You may have noticed an increasing number of Forex brokerages operating from Bulgaria, with well known brokerages such as Deltastock and Trading212 having opted to operate from the eastern European country. In this article we examine, the state of the Forex industry in the country.
Bulgaria has only been a member of the European Union since 2007, when the country became a full member of the EU along with its northern neighbour Romania. In Bulgaria the regulation of FX services in undertaken by the countries Financial Supervision Commission (FSC), who are responsible for awarding licences to firms and ensuring that licensed firms obey all the necessary regulations.
Many of you will know that countries which are part of the European Economic Area are bound by the Markets in Financial Instruments Directive (MiFID) which sets to harmonize the regulation of financial services within the European Economic Area. With MiFID setting out a minimum standard of regulation required from domestic regulators, the idea being that no country can gain an unfair advantage by significantly undercutting the regulatory requirements set out by other jurisdictions. This allows firms in Bulgaria to offer their services to residents of other European Economic Area countries via the principle of outbound passporting.
From within the FX industry there has been some criticism of Bulgaria when it comes to the regulation of FX services. It has been said that many of the brokerages based in the country favour the jurisdiction due to the light touch approach taken to regulation, with some feeling that other jurisdictions are much more stringent when it comes regulatory standards. It is true that in certain respects the regulatory framework doesn’t require much more than the minimums as set out in the MiFID directive. But firms regulated in the country are required to comply with all the minimum standards set out by European regulatory law, ensuring that customers are provided with a certain level of protection.
Bulgaria: A Popular Choice With Brokers
Aside from being apart from the European Union allowing regulated firms to accept customers from throughout the EU, the country of Bulgaria has a number of other advantages which has made it a popular choice with brokerages. The country has one of the most competitive tax regimes within the European Union, with income and corporation being set at a flat 10% rate. This puts the country up there with Estonia and Cyprus who also have very attractive tax systems. Additionally wages in Bulgaria are lower than in many other European jurisdictions, which allows brokerages based in the country gain a competitive edge over brokerages based in other European countries.
This and the relatively light touch approach to financial regulation is partly responsible for the growth of the FX industry within the country. You can expect to see a number of other brokerages set-up shop in Bulgaria, particularly if the country’s tax regime remains so competitive in comparison to many of the countries European neighbours.
Notable Bulgarian Forex Brokers
Delastock are probably the best known Bulgarian Forex brokerage. The firm was founded back in 1998 and has gained a lot of attention in recent times due to the unique ECN platform offered by the brokerage which allows customers to gain access liquidity from range of established brokerages/ECN’s while also being able to trade against other users of the Deltastock ECN platform. In addition, to its ECN offering Deltastock also offers it’s clients a range of fixed and variable spread accounts.
Trading212 are a relative newcomer to the FX scene, but have made a splash in recent times with a large advertising campaign which has pushed the firm into the spotlight somewhat. Trading212 offer No Dealing Desk services to its clients with 100% of positions being passed onto the brokerages liquidity providers.
Bullbrokers are another Bulgarian brokerage who have been around for sometime now having being founded way back in 1996. The firm offers ECN and Dealing Desk accounts to clients and allows for traders to trade over 30 FX pairings and 250 CFD’s.