A non-bank foreign exchange company also known as foreign exchange broker or simply forex broker is a company that offers currency exchange and international payments to private individuals and companies. The term is typically used for currency exchange companies that offer physical delivery rather than speculative trading. i.e., there is a physical delivery of currency to a bank account.
Foreign exchange companies are normally distinct from money transfer companies or remittance companies and bureaux de change as they typically perform high-value transfers unlike their money transfer counterparts that focus on high-volume low-value transfers generally by economic migrants back to their home country or to provide cash for travelers. Transactions can be either spot transactions or forward transactions.
Companies by country
Foreign exchange markets in India has shown a steady increase as a consequence of increase in the volume of foreign trade of the country, improvement in the communications systems and greater access to the international exchange markets. The volume of transactions in these markets amounting to about USD 2 billion  per day does not compete favorably with any well developed foreign exchange market of international repute but with the entry of online Foreign Exchange Companies the market is steadily growing.
Around 25% of currency transfers/payments in India are made via non-bank Foreign Exchange Companies. Most of these companies use the USP of better exchange rates than the banks. They are regulated by Foreign Exchange Dealer’s Association of India (FEDAI) and any transaction in foreign Exchange is governed by Foreign Exchange Management Act (FEMA) 1999.
The Australian foreign exchange market has grown considerably to be the highly liquid, globally integrated market that it is today. The foreign exchange market in Australia is regulated by the Australian Securities and Investments Commission (ASIC). In 2016, the local market was the eighth largest in the world and the AUD/USD was the fourth most traded currency pair globally.
It is estimated that in the UK, 14% of currency transfers/payments are made via non-bank Foreign Exchange Companies. These companies’ selling point is usually that they will offer better exchange rates or cheaper payments than the customer’s bank. UK forex brokers are not covered under the Financial Services Compensation Scheme however FCA Authorised Payment Institutions are required to safeguard funds in accordance with Regulation 19 of the Payment Services Regulations 2009.
The 10 largest companies in the UK by net profit as at August 2012:
|No.||Company||Accounting Date||Pre Tax Net Profit|
|1||Western Union Business Solutions (formerly Travelex)[nb 1]||31 December 2010||£11,048,000|
|2||Moneycorp[nb 2]||31 August 2011||£7,660,000|
|3||WorldFirst UK Ltd||31 January 2012||£4,494,000|
|4||HiFX||30 June 2011||£4,486,000|
|5||Currencies Direct Ltd||30 June 2011||£4,471,000|
|6||Schneider (renamed Monex Europe Limited)||31 March 2012||£3,500,278|
|7||OPT||09 Feb 2014||£3,387,157|
|8||Foreign Currency Direct||31 October 2011||£1,687,364|
|9||AFEX||31 December 2011||£1,583,459|
|10||Global Reach Group||31 December 2011||£1,289,000|
United Arab Emirates
As per the world bank report, the money exchange business in the UAE has shown steady growth in 2014 as remittances rose nearly five per cent to $29 billion. Most of the GCC states have announced major plans for converting their countries into world-class business hubs. This will further enhance exchange business in the region.the money transfer business in the UAE continued to grow last year as exchange companies reported up to 10 to 15 per cent increase in transactions in 2014 compared to the previous year. New development around the UAE is also set to give a boost to the tourism sector, which would, in turn, increase demand for currency exchange services
Two major Foreign Exchange companies in UAE
- UAE Exchange
- GCC Exchange
In Singapore, foreign exchange companies are governed by the Monetary Authority of Singapore under the Money-Changing and Remittance Businesses Act which sets out the criteria for license application as well as guidelines when it comes to the prevention of money laundering and countering the financing of terrorism. As of June 2019, there are 391 money changing businesses and 114 remittance companies in Singapore.
- ^“Spot and Forward Transactions” (PDF). USBank. Retrieved 13 December 2013.
- ^Julian, Saidur. “Top Forex Brokers”. Fx Daily Report. Retrieved 7 October 2016.
- ^Guy, Debelle. “The Australian Foreign Exchange Market”.
- ^“Triennial Central Bank Survey of foreign exchange and OTC derivatives markets in 2016”.
- ^The Sunday Times (UK), 16 July 2006
- ^Boyce, Lee. “Beat the foreign exchange trap: How to send money overseas cheaply and securely”. MailOnline. Retrieved 13 December 2013.
- ^“The Payment Services Regulations 2009”. www.legislation.gov.uk. Retrieved 13 February 2017.
- ^“Foreign Exchange Industry to Thrive”. Retrieved 19 July 2015.
- ^“UAE is an economic hub”. Retrieved 20 May 2013.
- ^“Money-changing and Remittance Businesses Act – Singapore Statutes Online”. sso.agc.gov.sg. Retrieved 21 June 2019.
- ^“How to Set Up a Money Changer Business”. Biz4x. Retrieved 21 June 2019.
- ^“MAS Notice 3001 Notice on Prevention of Money Laundering and Countering the Financing of Terrorism – Holders of Money-Changer’s License and Remittance License”. www.mas.gov.sg. Retrieved 21 June 2019.
- ^“Financial Institutions Directory”. eservices.mas.gov.sg. Retrieved 21 June 2019.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.