so much more than established market players and, most of all, a novel approach to running things. What we’re saying is that you should stay both open-minded and vigilant when trying out solutions.

KYC

KYC is arguably one of the toughest steps in launching a brokerage, but the KYC monster can be soothed if you know the rules of the game.

By the way, all webinar attendees got a bonus KYC brochure with tried and tested tips. Email us at sales@t4b.com if you would like access to it, too.

Forming a company will be the first official step on your brokerage journey. You'll need to decide on:

• Jurisdiction
• The size of the investment you are ready to contribute
• The market you are planning to operate in
• Relevant business activity (such as financial services, brokerage services, or online currency trading services), regardless of jurisdiction

Depending on the trading platform, KYC requirements may differ.

Important: The company formation process has its pitfalls and often takes longer than anticipated. That’s why our best tip is to do it with a trusted partner who will help you avoid the most common mistakes and will guide you through any extra steps that might come up along the way. At TFB, for example, once we have a prospect willing to start brokerage, we fully assist with the onboarding process from the company formation stage until launch to save the client from unnecessary headaches.

Once the company and a license or legal opinion are ready, it’s time to prepare the rest of the essential documents. When applying to MT5, for instance, the most crucial documents are:

• Proof of physical address
• Website domain
• Corporate bank account
• Online UBO verification (by a real person)

Finding the right technology partner

As you go through the KYC process, you can start to simultaneously look for a trusted partner who will help you build the best infrastructure for your needs.

In the world of trading and investing, having the right tools is critical. How fast your system works, how secure it is, and whether or not it’s simple to use will determine your success just as much as marketing and promotions.

Everyone’s requirements are different, but here is the minimum that we recommend all prospects think about:

• Server hosting for trading platforms
• Dedicated server for the liquidity bridge (we talked about why it’s important to put your bridge on a separate server in a dedicated article)
• At least one backup server to help you mitigate potential disasters (such as server overload, freeze, data loss, etc.)

Additionally, pay attention to:

• Server location (have it closer to your markets and target audiences for faster execution)
• Professional 24/7 support from the tech provider
• The dealing team responsible for your brokerage strategy
• Price feed or liquidity provider connection
• Bridge connection and basic risk management to mitigate undesirable risks
• A CRM with different PSPs to manage your clients

If you’d like to learn more about tech requirements and best practices or ask any other questions, please email us at sales@t4b.com. TFB offers an ecosystem of solutions for brokers, hedge funds, prop trading firms, and liquidity providers. We also have unique packages for different types of business models, and we also have a curated selection of plugins and applications to target niche and unique challenges.