When someone starts thinking about opening a Forex brokerage their mind immediately fills with question after question. Which regulatory jurisdiction should I choose? How much capital do I need? What kind of license do I need? How do I get pricing? Where do I base the operation? The “office” / location question is usually the last that comes to mind but the choices made here can determine whether a business succeeds or fails. The following 5 points are therefore worth considering before making any decisions on your brokerage startup:
Types of Brokerage
There are two types of brokerages in the industry, online and traditional.
Online brokerages, by nature, require that traders open and manage their account via the internet. The online broker operates with minimal staff and a cost effective infrastructure relying on automation to operate their business. An experienced trader can easily open an account and will require little hand-holding. An online brokerage tends to be much cheaper than the traditional brokerages in that they require minimal space for their call center and operations.
Traditional brokerages, on the other hand, operate with a full suite of services in a visible, physical location, enabling clients to visit the offices and open accounts in person. This option requires more staff and greater initial investment in infrastructure.
The right location plays an important role in the success of an FX brokerage, whether online or traditional. An online brokerage may choose just about anywhere to set up shop, as long as the internet connectivity is reliable. They don’t need prime real estate or high street location. A traditional brokerage, on the other hand, needs visibility and accessibility by/to the general public. Some things to ask yourself:
a) Can my clients and employees get here without much hassle?
b) Are there places like coffee shops, bars and restaurants close by, where I could entertain clients?
c) How secure are the premises?
d) Is there a bank or financial institution nearby?
e) Does the location send the right message to potential or current clients?
Since most FX brokerages are required to operate 24/6 in order to provide a service and to facilitate clients, it’s highly recommended to research the surrounding area of any possible location. If you are concerned about your brand and reputation (and would like to protect your brand from the start) then this is very important. For example, FX brokerages situated in a major financial district or in recognized bank/finance buildings can elevate your brand image.
Space and Design
You should have a concept for your office layout in your business plan when looking at potential office space. Think about where distinction has to be made regarding the physical boundaries of different departments. What space, or type of space, is required for each department? For example,
a) An open space for the sales team and customer support as will benefit coordination and ultimately create a focus and efficiency.
b) Dealing Room (if applicable) – Careful thought has to be given to designing a dealing room as it’s at the core of many retail FX brokerages. It’s advisable to have a spacious room for dealers with secure access. The room needs to be large enough and really accessible to technology in order to facilitate the IT equipment cabling and extensive computer hardware.
c) Top Management, compliance and accounts departments can be in enclosed, individual offices and cubicles due to the fact that they are dealing with very sensitive and confidential information on a daily basis. Document security is vital so ensure ample provision for storage of same. Client information, employee details and office bills should be safely documented. Records need to be preserved and maintained for the future reference so it’s very important to maintain an efficient storage system and keep the office clutter free.
d) Private meeting facilities and conference rooms for team meetings and client meetings
g) Reception – A spacious and attractive reception area will offer a warm welcome to the clients and will give the impression/perception of a solid and reputable operation.
Utilizing the space effectively ensures a discipline in the organization. The advantage of a professionally designed office will not only boost the business but also will improve the morale of the staff. Brokerages aim to grow, so make sure you consider your expansion options and ensure maximum office layout flexibility for future requirements too. A successful design will project the right image for your office.
Office Equipment and Suitable Furniture
Choosing the right type of furniture is not an easy task. It requires lots of planning, time and energy simply due to the fact that this furniture will be used on a daily basis. Base your decision on necessity, budget, office space and comfort. IT cabling needs should also be borne in mind, particularly when choosing desks..
You will need computers, printers, scanners, copiers, fax etc. so the use of multifunction machines will save you both space and money. If you have an FX sales team that continually comes and goes, then perhaps plan on utilizing laptops which could alleviate some of the initial installation costs.
A fast and uninterrupted internet connection is critical to operational success. An online retail brokerage needs to be “online”! In addition, the backing up of data online in the cloud will be easier with a fast internet connection.
Voice over Internet Protocol (VoIP) phone technologies are widely used in the start-up FX Brokerages due to their minimal cost and quality output. VoIP should be helpful and cheaper for 24/5 usage by customer support and by the sales team.
A power and data backup is also highly recommended in case of internet and/or power outage.
An FX brokerage can prosper and run successfully when combined with a well-organized and efficiently managed office.