Exclusive: Vanuatu Tightens Retail Broker Regulations

One of the most popular destinations for offshore regulation is Vanuatu. Over the past couple of years, the Pacific island’s regulatory framework has become somewhat of a safe haven for the forex and CFDs brokerage industry at a time of some critical changes to the sector.

Last year, the ESMA’s changes to the retail brokerage space in Europe caused a stir of new applications with offshore regulators. As a result, a growing part of the industry has been moving to other jurisdictions in an effort to diversify its business opportunities.

The Vanuatu Financial Services Commission (VFSC) did make one big change over the past couple of years - it hiked the deposit companies had to park with the regulator to $50,000. That said, up until now, the island nation’s regulation wasn’t materially different than when it took off in 2016.

Several Changes in 2019

This year starts with a bang as the VFSC recently made public the newest regulatory requirements for brokers licensed in Vanuatu. The changes were confirmed by a broker regulated by the VFSC.

Commenting exclusively to Finance Magnates, Tal Itzhak Ron, Genia Gurevitz and Stephanie Attias from Tal Ron, Drihem and Co. Law Firm, also confirmed to Finance Magnates that the regulation in Vanuatu continues to tighten.

The company’s team, which helps compliance of many brokerages and Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers in the industry shared that one of the key new requirements is to have a local presence in Vanuatu. Aside from that, the set of instruments that brokers can provide has also been changed with crypto offerings taking a hit.

The requirement for a local office is doubled with the need for a local director. The changes are aimed at making the regulatory framework more robust at a time when an increasing number of brokers are taking advantage of looser offshore regulations.

Sources with knowledge of the matter also shared with Finance Magnates that the VFSC also added an insurance requirement.

“Vanuatu is still a good option for non-crypto offering offshore-based brokers and as a liquidity service (internally or externally), together with Estonia which also changed recently, and Belize and Marshall Islands for self-regulated firms, for those looking for non-EU options,” elaborated the representatives from Tal Ron, Drihem & Co.