Starting a Forex Fund
While Forex brokers, money managers, and liquidity providers are under heavy regulatory pressure in recent years, the number of Forex funds around the world is constantly growing as a result of an expanding demand for passive-Forex investing services.
Setting-Up the Forex Fund -location
A Forex fund can be established in many countries around the globe, without even having to visit them. You can easily start a Forex fund in the US, in Europe, or even in offshore countries. The United States provides a huge pool of potential investors and a straightforward legal framework for building your Forex Fund, nevertheless, a specialized legal advisor is always needed. As concerns offshore funds, the British Virgin Islands may be the best choice. Note that offshore countries offer tax advantages, however, they are not the best choice for small-sized funds.
Legal Requirements and Time
The best way to start a Forex fund is by using two separate business entities:
□ A limited partnership for the Forex fund itself
□ A separate limited partnership that manages the funds
Starting a forex Fund requires a legal advisor who is experienced in preparing the needed documents. In the US, the required documents include:
- the PPM (private placement memorandum)
- fund's limited partnership agreement
- the subscription agreement
Other legal documents may include:
- Anti-Money Laundering
- Disaster/Data Loss policy
Furthermore, there is a requirement for:
- bank account
- brokerage account
- Investor Pitch Deck (a presentation that provides an overview of the fund’s structure and other information)
Setting up a Forex fund in a Western country typically needs between 2 and 4 weeks, however, setting up an offshore Forex fund, can prove faster.