The comparison tables circulating in this industry all look the same: jurisdiction, capital, timeline, fee, leverage allowed. They are useful once the field is already narrow and misleading before that, because they compare licences as products rather than as permissions to do a specific thing for a specific person. Answer five questions in order and most of the table disappears without anyone having to price it.
Question one: who is the client, legally
Not where you want clients. Where they will actually be resident, because residence generally determines which regime governs the relationship and whether solicitation is permitted. A firm intending to serve retail clients resident in the EU, the UK, Australia, Japan or the United States is in a small set of options, and none of them is an offshore registration. That single answer eliminates most of the jurisdictions founders start with.
The carve outs are narrower than the marketing suggests. Reverse solicitation exists in several regimes but it is a strict and narrow concept, it does not cover advertising, and it does not survive a firm building acquisition around it. If the plan requires it to work at scale, the plan is the problem. The detail is in reverse solicitation.
Retail versus professional matters at the same step. A firm dealing only with professional or institutional clients faces a different conduct set and different leverage constraints, but categorisation is a test applied client by client under professional client status rules, not a box a firm ticks for itself.
Question two: what are you actually selling
The permission has to match the activity. Dealing on own account, where the firm is the counterparty and carries market risk, is a different permission from receiving and transmitting orders, which is different again from portfolio management, from operating a multilateral facility, and from crypto asset services, which in many places now sits under its own regime entirely.
Prop firm founders should treat this question carefully rather than assume the answer. Evaluation businesses selling access to simulated accounts have been treated differently by different supervisors, and the position keeps moving. Some regimes have looked at whether the product amounts to a financial instrument in substance. The honest answer for a founder is that this needs local legal advice in each market served, and the background is in prop firm regulation. Getting the activity description right also determines capital, since capital requirements scale with permissions and with whether client money is held.
This is a way of ordering the decision, not legal advice. Every branch here has jurisdiction specific detail, and the answers change. Use it to shorten the list you take to counsel, not to replace counsel.
Question three: are you holding client money
This is the sharpest fork in the tree. Holding client funds brings segregation duties, reconciliation duties, higher capital, an auditor's attention and, in many regimes, membership of a compensation scheme. Not holding client money, by using a payment structure where funds sit with a regulated third party, changes the permission set and the cost base substantially.
It also determines what a failure looks like. A firm that holds client money and gets its reconciliations wrong is in serious trouble quickly, which is why client money reconciliation is where supervisors look first at a new firm. Founders who have never run a daily reconciliation should understand what they are signing up for before choosing a permission that requires one.
Question four: can the structure be banked and paid
Most licence decisions are made without this question and most launch delays come from it. A licence you can obtain but cannot bank is a shell. Before committing, put the proposed jurisdiction, ownership chain and product to a prospective payment partner and a prospective liquidity provider and ask what their onboarding looks like. What comes back tells you about jurisdiction risk ratings, enhanced due diligence, high risk merchant categories and reserve expectations, which together price the option far better than a licence fee does.
Sequencing matters too. Payment applications typically want the licence and the corporate documents in place, so the realistic path runs licence first, then banking, then acquiring, with the whole chain taking longer than any single step suggests. The mechanics are in which payment providers accept offshore firms and why banks refuse brokers.
Question five: how will you acquire clients
Marketing reach is a licence attribute even though no licence document lists it. Ad platforms and app stores apply financial services verification, and the general pattern is that they require evidence of authorisation in the market being targeted before running financial promotions or listing a trading app. A firm whose only permission is offshore should assume paid acquisition in strictly regulated markets is closed to it and plan around organic, affiliate and community channels instead, with the affiliate side carrying its own compliance load under affiliate compliance rules.
Answer those five and the shortlist is usually two or three jurisdictions rather than fifteen. Only then does the comparison table earn its place, and only then do capital, timeline and fees decide between options that are all actually viable. The wrong order produces the classic outcome: a cheap licence, obtained quickly, that cannot serve the clients the business plan depends on.
One more thing worth saying plainly. Whatever the tree returns, build the operating side to the standard of the strictest market you intend to enter later. Firms that do that can add a licence when they are ready. Firms that do not have to rebuild, and rebuilding a live client base is far more expensive than the licence they saved on.
"Every licence comparison I have seen starts with cost. Start with who your client is and the list shortens itself."
— Roman Onta, Executive Director, SINGUARD
Key Takeaways
- Client residence is the first filter and it removes most jurisdictions before cost is even discussed.
- Match the permission to the actual activity: dealing on own account, order transmission and crypto services are different regimes with different capital.
- Whether you hold client money is the sharpest fork, driving segregation, reconciliation, capital and compensation scheme duties.
- Test banking, acquiring and marketing reach before committing, because a licence you cannot bank or advertise under is not a working option.
Frequently Asked Questions
What is the first question when choosing a broker licence?
Where the clients will be legally resident. Residence generally determines which regime governs the relationship and whether the firm may solicit there, and that answer eliminates most jurisdictions before cost is considered.
Can an offshore licence serve EU or UK retail clients?
Serving retail clients in those markets normally requires a permission in the market itself, and the narrow carve outs such as reverse solicitation do not support marketing led acquisition. A firm planning to serve those clients needs advice on the permission each market requires.
Do prop firms need a licence?
The treatment differs by jurisdiction and it has been moving, with some supervisors examining whether an evaluation product amounts to a regulated activity in substance. There is no single answer, so a prop firm founder should take local legal advice in each market served rather than assuming the model is outside scope.
About the Author
Roman Onta is an Executive Director at SINGUARD. He builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals side by side with his brother Alex Onta, and he helped on the design of eTrader, the division Alex built and leads. His ground is worldwide payment processing, AML compliance and the corporate structures brokers are built on, work the two of them carry together, shaped by executive roles in the UAE and international corporates. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.