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

Interviews

AC Interview – Neil Swanepoel, Sales Development Representative

One of the biggest challenges faced by brokers is finding the best tools/methods to attract and convert new traders. With trading becoming increasingly more popular among Gen Z, it is this young group of up and coming traders that hold the most potential for brokers. To help better understand this unique demographic we spoke to Autochartist Sales Manager and new trader Neil Swanepoel. 

Digital Assets

BlockTower teams up with Centrifuge to bring real world assets to DeFi

The protocol empowers businesses to tokenize non-crypto assets such as mortgages, invoices and consumer credit, to create asset-backed pools that create an investment opportunity, and as a result, democratizing access to capital.

Digital Assets

Solana-powered game DeFi Land launches Play-and-Earn features

The Play-and-Earn mechanics announcement comes on the heels of a collab between DeFi Land and STEPN. DeFi Land will soon announce chain integrations, an alpha mobile version, and a multichain feature. 

Retail FX

Spotware rolls out Manager’s API for cTrader brokers

Spotware Systems, a technology provider for the electronic trading industry, has released its new Manager’s API for Brokers, providing powerful tools for server-server integration.

Metaverse Gaming NFT

Dubai Museum taps Binance to jump onto NFT bandwagon

Dubai’s Museum of the Future, the $136 million UAE government-sponsored museum that opened a few weeks ago, is joining forces with Binance NFT to roll out a range of digital products on blockchain.

Digital Assets

Ripple and Lithuanian FINCI partner for XRP-based payments

Ripple is looking to expand its presence in Europe, forming a new partnership with Lithuanian electronic money institution FINCI.

Digital Assets

Crypto.com enables Shopify merchants to accept crypto payments

Crypto.com has integrated with Canadian e-commerce giant Shopify so global merchants can accept crypto payments and save on processing fees through cash-final settlements.

Institutional FX

FX volume drops 13pct at CLS Group in April 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in April.

Crypto Insider, Opinion

Regulation: The Gold-Standard for Crypto-Assets

When the US supervisory authority SEC allowed an investment product referencing Bitcoin futures to be traded for the first time last October, this was widely perceived as a signal that cryptocurrencies had finally become established as an asset class.

<