Destination Vanuatu: Would you follow the lead of many FX brokerages and look east?

Several smaller FX firms have recently moved their licensing away from recognized regulatory jurisdictions and established themselves in the Pacific island of Vanuatu. Here is an insight into what is driving this commercial direction

The Pacific island nation of Vanuatu has emerged as a popular destination for forex brokerage license registration in the past couple of years.

The license allows the buying, selling and trading of securities such as bonds, commodities, CFDs and FX as well as portfolio management on behalf of clients.

It typically takes between 4 weeks to 4 months to setup a licensed Financial Dealer in Vanuatu, depending on the agency one uses.

According to my observation, the number of companies registered with Vanuatu Financial Services commission as Financial Dealers increased by 40% in the period of 3 months, amounting to 508 licensees as of January 20, 2017.

In 2017 Vanuatu Financial Services commission published Act No. 11 Dealers in Securities (Licensing) Amendment with a series of changes made to the security dealer license in Vanuatu.
Two major changes are :

The deposit has been increased from $1,850 to $47000 and auditing is needed for renewal
Application requirements were revised and now education proof, reference letters etc are required

On June 16th, 2017 Vanuatu Dealers in Securities Act was also renamed to the Financial Dealers Act. This article intends to provide summary of the changes (the act can be found following this link):

– The deposit for a Financial Dealers License application has been raised to VT 5 million and is no longer deposited with the Supreme Court but with     the (Vanuatu Financial Services) Commissioner.

– If you are an existing licensee, the balance in excess of previous deposit (~4.8 VT ) is required upon application for an extension of license (application for renewal, needs to be renewed yearly).

– As to the Bond deposit, the Act No 11 now provides for withdrawal of the deposit under the following conditions:

· Request should be done in writing to the Commissioner who may instruct the Commission to withdraw the bond deposit after expiration of the    license or at the request of the license holder.

· The Commissioner shall not authorize the withdrawal […] if there is information that the licensee owes investors funds and / or if the licensee has not provided an updated report of its financial activity and a list of investors to the Commissioner and the Commissioner must satisfy that there are no aggrieved investors that will be affected by the withdrawal of the bond;

· The Commissioner shall cause to publish a public notice of his intention to withdraw and pay the bond upon expiry of 90 days.

· In the event of an objection, the Commissioner shall not withdraw the bond but allow the parties to pursue their claim in court.

· In the event where a licensee is convicted of fraud and misappropriation of funds, the license will automatically be cancelled and the bond will be used to indemnify aggrieved investors.

Another change that may impact is that a licensee is prohibited to sell or transfer a Financial Dealers License and there is a VT1,000,000 fine for anyone who contravenes this rule, which must be considered.

Indeed, it has transpired that many smaller retail brokerages have recinded their licenses in several recognized jurisdictions in favor of regulation in Vanuatu, a trend that is likely to continue.

 

 

Read this next

Institutional FX

Broadridge helps SLIB to enhance cross-border proxy voting in France

“Together with our partners at SLIB, we have delivered an advanced voting and communications solution that makes it easier than ever for all investors, both those in France and in other markets, to seamlessly cast their votes in the companies they own.”

Digital Assets

FTX resumes salary payments to employees and contractors, except in Bahamas and Australia

“FTX also is making cash payments to selected non-U.S. vendors and service providers where necessary to preserve business operations, subject to the limits approved by the Bankruptcy Court. We recognize the hardship imposed by the temporary interruption in these payments and thank all of our valuable employees and partners for their support.”

Market News

Rishi Sunak’s reign in real data

After several weeks of Rishi Sunak’s appointment as the new Prime Minister, it is obvious that he has claimed quite the public support.

Digital Assets

CrossTower acquires BEQUANT to help crypto industry reset and consolidate

“We are stabilizing an industry with incredible promise; regaining trust; and rebuilding the future of finance.”

Retail FX

Plum launches crypto offering for EU residents

Plum has added crypto investing to its range of investment options in France, Belgium, Spain, and Ireland. Residents there will be able to buy and sell cryptocurrencies in their app with just a few taps, via services provided by Bitpanda.

Retail FX

FX/CFD and Crypto broker Quantfury launches fractional trading of stocks, ETFs, commodities

“Quantfury is advancing its unmatched trading and investing conditions further by making it even more affordable to Quantfurians out there. Fractional trading mode opens up more trading opportunities to the Quantfury global audience of more than 400,000 Quantfurians.”

Industry News

SEC awards $20 million to whistleblower despite degree of culpability and reporting delay

The Securities and Exchange Commission has awarded a whistleblower with $20 million for providing new and critical information that led to the success of an enforcement action.

Institutional FX

Tradesmarter’s white label WOW TRADER integrates with TradingView

Tradesmarter’s white label trading platform solution WOW TRADER has integrated with TradingView, the high performance and mobile friendly charting tool.

Industry News

ASIC loses fee overcharging case against Commonwealth Bank of Australia

“ASIC pursued this case because we believed CBA did not have robust compliance systems to ensure customers were being correctly charged. ASIC will carefully consider the judgment and continue to work to ensure large financial institutions charge fees correctly and put their customers first.”

<