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The first time I heard about Vanuatu was probably six years ago. Some readers will remember there was a huge rush to set up companies there, particularly after the ESMA regulations came into play around the same time.
Now I will be honest and say that the country became the butt of many a joke at my end. People sometimes ask why I enjoy writing about this strange industry and I will steal a quip from the US journalist Matt Levine, who once said he liked covering crypto because it captures the folly and ingenuity of man. There was something about brokers going to an island that is really, really far away and setting up post box companies to get high leverage that put Vanuatu in the same sort of milieu.
But the country has actually cleaned up shop a lot over the past few years. At one point there were more than 500 brokers there. Today there are just over 70, including some of the biggest players in this industry, like Deriv, Exness, and CFI.
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As readers may have seen elsewhere, I was able to visit the country last month. How that ended up happening is a tale unto itself, filled with serendipity, uncertainty, and heart-in-the-mouth intrigue. Maybe I’ll tell you all about it another time.
For now all you need to know is I am a simple man. If you invite me to Vanuatu, then brother, I am coming to Vanuatu.
Arrival
The country’s mythical quality is probably far less pronounced for Australian readers than it is for those in the UK. When you live in London then Vanuatu is among the farthest-flung places in the world to get to. If you are reading this in Sydney then imagine me telling you about a bunch of brokers going to set up shop in the Faroe Islands and you get an idea of what I’m talking about.
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Anyway, actually getting there is not that simple. The country’s national carrier went bust earlier this year and, as a consequence, the only direct flight from either New Zealand or Australia that you can get today is from Brisbane. So after a fun couple of days in the land of emus, I arose early to catch a connecting flight from Sydney to Brisbane, and then onwards to Port Vila, Vanuatu’s capital city.
Our fellow passengers on the second flight fit largely into two categories – Aussies going on holiday and Ni-Vanuatu temporary workers travelling home. With regard to the former, let’s just say if you have been on a RyanAir flight to the canaries or Ayia Napa, you would feel a sense of deja vu and be given a striking reminder of Australia and the UK’s shared history.
There were also a couple of curious characters on board. One guy looked like James Bond’s CIA ally in Goldeneye. He was about 60, wore a red Hawaiian shirt with Vanuatu flags all over it, and had slicked back hair. In his shirt’s breast pocket was a Vanuatu passport. Another man also looked like a Bond character but more like a villain from one of the Daniel Craig films. He was wearing an Armani sports jacket and had a Vanuatu passport that he kept waving around. I thought about this and came to the conclusion that if I had a Vanuatu passport then I’d probably think that was cool and want to show off as well.
The whole flight is a little over three hours and you touch down on a long runway that seems to be surrounded by jungle. We were picked up by our tremendous host Sandra Guyot from Titan FX, who gave us a whistle stop tour around town in a Ford pickup truck and then dropped us off at our accommodation.
It was late and we ate at Port Vila’s oldest French restaurant, which feels like a saloon at the end of a cowboy town. It has been there for 51 years and the founder, a man called Clement, still runs it. He has a touch of Thomas Mann’s ‘The Magic Mountain’ about him but was very friendly and you can also eat bat in red wine sauce in his restaurant. I opted for spaghetti.
Day one – Efate Tour
Vanuatu is made up of 83 islands spread in a curved line across approximately 1,300 km. Port Vila sits on an island called Efate, which is about half way down the archipelago. Driving around the island takes about three to four hours. To put things in terms our readers may understand, it’s roughly three times the size of Malta, only 10% of Cyprus, and about the same size as Singapore but with less than 1% of its population.
I don’t want to bore you too much with how I spent a day of leisure but suffice it to say that Efate is an amazing place. I know I’ve compared the country to Spain in terms of how it’s perceived by people, but the physical reality is more like an untouched tropical island. There are tourists but there aren’t that many of them. Plus the places you can visit are incredible.
We stopped at the Blue Lagoon, which has three different pools of water that look like something from a photoshopped holiday commercial. One of them you can Tarzan into from a tree with a giant rope attached to it. Another cool spot was the cheesily named Hideaway Island that you have to get a boat to. This has an underwater post box but the more amazing part is a small coral reef on the edge of the island. Without exaggerating, you swim out maybe 10m to 20m and start seeing a bunch of epic fish.
Taking off my finance hat and being a normal person for a moment, would I make the roughly 40 hour journey from the UK to Vanuatu for a short holiday break? No. But if I was in Australia, New Zealand, or even somewhere like Singapore – easily doable in a day – then absolutely. There is loads to do, the scenery and nature is incredible, and the weather is ideal – it’s basically 20 to 30 degrees all year round, with low humidity. So you are warm but don’t have that feeling of walking through butter that you can get somewhere like Limassol. What are you waiting for?
Day two – Titan FX and Deriv
Our second day was work focused. We got up, had coffees, and then headed to the Titan FX office in the middle of town. After more than five years of seeing brokers put the same Vanuatu address on their homepage, there was something surreal about actually going to the Govant Building in central Port Vila. I can confirm to all of you – it really exists.
Not only that but Titan FX has a sizeable presence there. The company has taken up one floor of the building and has two big open plan offices, plus plenty of breakout rooms and so on. In total the company has about 30 people working there but they are planning to expand.
We were greeted by a tribal dance troupe and then given a welcome speech by one of the Titan FX team. I then had to give a speech. Naturally this was a corker – not a dry eye in the house from what I recall but that might just have been my imagination. Then I had to cut a massive cake with my wife. In case you were wondering, yes, this whole thing absolutely was one of those occasions where you think, ‘is this real?’ and then try to work out what the domino-like series of events were that led you to reach that particular point in your life.
“What we are doing with Titan FX is, I hope, just the beginning for this industry in Vanuatu,” said Martin St-Hilaire as we drank coffee after the cake cutting. Martin has lived in Vanuatu for over two decades and is Managing Director at the broker. “From my point of view, I think a lot of foreign governments treat us in a way where they go, ‘ok, you can serve your coconuts and cater to tourists but that’s it.’ We cannot develop our economy that way. We have to try things and take some risks. And if you look at what Titan FX has done here then it’s proof it can work.”
Hiring people has been difficult in some instances but not in others. After getting a brief tour of Titan FX’s community initiatives, we then had lunch with Sandra and Ingrid Amos, who is a Human Resources Coordinator for Titan FX’s Vanuatu and global teams.
“Finding the right talent and skills for financial and legal roles here has been quite straightforward,” said Amos, as we ate steaks cooked on hot stones and looked out over the Pacific. “The technology side is much trickier. We have had interns in our technology team, one of whom now works at the company. But we need to make people in Vanuatu more aware of the possibilities in the tech field and improve education around it so people have the necessary skills.”
My final stop that day was the Deriv office, which is the floor below Titan FX’s. Today it’s only five people. However, country Director Dominic Dabu said the broker is looking at investing in a larger office on the island and expanding to 30 people, with long-term growth plans beyond that as well.
Originally from the Philippines, Dabu joined Deriv at the start of 2020 and quickly rose up the ranks as a customer service trainer for staff internally. He moved to Vanuatu in early 2023 and heads up Deriv’s office in the country. So how has it been so far?
“Imagine if you work in paradise, it’s genuinely like that,” said Dabu. “I was in Dubai previously and it’s very overdeveloped. There is no open space and you are always thinking about work. Here it’s island life, it’s very relaxed. Sometimes if I feel stressed or want a quick break then I’ll just walk out of the office and go look at the sea for a couple minutes. Of course, we still work really hard and get the job done but, if I compare it to Dubai, when I am done with work here, I go home, I feel totally relaxed. In Dubai you are always thinking about work.
“The other positive thing is you have a great expat community here and because it’s small, you get to know people quickly. I don’t want to say it’s perfect or has no problems but if you like a laid back lifestyle, then you will enjoy it a lot here.”
As noted, Deriv is also planning on expanding its team here and investing in a new office. To be honest, this surprised me. I knew they had a small team here but wasn’t expecting it to expand. But Dabu said that decision reflects the success the company has had so far in the country.
“When I joined here it was starting from zero, in every aspect,” he told me. “So I had to do all the HR and recruitment. Initially it was hard, I’ll be honest, because people here aren’t familiar with this industry. But now after a year they are doing a great job and we can see that because we measure productivity internally across all our teams. And that’s doing a lot of technical things too, like B2B, MT5 problems, payments – everything.”
Without trying to get all woke on you, old Kimbers felt some pangs of guilt as he walked home that late afternoon. I’d cracked the odd joke at Vanuatu’s expense before but actually coming here and seeing that there were plenty of people doing broker jobs, who are just as intelligent and capable as anyone else I’ve met in this industry, made that harder to do. The fact that people are so laid back and friendly only compounded the problem.
Day three – finance minister and regulator
The following day I woke up early and went with St-Hilaire to meet the finance minister. Or rather, he was the finance minister, but by the time I got to Vanuatu he had been reshuffled into a different role. Now he is Minister of Energy, Mines & Natural Resources. Except the name of that position had also been changed to ‘Minister of Climate Change’. All politics apparently.
Regardless, John Salong was an interesting man. He studied in the US and had almost joined the army there, but then came back to Vanuatu and set up several businesses, before entering politics.
We ended up talking for almost two hours in a hotel cafe. Like the other Pacific Islands, Vanuatu has emerged as a player in the tug of war that is the US-China conflict. Both countries are trying to woo the government in Vanuatu, with the US opening an embassy in the country in July and China building, amongst other things, some kind of presidential palace.
Looking back on it, and I don’t know what this says about my interests, the point that stuck with me more about that conversation was the degree to which bank derisking has impacted Vanuatu, probably because it’s just something that is not on your radar if you live somewhere like the UK.
This is worthy of its own article but the short version of what has happened is that the National Bank of Vanuatu has been cut off from Australian banks that were providing correspondent bank relationships for USD because of compliance policies, largely dictated by US banks.
Then when the bank tries to go directly to those US banks to access dollars, they won’t serve them because the volume and potential revenue are so small that it’s not worth it. To put it in broker terms, imagine your prime of prime cuts you off because of their own prime broker’s risk policy. But then when you go to the prime broker directly, they won’t deal with you, not because of risk, but because you don’t have the flow to make it worth their while. A catch 22.
“You sometimes feel like, because someone sitting in the US or Europe has decided something arbitrarily, you are being pushed backwards,” said St-Hilaire, as we left the meeting with Sarong. “Fortunately we are managing but it’s a frustrating situation to be in.”
Next we drove to meet the regulator. Sadly Branan Karae, the Commissioner of the Vanuatu Financial Services Commission (VFSC), was in the Solomon Islands visiting a sickly relative, so we spoke to his deputy – Joshua Tari, Manager Supervision – instead.
Tari joined the VFSC at the request of previous commissioner and initially only intended to stay for three years. However, with all the work to be done that turned into six years.
“When I first joined it was a bit of a mess to be honest, it was the company service provider phase,” said Tari. “So that’s why we did the licensing, put the supervisory measures in place, and generally tried to clean everything up a bit. Now I think we have very good companies. These are big, global businesses. There were around 600 companies when I joined. Now there are only 74.”
Something that I had wondered prior to this meeting was whether the regulator here, or really in any offshore jurisdiction, feels the heat from other regulators or authorities from around the world?
“No, not at all,” said Tari. “We haven’t had complaints from any other regulator. We get requests from them for licensing and vice versa. So if someone is applying for a license in Australia, we might get a request from ASIC about that, in terms of the company’s background, any warnings, and so on. The bigger thing is learning from other regulators how to govern this industry. That is another area where we have a lot of communication with other regulators.”
Heading home
After a tour of the 83 Islands rum distillery and a subsequent tipsy visit to the French ambassador’s house to watch the flag handing over ceremony for the Vanuatu paralympic team (seriously), it was time to go home.
That final morning I sat on the balcony area of the place I was staying in and kept trying to compose some general thoughts on my time in Vanuatu for a Video. Ultimately I wasn’t happy with it so I didn’t publish. I guess I’m better at writing.
Anyway, rewatching it now, I can see I came to a few conclusions. One is that it’s easy to mock offshore jurisdictions in far away places but Vanuatu’s regulator has done a lot to improve over the last five years. Plus why has this happened in the first place? Because regulators in ‘Tier-1’ regions failed epically to control bad actors, then just punished the whole industry. Look at the blow ups over the last decade. Did they happen in Vanuatu or somewhere else?
Moreover, Titan FX has a big office there. Deriv is building one too. In other words, there are actually people working in Vanuatu in this industry. Readers can correct me if I’m wrong but broker licenses in ‘legit’ places like the Seychelles, Mauritius, the Bahamas, BVI, or Bermuda, have close to zero employees in those countries. And why are they there in the first place? Is the intention any different to someone going to Vanuatu? I thinketh not.
The employee point is also significant because I think it’s plausible the industry in Vanuatu will grow a lot more, precisely because you have a few companies making the effort to expand their physical presence there and not just treat it as a post box. Today the industry employs about 150 people, not a lot but then Port Vila only has a population of about 40,000. Again, I’m unaware of any offshore region with a license where this is happening.
This may sound crazy to you but keep in mind that two decades ago Cyprus had close to zero people working in CFDs and almost no companies. Today it has about 7,000. CySEC also only started in 2001 but the way people talk about it now, it’s as though high leverage OTC derivatives have been a hallmark of Cypriot life since the Ottoman Empire. Obviously that’s not the case.
Something else worth remembering here is that of the 10 largest brokers in Cyprus by employee count, I would estimate that only one (eToro) derives the majority of its revenue from Europe. All the others are probably doing north of 90% of their revenue in other parts of the world. Exness, the largest, does not even take retail clients from the UK or European Union. From a purely regulatory perspective, there appears to be little benefit to a CySEC license given that’s the case. This works to Vanuatu’s benefit.
Would I move there? The short version is yes. If you are someone that enjoys outsized bottles of gray goose vodka and wanted to have an Instagram picture taken in salt bae’s Dubai restaurant, Vanuatu probably isn’t for you. I’m (genuinely) not saying that in a judgemental way, just as a fact. However, if you like a libertarian-feeling, chilled out lifestyle, by the beach, with lots of fun nature stuff to do, then you will like Vanuatu. Plus there’s no income tax, no speed limits, and the local beer is good too. Who knows? You may even get to go to the French ambassador’s house.
The chilled out factor didn’t actually hit me until I walked on to the tarmac to the plane going back to Brisbane. I suddenly had a deep feeling of, ‘ah man, back to all that annoying stuff’ and realised how removed from it all you felt there. A weight came over my shoulders. It was raining that day and there were clouds hanging low across Efate. We took off and I looked out the window. We had already gone up into the clouds. The island had vanished.
