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Broker License in Europe: Why Choose Bulgaria?

If you are considering starting a brokerage business but are not sure about the jurisdiction, you should take a look at Bulgaria. Recently, the country has been a popular choice for obtaining a Forex license as it offers a number of indisputable advantages. In this article, we will discuss those benefits and broker license requirements.

Why get a Forex license in Bulgaria?

First, broker licenses are an established practice in Bulgaria, and the investment regulations are similar to those in the EU countries.

Second, Bulgaria has favorable tax treatment, especially when compared to other European jurisdictions:

  • corporate tax — 10%;
  • dividend tax — 5%;
  • VAT — 20%.

Third, the Financial Supervision Commission, FSC, charges low state duties on the applications.

Bulgaria is appealing because of its inexpensive business maintenance. For instance, office renting prices start at EUR 300 per month and staff salaries are within EUR 1000-2000 monthly, much cheaper than in other jurisdictions.

Opportunities

The activities in the market of securities, financial, and investment services are regulated by the Markets in Financial Instruments Act (MiFIA) Law of Bulgaria.

Bulgaria offers a Market Maker license (enabling all investment services in stock/Forex markets) and an STP license (entitling brokers to a more limited range of investment services).

So with a Market Maker (full) license, the intermediary has the right to provide all investment services, including:

  • Accepting and sending instructions regarding one or several financial instruments
  • Fulfilling clients’ orders
  • Trading in financial instruments for one’s own account
  • Portfolio management
  • Investment advice
  • Underwriting issues of financial instruments and/or offering financial instruments under the unconditional and irrevocable obligation to subscribe to/purchase the financial instruments for one’s own account
  • Offering financial instruments for primary sale without the unconditional and irrevocable obligation to purchase the financial instruments for one’s own account (placement of financial instruments)
  • Operating a multi-purpose trading platform (it can be managed by a regulated organization, for instance, an investment firm; it also facilitates the exchange of financial instruments between several parties and is an alternative to traditional stock exchanges)
  • Operating an organized trading platform which enables third parties to trade in bonds, derivatives, and structured finance products, excluding shares

The incomplete (STP) license authorizes brokers to offer/provide a more limited range of investment services and activities, including:

  • Accepting and sending instructions regarding one or several financial instruments
  • Fulfilling clients’ orders
  • Portfolio management
  • Investment advice
  • Offering financial instruments for primary sale without the unconditional and irrevocable obligation to purchase the financial instruments for one’s own account (placement of financial instruments)
  • Safekeeping customers’ funds or financial instruments

Requirements

  • For the Market Maker license one must contribute an authorized capital of 1,500,000 lev (around EUR 766,000) and for the STP — 250,000 lev (around EUR 128,000)
  • The company must be a joint-stock company or a limited liability company
  • The company’s location and registered office must be in Bulgaria
  • Shareholders and directors (at least two of them) need to have the finance-related experience, higher education, a good reputation, and no record of convictions; Bulgarian residency would be an asset
  • A detailed business plan for the Financial Supervision Commission
  • The company should have accounted for contributing the authorized capital and for keeping customer funds
  • Internationally recognized online trading software and platform
  • A website

Deadlines

It takes 5 to 8 months to get a broker license in Bulgaria.

Bulgaria is a great choice for brokerage activities because as an EU member state it makes it possible to do business throughout the EU.

Our professionals have extensive experience in obtaining broker licenses in European and offshore jurisdictions, including Cyprus, Malta, Great Britain, Switzerland, Latvia, Estonia, Czech Republic, New Zealand, USA and Australia. Join our Telegram chat for a free consultation.

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