Bulgarian regulator and client documentation retention

Bulgarian regulator relaxes rule on how brokers retain client documentation

Andrew Saks

Bulgaria has during recent years become home to a number of retail FX brokerages, most of which are located in the nation’s capital city of Sofia, and some in Varna, along with a support network of platform firms, web integration companies and digital marketing entities. The regulatory structure in Bulgaria is not one that is […]

Bulgarian regulator relaxes rule on how brokers retain client documentation

Bulgaria has during recent years become home to a number of retail FX brokerages, most of which are located in the nation’s capital city of Sofia, and some in Varna, along with a support network of platform firms, web integration companies and digital marketing entities.

The regulatory structure in Bulgaria is not one that is widely recognized by the mainstream FX industry and its commercial partners, however those operating in the area have built up significant businesses by benefiting from being in a region which is very much integrated as part of the European Union, as well as being able to operate within Russia and the former Soviet Union nations, now known as the Commonwealth of Independent States.

Bulgaria’s regulatory authority for non-bank financial services firms, which is called the Financial Services Commission (FSC) had some differences between its methodology and that of European regulators in regions which are populous with retail FX brokerages, such as CySec in Cyprus.

Among such differences is the procedure by which client documents are retained on record by brokerages.

Until now Forex brokers regulated in Bulgaria, which the authorities deem to be “Investment Intermediaries” were not allowed to use scans when signing agreements with clients. This was the major obstacle for the FX business in the country.

This was changed two weeks ago and now the Bulgarian license gives FX Brokers the same options as UK or Cyprus license – to work with scanned copies of ID document and proof of address. The required capital for BG license is BGN 250,000 for the so-called “Middle”license (which can be used by STP brokers) and BGN 1,500,000 for a full licensed, which can be used by market makers. These are among the cheapest EU licenses, which combined with a corporate tax of 10% make the country attractive for starting FX companies.

The full amended ruling can be seen by clicking here.

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