Forex Brokers in Seychelles (FSA)

Many traders in the forex market are conversant with the brokers in the UK, Cyprus and maybe Australia but know very little about Seychelles.

Many retail traders have encountered problems due to the tightening of leverage conditions, and restrictions in CFD trading have made alternative locations such as Seychelles more attractive. Seychelles is one of the less popular but fast-growing forex trading jurisdictions. Realising the immense potential that regulated forex trading in the region could bring, the regulators in Seychelles have made vigorous attempts to clean up the forex trading environment in the country. From a typical "wild wild West" environment, forex trading in Seychelles is gradually becoming a more structured and safer destination for traders who want to experience offshore forex trading.

This is why it is pertinent to present current information on the forex brokers in Seychelles, so you know what you are getting when you trade forex with a broker registered in that jurisdiction. Any brokerage business in Seychelles, be it forex trading or gaming, is regulated. So there is a vital element of safety in traders' funds. The market structure in Seychelles is such that forex brokers in Seychelles have to fulfil several stringent requirements to get the special Seychelles forex broker licence.

To make a success of trading with a forex broker in Seychelles, you must be able to answer these questions:

• What will trade with a Seychelles forex broker mean for me?
• What do I expect to encounter in terms of trading conditions?
• How will my money be kept safe and secure?
• Is Seychelles forex trading regulated?

This article will help answer some of these questions.

Here is what you can expect to encounter when trading with a forex broker in Seychelles.

Structure of Forex Regulation in Seychelles

As mentioned earlier, Seychelles was one of the jurisdictions that served as a totally uncharted region in forex trading where operators threw the rules to the dogs. A lack of proper regulation meant unscrupulous entities took over the forex space and set up glorified bucket shops as brokerage services. Numerous complaints of traders having their capital locked up, unpaid withdrawals, and all manner of unsavoury stories meant that Seychelles gradually became a no-go area regarding forex trading. As the negativity around the forex trading space in Seychelles threatened the entire financial services industry, the government was forced to act to sanitise the industry.

The Financial Services Authority of Seychelles was formed by an enabling law to bring some sanity to the industry. Once regarded as a toothless bulldog, the FSA has cleaned up its act and is exerting its influence in the market to bring about sanity in the industry.

The need to create a regulator solely focused on the forex market for more effective regulation made for the 2013 passage of the Financial Services Authority Act. This law led to the FSA's creation. The Seychelles Financial Services Authority was previously known as the Seychelles International Business Authority (SIBA). SIBA took on the forex market regulation and the oversight of trust companies and non-bank financial services. However, SIBA's role as a regulator of several markets outside the financial trading space meant that adequate supervision of this market was impossible, giving room to the damage that the forex market in Seychelles took.

The FSA now conducts licensing, monitoring, and supervision of the entities it oversees. It also enforces compliance among service providers in the forex space. To become an authorised and regulated forex broker in Seychelles, an intending service provider must pass through three stages:

• A) Apply for a Special Company Licence, which is needed to become an incorporated company in Seychelles.
• B) Secure a banking account for this purpose. This is where intending brokers pay the security deposit.
• C) Complete the processes leading to the acquisition of the Seychelles forex broker licence.

Trading with Forex Brokers in Seychelles: Implications for Traders

Forex brokers in Seychelles are offshore forex brokers. While many informational resources tend to downplay these brokers as second or even third-class forex brokers, traders need to understand what offshore brokers bring to the table in an era where the regulations in the major trading hubs gradually stifle retail traders.

What Do Forex Brokers in Seychelles Bring to the Table?

Unlike a few years ago, forex brokers in Seychelles are now much better regulated. Only qualified companies out of the numerous applicants are granted the Seychelles Forex Broker Licence. Onshore jurisdictions tend to place higher capital requirements and near-impossible conditions on applicants for a forex broker license. By the time the licensees get into business, there is immediate pressure to recover from the hefty expenses that have been incurred. These could pose a conflict of interest for the trader as the broker's desire to recoup expended capital may be at odds with the trader's goals of getting fair and transparent pricing. In contrast, the setup cost for offshore forex brokers such as those in Seychelles means that the brokerage may not be under such pressure to undercut traders while performing counterparty functions.

Furthermore, the Securities Dealers License given to forex brokers in Seychelles allows them to do more with the authorisation licence. They can buy, sell and trade securities within and outside the forex market and manage an investment portfolio. This allows them to get additional income sources outside the spreads charged to their clients. The approval process for securing a Seychelles forex broker licence is stringent but rapid, offering low registration costs and the ability to operate in a low-tax environment.

Regulation of Forex Brokers in Seychelles

The following points sum up the requirements for a company to be granted authorisation by the FSA to operate as a forex broker in Seychelles:

1. The entity must first be incorporated as a company in Seychelles with a share capital of US$50,000. At least two (2) shareholders and two (2) directors must be presented as the company representatives during incorporation. This is a two-week process.
2. An application is made to the Seychelles Financial Services Authority requesting authorisation and licensing. Appropriate documentation must be attached. The documentation covers all paperwork required for all directors, shareholders and owners, not over three months. These documents include police clearance certificates, court declarations of having no prior bankruptcy proceedings, certified copies of international passports, professional reference letters, utility bills and bank reference letters (must also include originals). Each director must present a CV detailing experience in forex dealing activities and relevant industry-level qualifications.
3. A physical presence in Seychelles is mandatory. The office location will be inspected by representatives of the Financial Services Authority and passed fit to run a forex brokerage. Such an office must have the basics: evidence of property lease agreements, working utilities, an active phone number and internet connectivity.
4. The company must have a Compliance Officer who has the necessary industry-level qualifications. The compliance officer will serve as the broker and regulator liaison for record keeping and all correspondence with the FSA regarding anti-money laundering protocols.
5. The company must appoint a Security Dealer Licence Representative.
6. The company must also have Professional Indemnity Cover with a reputable local insurance company.
7. The company must have a Legal adviser. This is a mandatory requirement.

The forex broker in Seychelles must prepare annual financial statements and perform obligatory reporting of all transactions and information around transactions on its trading platforms, such as transaction volumes. The entire authorisation process ensures that only those competent with running a transparent forex brokerage business and licensed industry professionals will be involved in the company's operations. This is an integral part of the safety protocols put in place to protect traders. As a trader who opts to open an account with a forex broker in Seychelles, you are trading with entities that are much better supervised by regulators than used to be the case.

What Can You Expect in Terms of Trading Conditions with a Forex Broker in Seychelles?

The forex brokers in Seychelles provide the following trading conditions:

A) Trading Software

Use of the MT4 and MT5 trading platforms by brokers here is the norm. Use your expert advisors, libraries, custom scripts and indicators coded with MQL4 and also available on the MQL Marketplace.

B) Margin Requirements

Margin requirements for FX and CFD trading are more generous than those of onshore brokers. You can trade forex and CFD products with a leverage maximum of 1:500. Consequently, you only need $200 as a margin to set up a Standard Lot trade. Stop-out and margin call levels are usually set to 20% and 50%, respectively.

C) Commissions & Spreads

Raw spread accounts come with commissions of $3.50 to $5.00 on each trade side. The spreads on a raw spread account are 0.0 pips.

D) Account Types

Several forex brokers in Seychelles offer standard accounts and raw spread accounts. Consult each Seychelles forex broker listed here to determine their account types.

F) Account Funding

The use of cards and other specific e-wallet transfer systems are the most popular means of funding and withdrawing from accounts. As Seychelles is a recent entrant into the SWIFT system of wire transfers, many Seychelles forex brokers will only provide Euro-denominated SEPA bank wires. Again, you have to visit each broker's page to get the specifics.

G) Value-Added Services

The value-added services provided by the forex brokers in Seychelles are as follows:

• Forex VPS services can be used on the MT4 and MT5 platforms.
• Trading plug-ins constructed explicitly for use on the MetaTrader platforms. Examples are Trading Central and Autochartist.

Conclusion

It is interesting to note that in the list of forex brokers in Seychelles, you would find offshore branches of onshore brokers. Several EU/UK brokers have opened offices in Seychelles to reach those retail traders unable to fulfil the UK/EU leverage conditions as prescribed by ESMA. You can check out the list below and select from any forex brokers in Seychelles listed there.