New St. Vincent and the Grenadines regulations came as somewhat of a shock for those brokerages that had been working solely with an SVG operational company, for not only is there going to be substantial changes as to how FX brokers are going to be regulated in this jurisdiction, it will also require a substantial amount of time to adapt to those changes.
What is clear is that going forward the SVG regulator clearly only wants the larger FX brokers that are already regulated in a recognized and reputable jurisdiction, such as the EU. For many SVG-based brokers who are also regulated elsewhere this is purely a paper exercise, but for brokerages that are only operating out of SVG this is now becoming a major issue.
The SVG regulator has been clever in its approach. By stipulating that a broker will now need to be regulated in a separate jurisdiction, they opened SVG up as an offshore licence for anyone with an existing overseas licence at a reputable jurisdiction. For those who only have an SVG operating entity, that means that the hunt is on for a new license that can be obtained quickly.
So, if SVG is not the answer, where should brokers look next? For an offshore licence then the obvious choices are Mauritius and the Seychelles. Vanuatu, that has been relatively popular of late, is now also upping its requirements to get better credibility, but still remains largely a “quasi-regulation” that makes opening bank accounts and payment processing solutions very difficult.
What of the future? Our predictions are that licencing, and regulation will become more important, and it will continue to become even harder to get a licence. Even Vanuatu is now requiring more in terms of a licence application. Banking for brokerages is also getting harder. Even before the recent SVG announcement, it was virtually impossible to get the banking required for the licence, with the only solution seeming to be to have an account linked to your FCA (or ASIC / CYSEC) account. Brokerages will continue to want to be regulated in multiple jurisdictions so that they can offer their clients piece of mind, knowing that they are trading with a brokerage that has got an FCA licence, but yet still need to offer the offshore licence so that their clients can get the leverage that they require.
For those brokerages that are already regulated in St Vincent action needs to be taken now. The best option is to look for alternatives. Our team at FinSpace can help you with getting an FX license that suits your unique operational needs. Moreover, with our presence and experience in Mauritius allows us to offer bank and PSP account opening as an integral part of our license application service. Contact us now to find out more!
