The average cost estimate for setting up Kenya Forex Broker License business ranges from USD30,000 to USD45,000.Important to note is that these licenses are renewable every year.
The setup cost estimate differs due to a number of variables which include but not limited to;
License type
The Capital Markets Authority (CMA) which is the issuing authority require companies to maintain unimpaired minimum paid up share capital at all time. For example, to obtain dealing online foreign exchange broker license and a non- dealing foreign exchange broker license from CMA an applicant needs to maintain unimpaired minimum paid up share capital of KES50 million and KES30 million respectively.
Company structure
The applicant company need to provide the CMA with the regulator’s specified company structure in the form of detailed business plan, that serves to demonstrate the applicant’s ability to operate the proposed licensed business activities. Specifically, the business plan must provide such company details, inter alia, corporate structure – (board members, company secretary, senior management personnel, auditors, compliance officer etc), shareholding structure, financial projections and operating office details.
Applicant’s adopted business model of operation; size, staff
Experience has shown that new FX brokers come in all shapes and sizes. The type of forex brokerage you intend to launch will determine not only how many staff to employ but the specific roles you wish to fill.
At the minimum, any new forex broker should have the following functionaries Local MLRO, Legal Advisor, Internal Auditor, Local Directors, Operating office, Professional insurance indemnity cover, Experienced dealer – for dealing broker license, CEO, Chief finance officer, Company secretary, Registered office and postal address at the minimum. The more staff you employ, the higher the cost of running your forex broker license will be.
Availability of third-party service suppliers e.g., liquidity providers, operational utilities, service consultants, etc
Besides the company incorporation and license acquisition, the forex broker shall need the services of other players in the online forex trading business ecosystem like liquidity providers, trading platform vendors, introducing brokers, business consultants etc which come at an additional cost.
Kenya Forex Broker License is uniquely beneficial and on high demand because of the following factors;
- Gives the licensee access to East Africa’s largest economy
Recent estimates placed the African Forex trader count at 1.3 million. This is a very significant number – the total estimate for the number of clients globally was about 10 million in 2020, meaning the African markets make up for 13% of that. A distribution of the trading activity on the continent showed that Kenya is the third largest market, with 50,000 plus clients. - Kenyan market presents a low-risk investment environment as attested by the many multinationals with established head offices and ever-growing forex direct investments.
The CMA of Kenya is quickly becoming one of the strictest regulators on the continent. This guarantees that the firms operating under its supervision do not become insolvent and that they do not turn out to be fraudulent.
These regulations are necessary, because a high interest in the forex trading market poses a possibility for scammers to set up and start running their schemes in equal measure. - The Kenya Forex Broker License is of strategic significance for international brokers who intend to penetrate the larger African markets.
With a foothold in the Kenyan market, leading forex brokers have their finger on the pulse of other African markets, namely, East, West A, Southern and Northern African markets. This allows for regional expansion from a point of proximity and information. - Readily available banking and payment solution ecosystem.
The Kenyan banking industry is considered the most mature, fastest-growing and largest in East Africa, thereby making it the regional financial hub.
Presence of multiple licensed payment service providers complements the banking sub sector further making Kenya an attractive destination for Forex brokerage firms. - Reasonably high leverage of 400:1
CMA permit licensed online forex brokers to offer a leverage of up to 1:400. This is relatively high when compared to CySEC 30:1, ASIC 50:1 and FCA 30:1for all FX currency pairs.
6. Relatively cheap in terms of set up costs, minimum capital requirements and operational costs including readily available skilled staff.. CMA’s requirement for an applicant to maintain unimpaired minimum paid up share capital of KES50 million, KES30 million and KES10 million for dealing, non-dealing broker and money manager respectively is relatively cheap among comparable jurisdictions. Operational costs too especially on skilled human resources and utilities is quite competitive.