Exclusive: Vanuatu to Mandate Physical Presence of Brokers

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Exclusive: Vanuatu to Mandate Physical Presence of Brokers

<p>Vanuatu, once a favorite jurisdiction for offshore brokers, is mandating brokers to establish a physical presence in the country with a new office, along with the appointment of a local manager and director, effective from October 16.</p><p>The new regulations did not come abruptly, as the local regulator has <a href="https://www.financemagnates.com/forex/regulation/vanuatu-wants-its-financial-dealers-to-move-onshore/" target="_blank">prepared for them for months</a>.</p><p>To date, only four forex and contracts for differences (CFDs) brokers: FXPrimus, Titan FX, TradeNext and MFM Securities, are meeting the new regulations of the Vanuatu Financial Services Commission (VFSC).</p><p>"Our regulator wants to attract only the most serious applicants. If they are genuine in their intentions and dedicated in their approach, and they intend to properly run their business in Vanuatu, the VFSC will be flexible and patient," said Martin St-Hilaire, the Chairman of the Financial Markets Association of <a href="https://www.financemagnates.com/tag/vanuatu/" target="_blank">Vanuatu</a>.</p><p>A Popular Offshore Jurisdiction</p><p>Vanuatu was one of the favorite destinations for offshore brokers. Its loose regulations <a href="https://www.financemagnates.com/binary-options/bloggers/vanuatu-regulation-increasingly-popular-among-binary-options-and-fx-brokers/" target="_blank">attracted more than 600 brokers</a> at the peak of 2017. However, several of these locally licensed brokers turned out to be conducting fraud and that prompted the Financial Action Task Force (FATF) to put Vanuatu on its grey list.</p><p>The jurisdiction was cleared by the FATF a year later after the local financial markets regulator mandated a 5 million Vatu (approx. $50,000) bond deposit for all brokerages, along with certain other requirements. </p><p>The previous tightening of the regulations brought down the Vanuatu-licensed brokers to around 150 by 2020 and now this number is expected to shrink further due to the increased cost of maintaining a Vanuatu license.</p><p>"A single P.O. Box and some accounting entries won't cut it anymore to operate in Vanuatu," said St-Hilaire. "Our country wants to bring about a sea change in the way it does business, by transitioning from an offshore, protected financial center to an onshore, transparent Fintech center."</p>

This article was written by Arnab Shome at www.financemagnates.com.

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