The Bahamas – Clearly the Next Best Financial Services License

Although licenses like those issue by the Financial Conduct Authority (FCA) in the UK are seen as the most credible in the world, the UK and European brokers can no longer provide the generous trading conditions clients want.

The benefits of a Bahamas Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term broker license are now clear. Since the European Securities and Markets Authority (ESMA) started wielding their special powers in March ​2018 to stamp out retail trading on the continent, the number of inquiries about alternative jurisdictions has increased dramatically.

Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term restrictions, advertising limitations, and retail client protections have forced many to evaluate how to cope with their current license regime. It started in December 2016 when the UK’s Financial Conduct Authority (FCA) proposed stricter rules on brokers offering Contracts for Difference (CFDs).

How can brokers survive shifting regulations

When ESMA announced its own review of the industry in June 2017, I knew regulatory diversification was the only way brokers were going to survive. I saw the regulatory environment was not going to get any better and began a search that which led me to the Bahamas.

After evaluating a dozen jurisdiction from all over the globe, I found the Bahamas regulatory framework to have the most sensible rules and guidelines. For decades the jurisdiction has overseen large international financial services – mostly made up of investment firms and wealth management banks with broker divisions.

The Bahamas’ low profile and quiet money characteristics made it hard to spot at first, but a closer look revealed an opportunity for online brokers to reach a global audience.

The Bahamas doesn’t come under the authority of any supra-national regulator; instead The Bahamas is a self-determined and sovereign nation. In addition, the Securities Commission of the Bahamas’ rules are well-developed and have evolved over many years. The rules and regulations are designed to maintain a high credibility rating for the jurisdiction and protect its reputation.

All financial instruments and asset classes are under the regulation and supervision of the Securities Commission of the Bahamas. This includes futures, options, equities and CFDs made up of underlying assets including forex, currencies, crypto, indices, equities, shares, and commodities.

There are guidelines about leverage and client-product suitability, but these are determined by the broker using best practices. Advertising must be transparent and not misleading which is common sense anyway.

Of note, the minimum regulatory capital requirement is $300,000 when dealing as agent and principal, or $120,000 if dealing only as agent (i.e. STP). The regulator allows the broker to hold client funds with any credible Tier 1 or Tier 2 bank located in the Bahamas or anywhere in the world. This helps reduce payment processing issues.

The license approval process is typically eight weeks upon the submission of a complete application.

New opportunities

After the first article, I wrote about the benefits of a Bahamas’ financial services license in February 2017, we completed several applications with 100 percent success many are FCA brokers escaping the punitive European rules and regulations and seeking a jurisdiction that has credibility.

The Bahamas license is A-grade and is a business-friendly jurisdiction with substantial infrastructure. Client protection is paramount, and this is why a physical presence is required including both an executive and compliance officer.

It steers brokers who do not regard fundamental rules and regulations to other notorious places. Compared with jurisdictions that have lax oversight and​ inconsequential regulatory governance, the Bahamas does not welcome unscrupulous behavior.

This is better for everyone in the long run because your investment is protected, and your clients have greater comfort knowing your firm is in a well-regulated jurisdiction. We specialize in assisting firms to obtain a Bahamas license. We handle many jurisdictions however; the Bahamas is highly recommended given its reputation and high standards.

The FCA was ​once seen as the only jurisdiction where many firms aspired to get a license but given the new order, we now have more interest getting a license in the Bahamas than any other jurisdiction.

As the Chief Operating Officer of FDCTech, I encourage you to reach out to me with any question and it would be my pleasure to have a call or chat with you. Feel free to contact me at preed@fdctech.com

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