BVI is done. Put a fork in it… But how about the Seychelles for offshore FX businesses? Exclusive interview

Offshore jurisdictions have been popular with some of the smaller FX brokerages since the dawn of retail electronic trading, however due to the non-established and unregulated nature of some of the firms that operate from regions such as Panama, the Cayman Islands or the British Virgin Islands, the mere mention of such names these days […]

Offshore jurisdictions have been popular with some of the smaller FX brokerages since the dawn of retail electronic trading, however due to the non-established and unregulated nature of some of the firms that operate from regions such as Panama, the Cayman Islands or the British Virgin Islands, the mere mention of such names these days is often enough to send potential customers running for the hills.

The result is that most bona fide companies, whether a small boutique firm specializing in niche clients, or a startup with good intentions but without the net capital or operating budget required to operate in Australia, Britain or North America, have long since eschewed the British Virgin Islands (BVI) and its neighbors and paid the extra to open in the famed retail FX hub of Cyprus.

What about the Republic of Seychelles? It offers a similar ease of operation for smaller brokers and equally favorable tax treatment to other offshore jurisdictions such as BVI or Panama, yet is not tainted with the whiff of disrepute, nor does it conjure up images of gold chain-wearing, Rolex watch-toting con artists using pressure selling techniques from within their offshore bucket shops.

To investigate this further, FinanceFeeds today spoke to Denis Mayaka, CEO of management consultancy and fiduciary services company The Offshore House.

In explaining what this company does, Mr. Mayaka told FinanceFeeds “The Offshore House is a fiduciary services and management company which has longstanding, established relationships with law firms, accounting firms, high net worth individuals, family offices, banks, brokers, liquidity providers and professional traders across the globe.”

“Since our launch, The Offshore House has worked tirelessly to develop sophisticated products, services and solutions for our global clients. We are a ‘One Stop Shop’ firm where we provide a wide range of solutions to our global clients under one roof, and the company has grown from inception, having many institutional clients and individual clients across the globe in most of the international financial centers.”

FinanceFeeds asked Mr. Mayaka whether the Seychelles, a nation with a very small population which runs into just five digits, can remain as a hub for foreign entities, and attract further ones which are looking to keep their business offshore.

Mr. Mayaka explained “Seychelles continues to grow as a hub for clients seeking to keep their business offshore . I would classify Seychelles products into three verticals:

– International Business Companies which are used as holding companies, trading companies and structuring

-Wealth preservation and wealth planning structures : these include international Trusts and Foundations

-High value products : these include licensed companies such as investment management companies, forex traders, securities traders, offshore insurance companies, mutual funds and hedge funds , offshore banks and securities exchange companies.

FinanceFeeds understands that the view from the outside is that many of the financial services companies setting up shop in Seychelles are avoiding regulatory oversight. Is this correct or is the reality in Seychelles different?

“I will answer the question in two parts” said Mr. Mayaka.

“The Financial Services Authority (FSA) does not have much oversight on International business companies , trusts and foundations. A part from registration/incorporation and annual renewal, there is not much involvement by the FSA on these entities.”

“For high value products, this is not the case. Indeed Seychelles has some of the tightest regulations in the world especially for high value products. Take an example of a Seychelles mutual fund/hedge fund.”

  • A Seychelles licensed mutual fund/hedge fund must have the following functionaries:
  • Fit and proper approved directors
  • A Seychelles licensed/approved fund administrator
  • Fund manager approved by the FSA
  • Custodian
  • Auditor approved by the FSA – typically the BIG Four audit firms
  • A Seychelles licensed Legal advisor approved by the FSA

“In addition to the above there are requirements of annual filing of audited financial statements, annual returns , certificate of compliance and occasionally other items that may be requested by auditors or compliance officials. Indeed, some clients have previously commented that there is too much regulation in Seychelles!” exclaimed Mr. Mayaka.

His view however is very much in favor of the establishment of a good regulatory environment “I personally think that there is sufficient regulation and this is good for the industry and its stakeholders” he said.

FinanceFeeds then asked Mr. Mayaka if the regulatory or government bodies are looking to rope in the foreign entities setting up shop in the Seychelles whilst doing business offshore or if this environment is encouraged.

“Indeed” said Mr. Mayaka. “For example some of the largest securities brokers in the world have set up in Seychelles as market makers while focusing on their main business offshore.”

“Most of the mutual funds/hedge funds licensed in Seychelles do not actually do business in Seychelles. The investors and investments are based offshore , say in Europe or South East Asia. The same applies to insurance companies and other licensed entities.”

Fast forward 10 years, do we still see Seychelles positioning itself as an offshore hub or do you think this will change?

“International financial centres are evolving rapidly. Many international organisations are involved in this evolution. Examples of these are OECF, FATF etc. Hence Seychelles will continue to evolve in line with international movements . Ultimately, there will be more and more focus on high value products . However, international business companies, trusts and foundations will always have the niche in Seychelles.”


Read this next

Retail FX

Weekly Roundup: John Oliver rips into MetaTrader, Binance to pay $10 billion

Welcome to this week’s roundup, where we delve into the latest developments in the Forex, Fintech, and cryptocurrency markets. Stay ahead of the curve with our comprehensive overview of the week’s most impactful events and trends across these dynamic sectors.

Retail FX

Lark Funding reopens to US traders, MyFundedFX picks cTrader

Canada-based prop trading firm Lark Funding announced it will once again welcome clients from the United States.

Institutional FX

Cboe FX volume falls to lowest level since summer

Cboe’s institutional spot FX platform, known as Cboe Spot, today announced its trading volume for the month ending February 2024, which took a step back after a strong rebound in December.

Retail FX

ThinkMarkets secures lucrative DFSA license in Dubai

Melbourne-based broker ThinkMarkets has secured a license from the Dubai Financial Services Authority (DFSA) after it has already incorporated its new subsidiary in the Dubai International Financial Center (DIFC).

Digital Assets

New Horizen Lays Out Its Vision Of A Modular, Proof Verification Layer For Web3 Networks

Horizen is forging a new path for the future of blockchain with its New Horizen initiative, which is building a modular Proof Verification layer that’s dedicated to verifying cryptographic proofs for any settlement layer, beginning with Ethereum. 

Digital Assets

Karma3 Labs Raises a $4.5M Seed Round Led By Galaxy and IDEO CoLab to Build OpenRank, a Decentralized Reputation Protocol

Using OpenRank, developers and web3 companies can build consumer apps where people can discover, use, fund, read, or buy something on-chain without worrying about getting spammed or scammed.

Digital Assets

Worldcoin down as Elon Musk sues OpenAI CEO Sam Altman

Worldcoin’s (WLD) token dropped following news of a lawsuit against related company OpenAI. The lawsuit was filed by Elon Musk and accused OpenAI and CEO Sam Altman of breach of contract.

Institutional FX

Exegy’s Liquidity Lamp adds intraday data to outperform S&P 500 by 31.8%

Exegy has incorporated intraday signals into its AI-powered iceberg order detection tool, Liquidity Lamp. By adding intraday data to a baseline mean reversion strategy, Exegy’s model outperformed the baseline by 10.5% and the S&P 500 (SPY) by 31.8%, respectively in the out-of-sample testing.

Industry News

Think Elon Musk backed your crypto exchange? ASIC’s latest reveal may shock you

In an absolutely shocking turn of events that nobody could have possibly seen coming, the Australian Securities and Investments Commission (ASIC) has bravely stepped forward to reveal that, yes, those videos of Elon Musk passionately endorsing a cryptocurrency exchange are as fake as a three-dollar bill.