A core group of 60 brokers remain after licensing rules were strengthened.
Industry insiders cite Cyprus as an inspiration for Vanuatu’s future.
This article first ran on June 22, 2023 on FinanceMagnates.com.
Just five years ago, Vanuatu had 600 active Financial Dealer Licenses (FDL). Today, there are only 60, but the jurisdiction has traded quantity for quality. The deadline to comply with more stringent licensing rules, enacted in 2021, has passed and the current batch of Vanuatu brokers check all the regulatory boxes, including mandatory physical presence and economic substance in the Southwest Pacific island nation.
The rebooted Vanuatu FDL program offers four types of licenses: Class A (FX deliverables and debt instruments), Class B (corporate shares, precious metals, commodities), Class C (future contracts and derivative products) and Class D (digital assets).
Among the many requirements now fully enforced by the Vanuatu Financial Services Commission (VFSC), licensees must locally operate an office and maintain software systems; have at least one full-time manager with the executive powers to manage onsite day-to-day operations; have at least one director with financial experience who is a resident or citizen of Vanuatu; maintain professional insurance for at least US$500,000; deposit a US$50,000 bond with the VFSC; register as a reporting entity with the Vanuatu Financial Intelligence Unit; and have an extensive AML-CFT policy with effective controls in place.
P.O. Boxes Won’t Cut It Anymore
“The days when a simple P.O. Box and some accounting entries were enough to claim a stake in Vanuatu’s financial industry are over,” said Martin St-Hilaire, the President of the Financial Markets Association (FMA), a trade group formed in 2020 to promote the highest professional and ethical standards among Vanuatu brokers.
“Anyone who wants to benefit from Vanuatu’s regulatory and fiscal regime must come to the country and make a tangible contribution to the community. Vanuatu has matured from an offshore, protected international financial centre to an onshore, transparent international fintech centre.”
Among the FMA membership are such established global players as Deriv, Exness, Forex Chief, FX Primus, Global Clearing House, Global PoP Liquidity Solutions, Hantec Markets, Market Equity, MFM Securities, Master Select Group, Olymp Trade, Titan FX and TradeNext. All have set up shop in the capital city of Port Vila, which industry insiders hope will spur industry collaboration.
“These brokers will bear the growth of our national industry in the coming months and should inspire more to come,” St-Hilaire added. “We have a small but growing pool of local knowledge and expertise that, one day, will make us like Cyprus, our model jurisdiction: an established, vibrant fintech hub in a small island nation.”
Everything You Need to Know about Vanuatu Brokers
The FMA website features valuable resources for both brokers and traders, such as a list of all currently authorized brokers, a list of entities whose licenses were revoked, lapsed or rejected, a fraud warning page with all known false claims of VFSC endorsement, and lots of guidance for would-be licensees including AML-CFT and CSR compliance, employment in Vanuatu, etc.
The Association also partners with The Financial Commission, a Hong Kong-based organization with mechanisms for dispute resolution.
In the coming months, the FMA intends to add more services and collaborate with the VFSC to keep exploring new ways of enhancing Vanuatu’s regulatory framework. The ultimate goal, of course, is to maximize the country’s attractiveness to more serious players in the brokerage industry, while keeping bad players at bay.
St-Hilaire is confident about the future. “Now that Vanuatu has elevated its monitoring and regulatory systems to global standards, the world will recognize its licensees as serious businesses that uphold the highest professional and ethical standards.”
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