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FOREX Licenses

Licences (OTC Market) FX/CFDs

B2Broker can be your trustworthy partner in legal support services when obtaining brokerage licenses as a part of the FX turnkey solutions. You can also order these services independently.

The legal system of each jurisdiction imposes different requirements on companies seeking to obtain a license for financial activities as well as special requirements for its corporate structure, minimal share capital, staff and officers background, IT systems, AML / KYC legal documents and finance reporting. Therefore, it is extremely important to understand all the specific requirements before choosing a particular jurisdiction.

Our professional team can assist you with choosing your jurisdiction, understanding how to obtain a license and the renewal processes, the cost of obtaining a license and legal requirements for applicants, together with important legal key points so that you can start your work safely and professionally.

Our legal team works directly with local partners in each jurisdiction which make it possible to provide high level services and get an insider's perspective on the regulation's important points and legislative changes. Therefore, it helps our clients ensure they receive reliable legal support for the company after obtaining a license.

Based on our experience, there are a few jurisdictions which propose various competitive opportunities to establish Forex brokerage regulated entities.

For those clients who are not sure which license to choose or do not yet have the resources to obtain a brokerage license in one of the proposed jurisdictions, our specialists may provide personal advice on alternative options that will help to start a business on conditions that are appropriate in your particular case. We may also assist with the registration of the company without the FX or Crypto License and for the clients who already have the company, we may offer some additional services, you may find the list on our website.

Comparison of jurisdictionsBelarusCyprusUKMauritiusVanuatu
RegulatorNational BankCyprus Securities & Exchanges CommissionFinancial Conduct AuthorityFinancial Services CommissionVanuatu Financial Services Commssion
Estimated time to get appoval from Regulator~1 month~12 months~12 months~6 months~6 months
Minimum paid-up statutory capital200k BYN
(around € 65k)		€ 750k€ 750k1mln MUR
(around $ 25k)		500k VUV
(around $ 50k)
as security deposit
Government Fee / Application filing fee-€ 8,5k£ 25k$ 2,5k$ 3,1k1
Total approximate investment amount for the 1st year$ 165k€ 970k2£ 1,525k2$ 50k / 60k2$ 65 / 70k2
Local physical office requirement+++++
Staff requirementDirector

Compliance / AML / Risk manager

Accountant

External Auditor.		2 Executive Directors + 2 Non-Executive Directors;

Compliance, AML, Risk manager;

Head of departments: Dealing, Sales, Back office, Dealing on own account, Accounting;

Internal and External Auditor.		Director;

Compliance, MLRO, Risk manager;

Dealing department;

Accountant;

Internal and External Auditor.		2 Executive Directors (local);

Compliance, AML, Risk manager;

Head of Dealing department;

External Auditor, local support staff.		Director;

Compliance / MLRO;

External auditor;

Professional Indemnity Insurance

1 The fee may vary depends on number of Licenses types.

2 Kindly note that given amount doesn’t include professional fees of local specialists.

Jurisdictions in details

Belarus
Cyprus
UK
Mauritius
Vanuatu

Republic of Belarus

3-4 months to obtain a license and start operations

$ 80k minimal amount according to legislation

$ 165k Approximate budget for one year of work*

*Kindly note that provided numbers are approximate and can vary depending on each particular case.

Fast trading software certification procedure, single regulation authority fully compliant with FATF regulations and other benefits are available

About
Belarus, also known officially as the Republic of Belarus, is an eastern European nation bordered by Ukraine (south), Russia (northeast), Poland (west), Lithuania and Latvia (northwest). The capital of Belarus is Minsk. The official languages of Belarus are Belarusian and Russian, other languages like Polish, Ukrainian and Yiddish are spoken by minorities in this territory.

Belarus is a member of the United Nations, Commonwealth of Independent States, Eurasian Economic Union (EEU) and many more.

To be able to provide a quality service for your traders a financial license is required in most cases. In general, licensing can take several years and around $2 million. A Republic of Belarus Forex license offers all the main advantages of regulated jurisdictions but with much lower expenses and time needed to obtain your license.
Capital adequacy
Besides approximate amounts listed above, it is also important to know that a company's share capital will not be "frozen" and can be used to form guaranty fund and for other operational needs.
Project start budget: $165k (based on 1 year)

  • Capital requirements - $80,000 (200,000 BYN). Capital requirements are not frozen and can be used for guarantee fund formation (55 000 USD after obtaining a license) and for operational expenses;
  • Service fee - $20,000;
  • Software certification - $4,200 one-time fee (for each software platform. Optional per discussion and agreement);
  • Operational expenses (monthly) - $7,000;
    • Director salary: $2,000;
    • Compliance / Risk manager salary: $1,500;
    • Accountancy (outsourced): $500;
    • Submission of mandatory reports: $1,000;
    • Office rent (rent, land line, internet): $1,000;
    • Consultancy and advisory: $1,000 per month (optional per discussion and agreement).
Requirements
  • Just One shareholder is required: can be individual or corporate shareholder;
  • Physical office in Belarus with hired personnel: a director, compliance and an accountant;
  • Website in .by domain zone requirement;
  • Corporate documents requirement: client's agreement, risk policy etc;
  • Mandatory reporting and accountancy;
  • Mandatory formation of guarantee fund (returnable) and weekly transactions based on deposits of clients.
Client onboarding

There are no restrictions for onboarding clients from any country. You can onboard clients from Europe without any restrictions and US clients are also permitted but require some additional paperwork with the banks. Only two territories are listed in Belarus legislation as non-compliant with FATF recommendations: North Korea and Iran.

When a Forex company receives funds transfer from a client:

of the funds

should be transferred to the National Forex Center as a weekly contribution to the guarantee fund. The amount of the transfer is calculated as of the last working day of the week and is returnable;

of the funds
for non-resident clients (50% for resident clients)

should be transferred to two special bank accounts opened in two banks in Belarus and operated by the Forex company. Such a transfer must be completed on the same day that the Forex company received funds from a client or at the earliest possible time.

This is done for additional traders' protection. The funds from a special bank account can be used to return funds to clients, for example in case of withdrawal, or to transfer funds back to a current account when the size of margin collateral received from clients has decreased.

Jurisdiction features
  • Wide spectrum of available trading instruments: Forex pairs, metals, equities, futures, options, indices, ETFs;
  • Copy trading is available;
  • Transactions in foreign currencies are allowed;
  • Possibility of opening a bank account in a non-resident bank without permission of regulation authorities;
  • Possibility to hedge risks in any financial institution without permission;
  • High leverage, depending on status can be from 100 up to 500.
Benefits
    Benefits for broker:
  • Single regulation authority fully compliant with FATF regulations;
  • Fast license obtaining procedure;
  • Fast trading software certification procedure;
  • Low capital requirements for a company;
  • Low operational expenses;
  • Capital requirements are not frozen and can be used for guarantee fund formation and operational expenses;
  • Easy process of opening bank accounts and PSPs;
  • High leverage for professional traders;
  • Possibility to operate with clients from any country;
  • Guarantee funds are considered as accounts receivable and free of any taxation.


      • Benefits for trader:
    • Absence of income tax for traders;
    • Regulated guarantee fund of broker.
    Directors' appointment
    & functions
    It is very important to find people with relevant experience for positions as directors. Based on our actual experience we can inform you that this is a key point for a regulated company in Belarus. Director and compliance officers who will hold positions in the company must have at least the following experience as a minimum:
    • Be experienced in FinTech (Bank sphere or other financial sphere);
    • Knowledgeable (Economic or Legal education);
    • Russian speakers (to communicate with NBRB and other authorities);
    • Representative (to represent the company in Belarus generally).
    We highly recommend you approach this issue with the fullest attention. Rest assured, our specialists have practical experience in Belarus and can assist you with hiring key staff. We have an operational office in Minsk and can help you with this aspect based on our actual experience.
    Required steps

    Incorporation of a company and opening a current account in a bank

    Registration can be done in person by visiting the local authority office or online on the Internet. You can complete the application for state registration and provide supporting documents. Not later than the next working day you will be issued a certificate of state registration. At the same time during legal entity registration you should open a bank current account. This process usually takes 1-2 working days to complete.

    Moreover the state authority will register the new legal entity with all necessary government bodies such as the tax authority, insurance company, etc. and send you a confirmation within the next 5 working days.

    Open an office in Belarus and hire personnel

    • To start you need a director, head of compliance and an accountant;
    • Office rent is around $15 per square meter per month. On average a medium-sized office of 50 square meters will cost around $750.

      There are no restrictions on office sizes or locations.

    Create statutory capital

    Deposit to your current account, minimum requirement for a Forex Company: BYN 200.000 (equals ~ $80,000);

    Apply for a Forex license to the regulator - the National Bank of the Republic of Belarus

    After registration is completed the legal entity submits to the National Bank an application for inclusion in the Forex register. The list of supporting documents includes:

    • The charter of the legal entity;
    • Confirmation of the created statutory capital to the amount of at least 200,000 (two hundred thousand) Belarusian rubles, around 65,000 (sixty five thousand) EUR;
    • Confirmation of employment record for the director and compliance personnel;
    • Confirmation of business reputation for the shareholder of the legal entity;
    • Confirmation of professional qualification and business reputation for the director and compliance personnel.

    The application will be considered by the National Bank within 30 working days.

    Prepare manuals and policies

    • Terms and Conditions of Operations with Non-Deliverable Over-the-Counter (OTC) Financial Instruments;
    • Policy for providing, processing and execution of client orders for underlying asset price fixing in operations with non-deliverable over-the-counter (OTC) financial instruments (Order Execution Policy);
    • Compliance Policy, Anti-Money Laundering Policy, KYC Policy;
    • Risk Management Policy;
    • Privacy Policy.

    Transfer funds of 55,000 US dollars to the guarantee fund (upon license approval)

    After obtaining your Forex license it is mandatory to transfer a registration fee to the guarantee fund within the next 3 working days.

    The guarantee fund is formed and managed by the National Forex Center, appointed by the National Bank.

    The registration fee amount is $55,000 (fifty five thousand US dollars). Funds from the statutory capital can be used to transfer this fee to the guarantee fund as well as to cover other operational expenses.

    Certify and verify the Forex company's trading software with the Regulator

    A Forex company can only use trading software or platforms verified and recognised by the National Forex Center.

    The verification will be done within 30 working days. Its cost is a one-time fee 10,770 Belarusian rubles (around 4,200 US dollars).
    Reporting and accountancy
    Reporting and accountancy are mandatory within Belarusian jurisdiction. A Forex company compiles and submits reports to the National Bank and to the National Forex Center starting from the date of obtaining the Forex license.

    • Reports on performance indicators of the company must be sent quarterly and annually to the National Bank. Submitting reports to the National Bank is free of charge and is done online.
    • Reports on the company's financial stability, all trading transactions and transactions with clients' funds must be sent weekly and monthly to the National Forex Center. In order to submit reports to the National Forex Center a Forex company must sign an agreement and register an account in the electronic documents management system.

      • The monthly service fee amount starts from 2,521 (two thousand five hundred) Belarusian rubles (around 1,000 US dollars) for the first 2 years of operations and also depends on the total amount of transactions done during the month.

    Details on reporting functions
    Primarily, you should be ready to certify with the National Forex Centre the trading platform you plan to use (e.g. MT4 or MT5 or other). The cost of each system may be around 4000 USD. After certification, you should also use a special local reporting system which usually costs around 1000 USD per month. We are now preparing an integration process for a new reporting system that will be more user-friendly and which can be used with the Belarusian market and worldwide.
    Risk Management
    A Belarusian Forex license is ideal for a Straight Through Processing (STP) strategy.

    There is a Risk limit set by law for a Forex Company when it is mandatory to hedge an open position. The Risk limit is the maximum ratio of the total open position of clients (the sum of open positions of clients) for a particular basic asset and the equity capital of the Forex Company

    However, different risk management strategies are possible. In addition a Forex Company is allowed to hedge clients' positions in the parent company.
    AML & Compliance functions
    There are no strict obligations to have a special Service Provider for your KYC system, however, the best option is to hire professionals with relevant experience in KYC procedures. The compliance officer is obliged to check all clients, collect necessary information, and provide it to Government authorities in the event it is requested.
    Technical side & support
    There are no strict requirements regarding trading platforms which may be used and you are able to choose any platform and trading model. IT and software support can be sourced from us and a lot of other services can also be outsourced. Our services will cover these points.
    Taxation
    • Company tax rate – 25% for FX / 18% for other activities;
    • Personal income tax – 13% (traders are exempt from PIT);
    • VAT rate – 20%, turnover from FХ activities is not subject to VAT.
    Timeframe

    It is simple and fast to incorporate a company and to obtain a license for a period of up to 3 months:

    1-2 working days

    Registration of a legal entity and opening a bank account

    30 working days

    Application for a license will be considered by the National Bank

    30 working days

    Certification of software will be done

    Do you still have questions about Belarussian jurisdiction? Look for the answers on B2Broker YouTube channel

    Association of Development Finance Market
    P.S. We recommend that you become a member of Association of Development Finance Market in Belarus to stay updated with all new legislation changes and to get direct feedback from Government authorities and other Forex brokers on how to conduct this type of business in Belarus. Nowadays, Belarus is a fast growing and reliable jurisdiction for the Fintech sphere. Therefore, we highly recommend our clients to pay close attention to this jurisdiction if they are thinking about a regulated brokerage company.
    Watch the video

    Q&A «B2Broker Webinar - Belarus»

    B2Broker Webinar - Belarus: The Fastest Way to Start a Regulated Forex Brokerage

    *Kindly note that provided terms are approximate and may vary depending on various factors.

    Cyprus

    12 months average to obtain the license

    € 750k minimal capital amount according to legislation 1

    € >1mln budget for the start of the project

    1. Kindly note that provided numbers are approximate and can vary depending on each particular case.


    About
    The Republic of Cyprus is a former British colony and a current member state of the European Union. It is located in the Mediterranean Sea bordered by Turkey (to the south), Syria (to the west) and Kastellorizo (a Greek Island to the east) with a population of 1.2 million people. Cyprus's capital and financial hub is Nicosia. Its official languages are Greek and Turkish although English is widely spoken due to the past British colonial rule.

    • The Cyprus Securities and Exchange Commission (CySEC) is a reputable and well-known regulator of the financial markets and for this reason, CySEC Forex brokers are very popular amongst traders. Many regulated companies are licenced by CySEC. CySEC is one of the very few premier regulatory authorities that are highly committed to accepting new concepts and implementing advanced regulations for modern financial products. After its entry into the EU, CySEC has progressed in leaps and bounds and has totally shaken off its past by becoming one of the best regulators in the industry. Cyprus is indeed home to some of the most high-quality Forex brokers and several mainstream Forex companies started their journey by becoming regulated by CySEC in the first place.
    • CySEC has broad powers to oversee the activities of its members. As a result, CySEC-licenced forex brokers are considered synonymous with reliability.
    • CySEC offers freedom of trading by allowing traders to indulge in any strategy which has helped CySEC brokers to provide a substantial amount of leverage, hedging functionalities and other rules of trading. Nevertheless, it should be noted that CySEC has a number of specific requirements and restrictions imposed especially on retail account holders, including permitted leverage levels.
    Capital adequacy
    Types of CIF licenses and related investment services available:

    With the ability to deal on own account (market maker):
    • Minimum Required Initial Capital Contribution €750,000;
    • Reception & Transmission;
    • Execution of orders on behalf of clients;
    • Dealing on Own Account;
    • Portfolio management;
    • Investment advice;
    • Provision of Underwriting services.
      • Tentative list of costs (not including VAT) up to the time of license approval are summarized below:


    • Fees paid to Compliance Advisor €30,000 - 40,000;
    • Preparation of ICARA (Internal Capital and Risk Assessment (ICARA) (€10,000);
    • Registration of CY Limited company (€4,000);
    • Activation on-site CySEC inspection and active support during the activation process paid to compliance advisor €10,000;
    • CySEC application fees estimated at €8,500;
    • Miscellaneous fixed/variable costs:
      • Office rent (requirement to have a physical place prior to application submission);
      • Office expenses such as electricity and phone;
      • Director fees pre-authorisation (salaries negotiated for 2 exec and 2 NEDs);
      • Salary paid for compliance/MLRO officer and a back office officer and IT employee;
      • Accounting fees for the pre-approval period, also negotiable;
      • IT+platform expenses (MQ licence fees and OZ licence fees, etc);
      • Investor Compensation Fund (ICF) Contribution of approx. €45,000 (for any type of licence).
    * Kindly note that given amount doesn’t include professional fees of local specialists.
    Requirements
    • Company incorporation and registration with the Cyprus Registrar of Companies (ROC);
    • The main activity should be conducted in Cyprus;
    • Physical office with substance and not just a registered address, qualified personnel, Compliance Officer/AML Officer, Internal and External Audit, Accounting, Risk Management;
    • The regulated entity must maintain at all times the regulatory minimum capital required and for a licence of the type (2) and (3), it must maintain a client segregated and ring-fenced bank account at a qualified credit institution for all client money. This must at all times be kept separately from the company's own funds.
    Client onboarding
    Clients' funds shall be debited to the segregated account approved by CySEC. In general, the following will be required for filing:
    • Business plan;
    • Financial forecast for three years;
    • Operating manual;
    • AML, manual on risk management and compliance manual;
    • Questionnaire for each shareholder and director;
    • Certificate on the absence of criminal records and statements on the lack of bankruptcy for each shareholder and employee;
    • 4 directors, including the managing director, two executive and two non-executive directors, 3 of whom must be residents of Cyprus;
    • The Risk Manager and Compliance Specialist;
    • Internal auditors (residents of Cyprus);
    • External auditors;
    • Legal advisers.

    There is also a daily reporting system that must be maintained In-House or by an External Service Provider. All settlements should be reported daily to CySEC.
    Passportization. Before starting to work with any client that is not from the EU, you should seek approval from CySEC. The client needs to obtain the approval in the country where he plans to start working, request a Legal opinion that the Cyprus CIF company has the right to work and provide services. This process can be lengthy and expensive and does not always result in a positive outcome since there are several jurisdictions that require a full scope licence before a Financial Institution is allowed to provide its investment services in their market.
    Jurisdiction features
    • A wide spectrum of financial instruments may be available: CFDs in Forex, Metals, Energy, Commodities, Indices, Shares and Cryptos.
    • Leverage is restricted for retail clients from 1:2 to 1:30 based on the type of investment product (for ex. for crypto CFDs it is max 2:1) while there are no margin regulatory restrictions for institutional and professional clients
    Benefits
    Benefits for broker:
    • Cyprus is one of the most favourable European environments to set up a company or business. For this reason, it is referred to as the gateway of the European common market due to its favorable tax policies, economy and other foreign investment laws.
    • CySEC has broad powers to oversee the activities of its members. As a result, CySEC-licenced Forex brokers are considered synonymous with reliability.



    Benefits for trader:
    • Cyprus is not considered an offshore zone;
    • Membership of the European Union (from 2004) and Eurozone (from 2008);
    • Sustainable corporate and tax legislation;
    • Good opportunities for real business;
    • Treaties for avoidance of double taxation with more than 60 countries;
    • Since 2001, licencing of financial activities in Cyprus has been carried out by CySEC.
    Directors' appointment & functions
    As previously mentioned, you should have at least four directors, three of which should be residents of Cyprus. At least two of them may have a non-executive function (nominee directors) who are not actively involved in the operational activity. Two of them should have functions as an executive director and these persons should have active responsibilities, e.g. manage all questions from the company's side, communicate with the regulator, service and liquidity providers, and meet with potential clients.
    Required steps

    Choose and check the name of the company's availability and register a company with the Cyprus Registrar of Companies.

    Open the investment company's office in Cyprus

    Open an operational corporate bank account, accumulate the required capital and pay the required contribution through the Central Bank of Cyprus

    The amount depends on the range of services provided by the company and on the type of activity. Optionally, the fee for membership of the Association of Cyprus International Investment Firms (ACIIF) may be paid;

    CySEC should be assured that you have the authorised capital. The amount of the authorised capital is as follows:

    • Dealing on own account (market maker) – €750,000.

    Collection of information and preparation of the necessary documents

    The applicant should submit the package of documents to the CySEC. The applicant company shall meet the following requirements:

    • In order to obtain a brokerage licence in Cyprus, it is necessary to provide a statement from the bank confirming the availability of account among other documents;
    • Business plan of the company;
    • Personnel arrangements;
    • Financial plan for three years;
    • Certificate on no record of convictions for each employee;
    • Information on the absence of bankruptcy status for each employee of the company.
    The process of incorporation of the company may take not more than a week without legalization of the documents.

    Hire the employees

    It is necessary to designate a number of employees and agree on their candidatures with the regulator regarding their reputation and competence for holding respective positions to meet the requirements of CySEC for the licence:

    • The company should have a Board of Directors, a secretary, an accountant, head executives of the brokerage, financial and IT departments and traders. Combining some of the positions is allowed and there are qualification requirements imposed for persons with the position of director.
    • For the company, it is necessary to have a specialist in combating fraud and money laundering (the compliance officer), a risk manager and an internal auditor in the company's personnel.
    • Financial plan for three years;
    • Certificate on no record of convictions for each employee.
    • Information on the absence of bankruptcy status for each employee of the company.

    Anti-fraud and combating money-laundering policy, as well as the KYC (Know Your Client) policy should be prepared in the organisation

    Reporting and accountancy
    Every Cyprus company must maintain accounting records that enable the preparation and audit of financial statements showing a true and fair view of the company's financial position and performance in accordance with International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS).

    The accounting records must be held either at the registered office or at another place in Cyprus and must always be available for inspection by the directors.

    The financial statements must be accompanied by a report of the board of directors which includes:
    • Details of any changes in the nature or volume of operations;
    • Any changes in the share capital;
    • Any significant change in the constitution of the board of directors or the duties assigned to its members;
    • Directors' proposals regarding the distribution or not of the retained profits.

      • Financial statements must be audited by a registered auditor.
    Details on reporting functions
    In all serious jurisdictions such as Cyprus it is necessary to have a service provider who will provide you with reporting systems. Please note that when you are choosing a reporting service provider, it is extremely important to agree on the trading platform that you will use for operational activity, the liquidity provider you will work with, and other counterparties who are involved in reporting. Please be aware that you should be careful with reporting about all activity and avoid any duplicate of trades.
    Risk Management
    In the main, there are no strict restrictions on onboarding clients, however, the most important element of MiFID is the "passporting principle", which allows a firm in any EEA country to offer its services to customers in another.
    AML & Compliance functions
    It is very important to consider several options:

    • To hire a professional compliance officer who will furnish all policies manuals and will act as a representative person with the regulator, conclude agreements with AML / KYC software service providers;
    • To hide a professional compliance officer who will furnish all policies manuals and will act as a representative person with Regulator.


    The best option is to find some middle variant where the compliance officer will have sufficient experience and where special AML software will be used. In such a case, the regulator will be satisfied with the compliance security of your company.
    Technical side & support
    From the offset, you should choose a reliable service provider who will give you all necessary software, platforms, trader's room, liquidity (all available from B2Broker). After this, you will have a full picture of what you should do and with which providers to move forward.
    Taxation
    12,5%
    One of the lowest corporate tax rates in Europe

    • Favourable regime for holding companies: dividends received by a Cypriot company are exempt from corporate tax.
    • In Cyprus, there are no inheritance, real property, net wealth and municipal taxes. There is an immovable property transfer tax up to 8%. Value-added tax is 19%. The income from dividends and transactions with securities are not subject to taxation.
    Timeframe

    The process of incorporation of the company is not very long at all, usually taking up to a couple of weeks depending on whether additional documents are required to be provided to the Registrar's Office. In general, the process of the license application and final approval by CySEC may take from 9 to 12 months:

    up to 2 weeks

    The process of incorporation of the company

    9-12 months

    The process of obtaining the license

    *Kindly note that provided terms are approximate and may vary depending on various factors.

    The United Kingdom

    12 months average to obtain the license

    £ 750k minimum capital amount according to legislation for Dealer and Intermediary licenses

    £ 1 525k budget for the start of the project for 1 year *

    * Kindly note that provided numbers are approximate and can vary depending on each particular case.

    Flexible approach to the company's capital adequacy (Tier 1 capital): the applicant himself sets the required level which should be confirmed and approved by FCA during application process.
    About
    B2Broker is in close interaction with local UK partners to provide its clients with quality services and solutions and obtaining an FCA license in the United Kingdom. The regulatory body responsible for Forex regulation is the Financial Conduct Authority (FCA). We can assist you with one of the most coveted licenses in the industry to provide our professional services.

    The United Kingdom offers one of the most prestigious Forex broker licenses in the world. UK regulation may be considered as an industry high-quality benchmark for brokerage and investment companies. FCA regulation brings brokerage business to the highest level in the industry and provides them with direct access to one of the biggest financial markets within Europe.

    The prestige of UK jurisdiction directly affects the severity of the requirements for an applicant for a brokerage license. A license for brokerage activities in the UK is issued to companies that fully comply with all the legislative norms of the country, have their own office on the territory of the state and have a certain amount of authorised capital. It is extremely important to prepare company operational processes and all application documents in accordance with strict FCA requirements. This is why reliable legal support of the application is a core part of the application process.
    Capital adequacy
    Kindly note, that initial capital amount requirement means that you should hold this amount on the same level and show it in quarterly reports. In other words, you can not fully use the initial capital (e.g. 750,000 GBP). Your company should always hold such an amount on its accounts at least at the end of the reporting quarter and show a sufficient amount in a corresponding report. Therefore, it is highly important to take into account other necessary costs which should be added to the approximate initial investment amount.

    It is very important to note that total amount that should be invested by the shareholders at the first stage will be bigger than initial required capital set by the FCA (e.g., £750,000). Capital adequacy is calculated for 3 years financial forecasts preparation. These forecasts should be provided to the FCA together with initial application documentation and Business Plan. To calculate initial capital, it is important to understand the company's expenses which usually are big for the first and second financial years of a company.

    Among other, such expenses should include the following positions:
    • Expenses for salaries for directors and key stuff
    • Expenses for IT and software systems (e.g. WL licenses, servers, internal system)
    • Expenses for outsourced services (e.g. customer support, IT support, etc.)
    • General expenses for accounting, operational issues, legal support, additional stuff, office rent, etc.
    • Expenses for AML and Compliance software, trading software, etc.
    • Commissions payable to liquidity providers
    • Taxes

    Therefore, all potential expenses should be considered and increased to the initial minimum capital requirement (e.g. £750,000). Following this, you will have an approximate understanding of capital adequacy and the first investment that should be made. Also, the amount of adequate capital also depends on predicted income which is different for each applicant and depends on the type and number of clients, their approximate volumes, etc.

    For example, for a company with a minimum initial capital £750,000, the first share capital injection can be to the amount of £1,325,000 - £1,525,000 to meet capital adequacy requirements.

    * Kindly note that given amount doesn’t include professional fees of local specialists.
    Requirements
    • Local office - the company's 'mind and management' such as directors, compliance and governance function, audit and risk functions should be in the UK;
    • Local directors and MRLO;
    • Strong management and organizational structure of the company including highly professional dealing department and risk management located in the UK and controlled by the directors;
    • Internal and External audit which includes capital adequacy requirements, calculated on a daily basis; Audited financial statements, annually or quarterly; Monthly financial statements, prepared according to general accounting principles;
    • Threshold Conditions - the company must satisfy the minimum standards set by FCA for all regulated activities and also demonstrate that the key persons managing the firm are 'fit and proper' to perform their functions;
    • Appropriate resources - the company should demonstrate that it has the appropriate financial resources, skills and experience of those managing the company's affairs;
    • Suitability - the company must demonstrate competence and ability of the management, and that the affairs of the company are conducted in an appropriate manner in the best interest of consumers.

    Requirements on license categories / IFPR changes.

    Formally, two main types of Forex licenses which allow holding of clients' funds will remain until the end of 2021.

    1. Dealing on own account (Dealer License)

    This license is equivalent to "market-making" and involves position-taking which includes in the conclusion of the transaction in financial instruments.


    • Initial Capital Requirements - £ 730,000
      • 2. Matched Principle (Intermediary License)*

      Also known as STP/straight-through processing involves client trades being hedged with an equal transaction with a liquidity provider.


      • Initial Capital Requirements - £125,000
      • Starting from January 2022 the minimum initial capital requirement for these two types of activities most likely will be the same - £750,000.

      The new UK Investment Firms Prudential Regime (IFPR) will come into force 1 January 2022. The new prudential regime for investment firms - comprising the Investment Firms Regulation and Directive (IFR/IFD) - will sweep away the favorable prudential treatment currently experienced by many investment firms that offer matched principal trading (so called '£125,000 limited license firms'). Matched Principal license firms deal on their own account and hold client money. They currently benefit from a minimum capital requirement of £125,000 (instead of EUR 730,000) and enjoy a limited application of other prudential requirements. This is because they are restricted to conducting "matched principal" trading, where they hedge client trades on a back-to-back basis and are seldom exposed to market risk. These benefits are not carried forward in the new regime so the dividing line between a limited license and full scope will cease to exist. Given that £125,000 limited license firms deal on their own account and hold client money, they will be categorised as 'class 2 firms' (unless they have very large group balance sheets), meaning that they will be subject to the full application of the new regime. These firms will become subject to a much higher minimum capital requirement of £750,000. This is just one element of the new own funds requirement which will require firms to maintain capital above the highest of three figures: (a) £750,000; (b) the fixed overheads requirement; and (c) the new K-factor requirement. The K-factor requirement is the biggest change in the new regime. It applies percentages ('coefficients') to the value of specific risks encountered by firms. The new regime is intended to be a major improvement as it is calibrated to the risks of investment firms rather than banks.

      Taking in account the above mentioned legislative changes, we recommend basing financial plans and forecasts on the minimum capital to the amount of £750,000 plus at least £575,000 - £775,000 of investment amount for the 1st year. You can find details in "Capital Adequacy"

      *At the moment it is factually impossible to obtain this type of license, due to regulation changes set by IFPR.


      Starting from January 1, 2022 the above mentioned changes amendment will come into force. Our team closely follows all updated information from the FCA and makes updates accordingly.

    Client onboarding
    The licensed company should mainly be focused on clients within the UK. Clients from other countries can be onboarded in accordance with passportisation rules set by the FCA.

    The company should have a segregated bank account for client funds which meets CASS requirements (Client Assets Sourcebook) set by the FCA. The principal objective of the FCA's CASS Rules is to keep client assets safe in the event of a firm's failure. A fundamental requirement of the CASS Rules is that firms must keep client money separate from firm money in segregated client money bank accounts and register custody assets appropriately. This ensures that client money and custody assets are ring-fenced in the event of the insolvency of the firm.

    This account should be opened in a credit institution with the highest credit rate, payment systems are not allowed. All clients' funds should be monitored and accounted daily by the designated CASS officer.

    This account should be opened in a credit institution with the highest credit rate. Payment systems are not allowed. All clients' funds should be monitored and accounted for daily by the designated CASS officer.

    In case you wish to render services to clients from the European companies, you should observe the legislation that may be applied for the regulated companies registered in the United Kingdom in each of the European countries.
    Jurisdiction features
    • One of the most highly reputable financial jurisdictions;
    • Direct access to one of the most developed financial markets and judicial system;
    • Flexible regulation compared with EU countries;
    • Possibility to cooperate with top level banks and liquidity providers.
    Benefits
    • Wide spectrum of available trading instruments, including Crypto CFD under certain conditions;
    • Flexible approach to the company's capital adequacy (Tier 1 capital): the applicant himself sets the required level which should be confirmed and approved by FCA during application process;
    • Flexible requirements to leverage levels depending on the types of clients;
    • Ability to work with top level banks and liquidity providers;
    • Extremely high level of clients' funds protection.
    Directors' appointment & functions
    The directors in the UK regulated entity have a key role. The FCA will check details to ensure the persons appointed as directors and key managers (e.g. CASS officer or Head of Dealing) are acting independently and in accordance with rules and regulations set by the UK laws. It is highly important to show that directors are independent and shareholders cannot directly influence directors on operational matters. Local directors are fully legally responsible for all activities of the company as well as for potential violations.

    Therefore, it is highly important to find those persons who are completely trustworthy. Moreover, the directors should have significant work experience in the financial sphere. Their experience will be checked very carefully by an appointed case officer. Based on this, employment of directors is one of the most crucial aspects of the application. All communication with the FCA will be held through directors only.

    SMF (Senior Management Functions) are delegated by the FCA in a special handbook where all key functions of directors and managers are listed. Depending on your planned activity and the number of directors and key managers, functions can be combined. All the functions of all directors should be submitted to the FCA and confirmed by an appointed case officer during the application process. The number of directors can be different as can their functions. The company obligatory should have 2 directors - an executive director and a compliance director. Non-executive directors are also allowed.
    Required steps

    Collection of information and preparation of necessary documents

    • KYC documents for shareholders and directors;
    • Corporate structure drafting

    Company registration (you can find more information under the relevant topic on our website)

    • Check of company name
    • Rent office
    • Filing information to Companies House

    Formation of the application and filing to the FCA

    • Application forms
    • Business Plan
    • AML policy
    • Financial projections
    • Disaster recovery plan
    • Information on IT platform and systems
    • Draft of customer agreement
    • ICAAP report
    • Other documents required by FCA

    Communication with the appointed case officer, provision of additional required information

    • Preparing answers to additional questions from the case officer;
    • Making adjustments to the documents according to comments from the case officer.

    Opening of bank account and payment of declared share capital

    Search and negotiations with banks to open operational and clients' CASS accounts.

    Authorisation (obtaining a license)

    License issuance by the FCA.
    Reporting and accountancy
    Reporting and accountancy are obligatory for a licensed company in the United Kingdom. The company should comply with regulations set by the FCA and HMRC (HM Revenue and Customs). Reporting includes the following reports:

    • Monthly reports through RegData system
    • Transactions reporting
    • Quarterly financial reports
    • Annual external audit
    • Other reports according to the FCA regulations
    Details on reporting functions
    The company should provide several financial, accounting, compliance, and trading reports to different local authorities. Factually, all reports can be divided into four categories: A Financial reporting to HMRC

    This includes financial, tax and accountancy reports which usually are provided by the company's accountants.

    B Regulatory reporting

    The FCA has moved to a new data collection platform called RegData which replaced a previous platform, Gabriel. It is obligatory for all licensed financial companies to use this system for reporting to the regulator. Once your firm has been authorised, you will be able to register a Principal User in RegData. The Principal User (a person with controlling functions, e.g. executive director) will be able to set up and manage other users, as required, once they have accessed RegData.

    Generally, RegData system can be used for:


    • Submit regulatory data;
    • View a tailored schedule of a company's reporting requirements;
    • View all company's submissions in one place;
    • Print data items.

    The full list of information that can be filed through RegData can be found listed.



    C Transaction reporting under UK MiFIR regulation (The UK version of the Markets in Financial Instruments Regulation (600/2014), which is part of UK law from the end of the Brexit transition period by virtue of the European Union (Withdrawal) Act 2018.

    Complete and accurate data is critical to transaction reporting. In order to be able to monitor for market abuse effectively, the FCA needs to receive complete and accurate information regarding the types of instruments, when and how they are traded and by whom. This is set in Article 26(1) of UK MiFIR which states that investment firms which execute transactions shall report complete and accurate details of such transactions.

    Each transaction report includes amongst other elements:


    • Information about the financial instrument traded;
    • The firm undertaking the trade;
    • The buyer and the seller;
    • The date/time of the trade.

    Under Article 26(7) of UK MiFIR transaction reports can only be submitted by:


    • An investment firm submitting their own reports;
    • An Approved Reporting Mechanism (ARM) acting on behalf of an investment firm;
    • A trading venue through whose systems the transaction took place.

    The list of authorized Data reporting services providers (DRSP) is available on the Regulator's website. Also, there are a number of companies which provide special software (reporting platforms) which can link your authorised company with regulated DRSP and assist you in transaction reporting. It makes sense to search for a reporting platform provider during the application process.


    D Other reports

    This category includes reports which are related to the company's service - e.g. reporting to Companies House, audited financial reports preparation, etc.

    Risk Management
    Risk management is one of the most important parts of a licensed company's operational structure. A company should establish its risk management procedures to ensure the company is managing all risk correctly and its management are experienced in risk management. The company through its risk committee should set the parameters of risk which the company will tolerate and put strict limits per product type, size of position, individual client's position, and size limits.

    Among other documents a company should develop and approve are, but not limited to the following:
    • Standards and controls of the business;
    • ICAAP;
    • Business Continuity Plan;
    • Risk Assessment and Procedures (Key Risk Appetite of the business);
    • The Corporate Governance Report.
    AML & Compliance functions
    The AML function is held by the compliance director of the company who should ensure that all compliance and AML procedures are in place, and all employees of the company will accurately fulfill all the established rules and policies set by the compliance director. As a part of the compliance structure, there also can be an established risk committee chaired by the executive director. The committee can include a compliance director, CASS officer - a special employee who will monitor clients accounts daily according to CASS (Client Assets Sourcebook) rules set by the FCA, head of trading and any other key manager. The main goal of the risk committee is to ensure that all the company's risks are monitored, and all necessary steps are taken to minimise risks. All reports related to AML and compliance activity should be made through the above mentioned reporting systems.

    There are different software providers who can provide you with special transaction reporting software (e.g. Cappitech), together with special software for AML and compliance checks (e.g. Refinitiv). Business conditions usually are set individually with each client. Using such systems is very important for reporting issues, so every applicant should take into account the costs for this kind of software.
    Technical side & support
    During the application process an applicant should demonstrate which IT systems and platforms the company will use after authorisation. Therefore, among other things, it is very important to be ready to provide the following information to the appointed case officer regarding the IT side of your business:

    • Description of internal IT systems which will be used (e.g., Trader's room, CRM system, etc.);
    • Trading platforms which are planned to use;
    • Server locations with the names of providers;
    • Details of IT team organisation. Will it be in-house or outsourced;
    • Provide a detailed list of IT functions which will be outsourced and how a company will control it;
    • Provide draft of the agreements with the third parties (if the IT function will be outsourced), and software providers;
    • Penetration tests for certain software, upon request of appointed case officer;
    • Any other information related to IT / Software which may be requested by an appointed case officer.
    Taxation
    • Individual Basic Tax rate is 20%
    • The normal rate of corporation Tax is 19% for the year beginning 1 April 2020.
    Timeframe

    Total time of the whole process to obtain a license may take 6-12 months:

    1-2 week
    including office search

    Company registration

    1 month
    depends on required documents provision

    Collection of information and necessary documents preparation

    1-2 months

    Formation of the application and filing to the FCA

    3-6 months

    Communication with appointed case officer, provision of additionally required information

    1-2 months

    Opening of bank account and payment of declared share capital

    1-2 week

    Pre-authorization

    1-2 week

    Authorization (license obtaining)

    *Kindly note that provided terms are approximate and may vary depending on various factors.

    Mauritius

    6 months average to get the license

    $ 25k minimum capital amount according to legislation(or equivalent of MUR 1 million in any other currency)1

    $ 50 - 60k budget for the start of the project for 1 year2

    1. Approximate amount in USD for Full Service Dealer (excluding underwriting) license.


    2. Kindly note that provided numbers are approximate and can vary depending on each particular case.


    Confidentiality with no public records, flexible tax rates and other benefits are available.
    About
    The global business sector in Mauritius commenced operations in 1992 and currently is home to more than 16,000 companies and trusts and collective investment schemes with more than 20 banks (10+ international) offering services to both the local and offshore sectors. The Financial Services Commission, established in 2001, is responsible for licencing and the regulation of non-banking financial services including insurance, the Mauritius stock exchange and the newly formed GBOT (Global Board of Trade), the first international multi-asset class exchange in Mauritius.

    Mauritius is an active co-operator with OECD, FATF and the UN.
    Capital adequacy
    Before completing the application to the FSC, the company should accumulate in an operational bank account the initial minimum capital set for this type of license e.g., MUR 1 000 000 (about $25,000). This amount may be held in USD or EUR. The bank account can be opened in one of the local Mauritius banks prior to filling the application for the FSC.

    Together with a business plan, an applicant should prepare and provide 3-year financial forecasts where the predictable capital adequacy level (so called Tier 1 capital) should be indicated.

    The FSC will check all financial reporting, including annual audited reports to ensure that the company is in good financial standing and has enough financial resources for its activity and that clients funds are protected. They will also check if you have a local physical office with local staff. Usually, the FSC gives a 3 month transitional period to new applicants to meet their requirements.

    The cost of annual company maintenance including renewal fees, professional fees for legal and accounting services can range from $10,000 – $12,000. Additional expenses may include salaries for local staff, local office rent, AML and Compliance support, which can rise with the cost of annual maintenance being up to $20,000.

    The total approximate amount of investment (including initial minimum capital) should be about $50,000 – 60,000 for the first year.

    * Kindly note that given amount doesn’t include professional fees of local specialists.
    Requirements

    Main requirements


    The Company will hold 2 types of licenses, namely one type of Investment Dealer License under the Securities Act 2005, Securities (Licensing Rules 2007 & the Financial Services (Consolidated Licensing and Fees) Rules 2008 and a Category 1 Global Business License (GBL 1) under the Financial Services Act.


    • Minimum stated capital requirements:
      a) MUR 10,000,000 for Investment Dealer (Full Service Dealer including underwriting);
      b) MUR 1,000,000 for Investment Dealer (Full Service Dealer excluding underwriting).
    • Directors. It is mandatory for the company to have 2 resident directors which may be provided by a local management company;
    • Investment Dealer Team. The FSC pays special attention to the Investment dealer team of the applicant. It is required that at least 2 members are appointed onto the investment dealer team to ensure business continuity. The applicant should provide to the FSC detailed information regarding members of the dealing team including information and documents confirming their education, work experience, demonstrating a proven track record in the provision of investment dealer services. The strength of the investment dealer team is a key component of the application. Applicants should therefore provide adequate information on its members, demonstrating their suitability to discharge their responsibilities;
    • Documentation requirements. Detailed business plans together with various manuals are required to be filed with application. A local management company may assist with preparation or review of business plan, privacy policy, disaster recovery plan, complaint handling policy, AML manual and other required documents;
    • Disclosure requirements.The proposed company will be required to file its annual audited financial statements and tax return within 3 months from its balance sheet date;
    • Local presence. It is required that the company should show a local substance by establishing a local office and hiring local staff. A local office with a hired local specialist should be established during the 6 months after license authorisation;
    • Segregation of clients funds. It is mandatory to segregate clients’ funds from company funds;
    • Clients of the company should not be from black-listed countries;
    • In case the company is willing to do any activity in Mauritius, a separate authorisation will need to be sough;
    • Clients of the Company should not be from black-listed countries;
    • The annual audit of the Company should be done in Mauritius;
    • The authorities may do a twice-yearly audit of the company;
    • Accounting records should be kept at the offices of the administrator.


    Categories of Investment Dealer license

    Full service dealer (including underwriting) – authorised to:
    • Act as an intermediary in the execution of securities transactions for clients;
    • Trade in securities as principal with the intention of reselling these securities to the public;
    • Underwrite or distribute securities on behalf of an issuer or a holder of securities;
    • Give investment advice which is ancillary to the normal course of his business activities;
    • Manage portfolios of clients.

    Full service dealer (excluding underwriting) – authorised to:
    • Act as an intermediary in the execution of securities transactions for clients;
    • Trade in securities as principal with the intention of reselling these securities to the public;
    • Give investment advice which is ancillary to the normal course of business activities;
    • Manage portfolios of clients.

    3 Broker

    Authorised to execute orders for clients to manage portfolios of clients and to give advice on securities transactions to clients.


    4 Discount broker

    Authorised to execute orders for clients without giving advice.


    Please pay your attention that some requirements may be changed due to amendments in local legislation. Please contact our sales department to obtain more information.

    Client onboarding
    There are no restrictions regarding onboarding clients from any country except those blacklisted. During the application the company should provide a list of target countries to the FSC. The applicant needs to submit an undertaking that it will seek the necessary approval/authorisation in the jurisdictions where it intends to operate.

    The company should have a segregated bank account for clients’ funds which may be opened in one of Mauritius banks.
    Jurisdiction features
    • Prestigious jurisdiction with a great reputation for prominent trade operations;
    • Bilingual population (English and French);
    • Advanced legal system based on English and French law;
    • Developed infrastructure, high-tech ICT connections;
    • International banking with no exchange control together with international multi asset class exchange;
    • Royalties paid to non-residents are exempted from taxes;
    • OECD White List jurisdiction which has never been on the Financial Action Task Force (FATF) list of uncooperative jurisdictions.
    Benefits
    • Bank account in Mauritius;
    • Confidentiality with no public records;
    • Tax exemption for royalties paid to the non-residents;
    • Exemption from stamp duties, registration duties or other such fees;
    • Flexible tax rates and wide range of tax exemptions;
    • OTC trading is available.
    Directors' appointment & functions
    The FSC requires that a company seeking an Investment Dealer License should have at least two local directors with significant work experience in the sphere. Usually, a local management company may provide such persons who are well known to the FSC and have sufficient work experience. Usually, local directors are not involved in operational activity of a company but are aware of a company's operations. There is no difficulty in finding such specialists in Mauritius. A company may have more than 2 directors, and usually the executive director is located outside Mauritius and can be appointed from the client's side. The FSC requires that they are provided with detailed information regarding such a director including a detailed CV with sufficient work experience in the financial sphere, recommendation letters and copies of diplomas.
    Required steps

    Reservation of company name

    • Check company name availability;
    • KYC and corporate documents preparation.

    Application for a company registration

    Filing all necessary documents to the Registrar.

    Company Incorporation

    Obtaining corporate documents

    Application to GBL 1 license

    Preparation and filing the application for Global Business License to Financial Services Commission.

    Local bank account opening

    • Application and supporting documents filing;
    • Negotiations with the bank.

    Preparation and submission of the application to the FSC

    • Preparation of all supporting documents required by Financial Services Commission including business plan, financial forecasts, manuals and policies;
    • Application filing.

    Communication with the Regulator on additional clarifications and questions

    Communication with an appointed officer, additional documents and information provision.

    Obtaining the license

    • Company approval;
    • Obtaining indemnity insurance;
    • Local office and at least 1 local member of staff.
    Reporting and accountancy
    The company is obliged to conduct an annual external audit which should be conducted in Mauritius. The authorities may conduct a twice-yearly audit and all accounting records should be kept at the local office.
    Details on reporting functions
    There are no strict requirements for reporting compared with jurisdictions such as Cyprus or the United Kingdom. Keeping in mind that a licensed company needs to separate its clients and operational funds, it should provide financial and accounting reports together with AML and compliance reporting. Audited financial reporting is obligatory. The FSC can also initiate extraordinary checks. Usually, reporting functions are held by local management companies, who assist with all procedures.
    Risk Management
    A Dealing and Risk management team is a key component of a successful application. The company should develop risk management procedures and provide to the FSC details on the risk management policy together with a business continuity plan. Different risk management strategies are possible.
    AML & Compliance functions
    AML and Compliance functions are also a very important part of licensed company business. There is the possibility to outsource this function to local specialists who are well known to the FSC. Hence, the applicant is able to appoint their own Compliance officer, MLRO (Money Laundering Reporting Officer) and Deputy MLRO or instead, outsource these functions which is an attractive option for startups who do not yet have a compliance department.
    Technical side & support
    The FSC does not have strict requirements for IT and Software systems for licensed companies. However, during a license application process an applicant should provide to the VFSC information about trading platforms, liquidity providers, internal software systems, AML and Compliance software which are planned on being used. Additionally, in some cases, a draft of trading platform and software provider agreements may be required.
    Taxation
    15% - Corporate rate

    The company will be taxed on its chargeable income (including dividends, interests and other income but not capital gains less expenses) at a corporate rate of 15% which is reduced to a net effective tax rate of 3% or even less:

    • No tax on dividends and income;
    • No capital gains or inheritance tax;
    • No exchange control restrictions;
    • Free repatriation of profits, dividends and capital;
    • No stamp duty and no capital duty levied on the issue of share capital.
    Timeframe
    Incorporation and license obtaining usually takes minimum 3 months from the date the application is lodged with the FSC:

    about 2-3 business days

    Reservation of company name

    about 1-2 weeks

    Application to GBL 1 license

    about 1-3 business days

    Application for a company registration

    about 1 week

    Company Incorporation

    1-2 months

    Opening a local bank account

    1 month

    Preparation and submission of the application for the license

    3-4 months
    it can take longer

    Application processing, communication with the FSC on additional clarifications and questions

    2-3 weeks

    Obtaining the license

    *Kindly note that provided terms are approximate and may vary depending on various factors.

    Vanuatu

    8 months average to obtain a license

    $ 50k minimum capital amount as security deposit according to local legislation

    $ 65 - 70k budget for the start of the project for 1 year *

    *Kindly note that provided numbers are approximate and can vary depending on each particular case.

    Friendly KYC / AML procedures involved in obtaining a license compared with other jurisdictions. Other benefits are also available.
    About
    B2Broker offers its clients the opportunity to set up a corporate structure that enables them to obtain a dealer in securities license issued by the Vanuatu Financial Services Commission (VFSC). The application, which includes many different documents, has to be completed and filed with the VFSC and Vanuatu Financial Intelligence Unit (VFIU) to be able to get an international company with a dealer in securities license.

    There is a high level of confidentiality for beneficiary owners, shareholders and officers in Vanuatu together with exemption from capital gains, tax on profits and stamp duty after incorporation of 20 years.

    There is no minimum capital requirement. Instead, a government bond of approximately $50,000 is used.

    We can assist you with setting up a corporate structure able to obtain a dealer in securities license delivered by the VFSC.
    Capital adequacy
    During the application process the VFSC may require current financial forecasts with the determined capital adequacy. It is important for an applicant to transfer a security bond deposit to the VFSC to the amount of VT 5,000,000 (approx. $50,000). There is no requirement to pay any declared share capital to a company bank account prior to the issuance of a license. The VFSC will, in any case, check annual audited financials during the license renewal process to make sure that a company is in good financial standing.

    The cost of annual company maintenance including renewal fees, professional fees for legal and accounting services can be about $7,000 – $10,000. We also draw your attention to professional indemnity insurance which also is obligatory for licensed Vanuatu companies. Its cost can vary depending on the company's volumes and activity. In some cases its cost can exceed $15,000.

    The total approximate investment recommendation is $15,000 – $20,000 for the first year of activity in addition to the security bond deposit of $50,000.
    * Kindly note that given amount doesn’t include professional fees of local specialists.
    Requirements
    In June 2021, the amendment to the Financial Dealers Licensing Act was passed in parliament and the amendment will soon come into force. The transition period is set as 12 months from the date of publication. Our team closely follows all updated information from the VFSC and makes updates accordingly.

    Main requirements



    $50,000 bond deposit
    should be deposited directly to Vanuatu Financial Services Commission.


    • AML officer
      The company should have a responsible Anti-Money Laundering officer who is registered with the Financial Intelligence Unit in Vanuatu. This AML officer cannot be the director or take any other position within the company. An alternate Anti-Money Laundering officer must also be appointed.
    • The type of a company that may seek a license (International companies limited by shares) cannot do business in Vanuatu except to further their business elsewhere.
    • Professional Indemnity Insurance
    • Physical presence
      The amendment requires that all licensees must operate from an office in Vanuatu. The office should maintain certain systems such as a filing system, a management and accounting system and store certain documents in the office.
    • License manager
      The amendment introduces the licencing of the resident manager as an alternative to having a fully fledged physical presence in Vanuatu. Such a person should apply to the VFSC for a license and meet some criteria, such as to be a physical person with relevant work experience, have a local physical office in Vanuatu and reside there for at least 6 months a year.
    • New types of licenses
      Instead of one Financial Dealer License there will be 4 types of licenses (A, B, C, D). An applicant may apply for each type of license. A new license issued under the new amendments shall remain in force until it is revoked by the VFSC. The license will be renewed upon payment of the annual fees. Potentially the current license renewal process may be modified. Current Financial Dealer Licenses are issued for 1 year.



    Licenses categories


    2 licenses are required:
    Principal license which is issued in the name of a company and Representative license which is commonly issued in the name of a company director.

    According to recent changes in local Vanuatu legislation, Principal licenses will be divided into 4 categories. Each category allows a license holder to conduct an activity with certain instruments. The Principal licenses have the following gradation:



    Class A Principal license:
    • Debenture stocks;
    • Loan stock, bonds;
    • Certificates of deposits;
    • Proceeds of foreign exchange.

      Class B Principal license:
    • Shares in share capital of a corporation;
    • Proceed of precious metals;
    • Proceeds of commodities;
    • A right whether or not conferred by warrant;
    • Subscribe for shares or debt securities or a right under depository receipt.

    Class C Principal license:
    • Future contracts and derivative products but not limited for futures and options;
    • An option to acquire or dispose of any security falling within any other provision of the Act (Financial Dealers Licencing Act No. of 2020);
    • A right under a contract for the acquisition or disposal of the relevant securities under which the delivery is to be made at a future date and at price agreed when the contract is made in accordance with the terms of that contract.

    Class D Principal license:
    • Carry on or purport to carry on the business of dealing in digital assets.

    This class of license may only be issued to the license holders of Class A, Class B or Class C Principal's licenses.

    Client onboarding
    There are no restrictions for onboarding clients from any country. You can onboard clients from Europe without any restrictions.

    However, according to local legislation you should maintain your own AML procedure, which should be in compliance with FATF recommendations. There are two jurisdictions that are blacklisted by FATF: North Korea and Iran.
    Jurisdiction features
    • Wide spectrum of available trading instruments: Forex pairs, metals, equities, futures, options, indices, ETFs;
    • Copy trading is available;
    • Transactions in foreign currencies are allowed;
    • The possibility to open a bank account in a non-resident bank with permission of regulation authorities;
    • The possibility to hedge risks in any financial institution without permission;
    • High leverage, depending on status can be from 100 up to 500.
    Benefits
    • No leverage restrictions;
    • Ability to offer managed accounts PAMM & MAMM;
    • 50,000 USD refundable bond deposit;
    • Friendly KYC / AML procedures when obtaining a license when compared with other jurisdictions;
    • Ability to open multiple bank accounts in Vanuatu;
    • No tax on profits and stamp duty for a period of 20 years.
    Directors' appointment & functions
    For the moment there are no special limitations regarding a director's residence. The licensed company may have at least 1 director – physical person. The VFSC will check the director's professional experience. It is highly recommended that the director has sufficient experience in the financial sphere. If a person does not have relevant experience, an application may be withdrawn.

    The Director usually also holds a Representative license which is issued together with a Principal license in the name of a company. The Director has full authority to represent a company in all and any authorities. The Director can issue a Power of Attorney for any person with such powers as deemed appropriate.

    According to the new legislation changes, it is possible that the Director will be formally obliged to reside in Vanuatu at least 6 months a year. At the moment it is unclear how this rule will work in practice, and there may be an alternative way to avoid this new requirement.
    Required steps

    Registration

    Registration of Vanuatu company (International business company) You can familiarise yourself with the full process of registration by the following link.

    Drafting documents

    Drafting of all required documents, including AML procedures and the business plan, preparation of application forms, KYC documents and other required information.

    Vanuatu FIU provides a manual that can be used as a guide for drafting your own AML procedures.

    Depositing

    Depositing of a government refundable bond to the National Bank of Vanuatu (approx. equivalent of 50,000 USD).

    Application to VFSC

    Drafting and submission of application to VFSC.

    License

    Communication with the VFSC for the receipt of a license and license issuance.

    Opening of a bank account

    Local banks (e.g National Bank of Vanuatu) are usually friendly to opening an account to Vanuatu companies and will allow settlements with foreign entities.

    Registration as a reporting entity

    with the Vanuatu Finance Intelligence Unit. Please note, that from the moment of registration as a reporting entity you are obliged to follow AML legislation of Vanuatu and to submit an annual compliance report according to the requirements of FIU.
    Reporting and accountancy
    Reporting and accountancy are mandatory under Vanuatu jurisdiction. There are few reports that should be submitted annually:

    • Quarterly reports to VFSC.
    • Annual audit. This should be submitted to the VFSC within 3 months from the date of license renewal.
    • Compliance report. This should be submitted to the FIU annually.
    Details on reporting functions
    Vanuatu has fairly simple reporting requirements. A licensed company should provide to the VFSC quarterly reports with information on number of clients, number of complaints, financial indicators, etc. together with an annual report. In addition, annual audited financials prepared by authorised local auditors are required. A company's compliance officer should provide annual compliance reports together with reports in case of violations or suspicious transactions related to a client's activity to the FIU.
    Risk Management
    Risk management is one of the most important parts of a licensed company's operational structure. A company should establish its risk management procedures to ensure the company is managing all risk correctly and its management are experienced in risk management. The company through its risk committee should set the parameters of risk which the company will tolerate and put strict limits per product type, size of position, individual client's position, and size limits.
    AML & Compliance functions
    A Anti-money laundering requirements

    Vanuatu Financial Companies are obliged to follow anti-money laundering and terrorism financing principles. It is implemented through:



    • Establishing and maintaining AML policy;
    • Appointing a qualified compliance officer;
    • Reporting to Financial Intelligence Unit (FIU)

    AML policy should contain all necessary requirements of anti-money laundering, foreseen by legislation (Know your customer procedures, transaction monitoring, reporting, staff training). For all newly registered companies FIU provides an AML manual that can be used as a guide for drafting your own AML policy.

    A compliance officer is an employee who ensures that a company complies with anti-money laundering requirements. Compliance officers have a duty to their employer to work with management and staff to identify and manage AML risk, as well as reporting suspicious activity, transactions, etc to the FIU. Please note that the company’s director cannot take the position of compliance officer. This should be a separate person.

    B Suspicious Transaction Report (STR) and Suspicious Activity Report (SAR)
    • Reporting entities must report an STR if they suspect that a transaction or attempted transaction involves proceeds of crime or is related to terrorist financing;
    • Reporting entities must report an SAR if they suspect that a series of transactions or an act involves proceeds of crime or is related to terrorist financing;
    • Reporting entities must prepare and submit a report to the FIU as soon as possible, but no later than 2 working days after becoming aware of the suspicion;
    • Further, reporting entities must not proceed any further transaction unless directed to do so by the FIU.
    C Compliance report
    • Reporting entities as part of their market-entry requirement must complete and submit their compliance reports. Currently, it is requested that entities provide compliance reports by 31 March annually, however this is subject to direct clarification with the FIU.

    Full list of reports specified

    Technical side & support
    There are no strict IT / Software requirements for licensed companies in Vanuatu or a transactions reporting system. However, during a license application process an applicant should provide to the VFSC information about trading platforms and internal software systems which are planned on being used. In some cases, a draft of agreements with trading platforms and software providers may be required.
    Taxation
    0% - For the period of 20 years Vanuatu Forex brokerage companies are exempt from the Vanuatu local taxes on income derived outside of Vanuatu.
    Timeframe

    It is simple and fast to incorporate a company and get a license for the period of 3-8 months:

    about 2 weeks

    Registration of a legal entity from the moment of submission of all required documents takes

    about 30 days

    Drafting of an application from the moment of submission of all required documents takes

    6 months

    The license application consideration by the VFSC

    2 weeks - 2 months

    The term for opening an account (dependent on following all KYC requirements)

    Bank issues
    You should be aware that there are difficulties with opening bank accounts for licensed Vanuatu companies. There are options available with local Vanuatu banks, but if you plan to work through any other prestigious jurisdictions, we wish to advise you that it can be very difficult to open a bank account or even PSP. Most banks in reputable jurisdictions don't onboard companies from Vanuatu.

    *Kindly note that provided terms are approximate and may vary depending on various factors.

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