Lithuanian Financial Brokerage Firm License

Obtaining an investment firm license in Lithuania involves meeting a comprehensive set of requirements aligned with EU MiFID II, EBA, and ESMA standards. 
 

Capital Requirements

Initial capital must match the license type:

• Type C: €50,000

• Type B: €125,000

• Type A: €750,000

This capital must be in cash (not loans) and deposited in a bank account.

After licensing, own funds must always exceed the higher of:

The initial capital requirement, or

The ongoing capital requirement calculated using the EU’s IFR/CRR formulas (based on activity volume).

The Bank of Lithuania (BoL) monitors capital adequacy quarterly.

A capital buffer above the minimum may be expected in cases with higher operating risk (e.g., FX services, tech infrastructure).

We assist in ensuring capital is demonstrated (via a bank letter) and injected before license issuance.
 

Legal and Corporate Structure

The licensed entity must be a Lithuanian UAB (private limited company) with a registered office in Lithuania.

Management Board: Generally, at least 3 members (some smaller Type C firms may be allowed 2).

Key roles must include:

CEO and possibly Deputy CEO for daily operations.

Individuals with expertise in compliance/risk, and trading/operations.

Four-eye principle: At least two qualified individuals must be involved in all material decisions — no single-person dominance.

Key functions (compliance, risk, accounting) must operate in or from Lithuania — either via internal staff or local service providers.
 

Shareholders and Ownership

Any entity or individual owning 10% or more is deemed to have a qualifying holding.

BoL performs fit-and-proper assessments including:

Financial soundness

Business reputation

Group transparency and structure (especially for non-EU owners)

Shareholders must not hinder effective supervision; all beneficial owners must be disclosed.
 

Personnel and Competency

All board members and key function holders (risk, compliance, internal audit) must be:

Competent (experience in financial markets, risk, or compliance, as relevant).

Of good repute (clean criminal, administrative, and bankruptcy records).

BoL may interview management and check EU regulatory registers.

Language: English is acceptable, but local Lithuanian personnel often facilitate smoother communication.

Gaps in experience may be mitigated with training, support, or interim consultants.
 

Infrastructure and IT Systems

For brokerages, systems must be robust, secure, and MiFID-compliant, including:

Trading Platform: MT4/MT5 or similar, with appropriate risk controls.

Client Data Protection: Secure storage, encrypted communications.

Business Continuity/Disaster Recovery: Secondary systems or failover solutions.

Call & Communication Recording: Required for order-related communications; records must be stored for 5–7 years.

Cybersecurity: Firewalls, intrusion detection, vulnerability assessments, and a plan for scaling security as the firm grows.
 

Outsourcing

Outsourced functions (e.g., IT, internal audit) must be under written agreements aligned with EBA outsourcing guidelines.

Agreements must allow BoL audit rights and access to relevant data.
 

MiFID II Procedural Compliance

Client Onboarding:

• Appropriateness tests (especially for CFDs, complex instruments).

• Suitability assessments (if providing investment advice/portfolio management).

Client Money Handling:

• For Type A/B licenses, firms must hold client funds in segregated EU bank accounts, reconcile daily, and avoid misuse.

Client Reporting: Trade confirmations, account statements, fee disclosures – via platform or CRM.

Best Execution: Multiple LPs preferred; single LP requires monitoring and justification.

Equity Trading: Firms must comply with MiFIR transaction reporting and may need an ARM (Approved Reporting Mechanism).

Market Abuse Monitoring: Systems and internal policies must detect, escalate, and report suspicious transactions (STORs).
 

Insurance and Safeguards

Professional Indemnity Insurance (PII): Not always required, but helpful for cross-border or advice-related services.

Investor Compensation Scheme (ICS): Mandatory membership — Lithuanian ICS covers up to €22,000 per client. Annual contributions apply.
 

Local Presence and Substance

A physical office in Lithuania is mandatory (not just a registered address).

Substantive local operations are expected — compliance, audit, and elements of management must be exercised from Lithuania.

Key management must regularly work from Lithuania; board meetings should take place locally.
 

Auditor Appointment

• A licensed independent Lithuanian audit firm must be engaged.

• An engagement confirmation letter must be included in the application.

• The auditor will review annual accounts and may also prepare regulatory reports (e.g., on capital adequacy).
   

Meeting these regulatory, operational, and governance requirements is a significant task, reflecting the robustness of an EU license. However, through structured preparation, local partnerships, and regulatory alignment, we guide you to ensure every point is either fully met or backed by a clear implementation plan, allowing the Bank of Lithuania to issue the license with confidence.