The Republic of Latvia is one of the European countries with a promising future. The states in which the market for interbank currency exchange at free prices (Forex) operates are divided into two types: classic for business and recently appeared on the market for trading operations with valuable currencies.
The Baltic state, which has a membership in the European Union, has created all the conditions and opportunities for successful trade and financial activities.
The current legislation of Latvia is based on the principles of transparency and clarity, the banking system has been distinguished by its stability over the past fifteen years, the government’s loyal and stimulating policy contributes to attracting foreign capital.
Most entrepreneurs (carrying out commercial activities since the days of the Soviet Union) who seek to enter the European market will be interested in a lucrative offer for companies incorporated in accordance with the laws of the country. License holders can participate in the EU passporting program.
Members of the union of European states (European Union), which have fulfilled all the conditions and passed the certification procedure, and legal entities-residents of Latvia have the right to obtain a license permit for intermediary financial and trade functions.
Since the republic does not belong to the standard classical offshore centers, all business transactions are subject to the current basic tax rates.
Compliance with the rules for creating financial assets and liabilities in the foreign exchange market is supervised by a specially created commission group, which carries out its activities in accordance with the norms of the current legislation of Latvia.
Specificity of the registering
To carry out their activities in the foreign exchange market, brokers will need to obtain a license permit (Forex). This category of companies is classified by Latvian legislation as a business segment with an investment focus. The list of structural units is presented in the official permission, in addition, the complete register of financial instruments is listed.
It is also allowed to provide services in the Forex market to representative offices, divisions of investment companies with foreign capital. To carry out activities, you must obtain a license permit.
A prerequisite for companies operating in the foreign exchange market is to work in an actually operating, official office within the territory of Latvia.
Advertising campaigns carried out must provide customers with only real and valid information. Dissemination of knowingly false information is strictly punishable.
Permit holders, in accordance with the norms of the current legislation, are prohibited from opening subsidiaries. This condition is leveled if the main function of the created structural unit corresponds to the activities of the parent company.
To provide services on the financial market in other states of the eurozone, the firm must notify the representatives of the supervision commission.
The main condition for a company providing forex group services in accordance with the obtained license is not to use intangible assets as invested funds to organize the authorized capital. The Financial Supervision Commission determines a sufficient minimum for the formation of an IC. The company undertakes to adhere to the established amount of investments. The authorized capital of a company in the territory of Latvia must comply with the norms stipulated by the current legislation. The minimum size in the financial services market is fifty thousand euros.
For brokers of the Forex segment with STP (Straight Through Processing) dealing, the AM should be at least one hundred and twenty-five thousand euros. The amount of equity capital is determined by calculating the percentage – ten percent of the total assets of the company and at least twenty-five percent of the company’s expenses, which do not depend on the volume of services provided (fixed costs).
Companies that assume exchange rate risks (market makers) form a charter capital in the amount of at least seven hundred and thirty thousand euros. It is necessary to deposit the amount of capital in one hundred percent. When conducting high-risk transactions, the amount of the transaction cannot exceed the established IC in eight times the amount.
Company owners planning to become a broker must meet the following conditions:
Competent persons with experience in a similar position (at least three years) have the right to be a member of the management body. The firm can independently determine the adequacy of shareholders to fulfill the oversight function. The company must employ two residents of Latvia as a director. A prerequisite is that managers hold office until the end of the license permit.
Legal source of income with official support;
True autobiography and appropriate business status;
The owner of a share of a business (more than ten percent) must have broker experience and possess a sufficient amount of specialized knowledge.
Basic qualification requirements for company employees:
All candidates go through the stage of selection of the commission, which provides permission for the registration of an employee.
Diploma with specialized education;
Work experience of at least three years in similar positions;
Unsullied business reputation.
Benefits of license
In accordance with the clauses of the order of state bodies (Directive), which regulates the activities of financial institutions, all states of the eurozone must provide firms with the right to freely provide services that are subject to a license. On the territory of Latvia, the order also falls under the actual fulfillment of international obligations at the state level (implemented).
Certification allows the owners of firms located in the territory of Latvia to inform the relevant authorized structures of other countries about their desire and the subsequent provision of services to the company of an investment nature in the territory of their state. According to the terms of the current procedure, you will not need to obtain additional permission to carry out commercial activities. All you need is documentary confirmation from the representatives of the selected country.
The main benefits and advantages of jurisdiction for conducting transactions in the Forex market:
Simplified mechanism for opening a bank account;
If the application was rejected due to unsatisfactory or inappropriate registration, re-submission of the application is allowed. All the indicated remarks and errors must be eliminated;
Efficiency of the registration process – the registration period is less than one quarter.
Before applying for a license permit, you need to organize and complete the complete company registration procedure.
To issue a license, it is mandatory to have a valid, activated bank account, and a written application with a set of papers to the licensing authority. The appropriate authority will receive a notification either about the granting of permission or about the refusal with arguments and explanations.
The issuance of a permit is free of charge. For annual use, payment of a fee is provided, the amount of which is revised once per calendar period (365 days).
The company will need an actually operating address, keep accounting records, ensure the formation and provision of financial statements.
After completing the verification stage of the account, the company sends a package of documentation to the licensing authority:
Official statement. The list of services provided must be indicated in the text;
Personal information about the owner of the company and the management structure of the organization;
Accounting reporting form (Balance sheet). The report must be dated from the previous month (before the application is submitted);
Prospect plan for three years, taking into account risks, benefits, business strategy. Characteristics of the accounting and management policy of the object;
Description of the organizational structure of the enterprise with tasks and powers. Detailed view of the formation of the audit committee within the company.
Companies are in charge of various financial instruments with which they operate. The following are in greatest demand:
Securities in circulation;
Options and Futures;
Financial instruments in the money market;
Contracts for raw materials and commodity resources, with settlements for them in cash or in the form of physical settlements when operating within multilateral trading floors;
Forwards and other production instruments related to financial indices, interest rates, financial settlements and others;
Party of the Central Bank in relation to obligations under statutory funds;
Forwards and securities derivatives in relation to contracts for raw materials and commodity resources, carried out in the form of physical settlement, unless otherwise specified in clause 6 above;
Cash settlement contracts;
Forward contracts, futures and options on interest rates and other production instruments related to climatic aspects, freight-type rates, cash-settled emission quotas, etc.
Issuance of authorization for business operations by CySEC provides for compliance with the following aspects:
The candidate’s administrative structure and inherent organizational adequacy;
The efficiency and regularity of the internal audit mechanism;
Separation of the client’s and candidate’s assets with the simultaneous division of client assets among themselves;
The efficiency of the mechanism and its adequacy with regard to the prevention of conflicts of interest and their resolution;
Required staff for each candidate.
Private Financial Services performs not only the procedure for organizing and forming a business, but also provides a full package of services for the current maintenance of the company:
The firm is responsible for preparing a complete set of documentation and issuing a permit;
Controls the registration process at all stages of the transaction;
Engaged in opening bank accounts and providing services of a nominee shareholder and director;
Searches for a legal address and suitable software.