Along with jurisdictions like the Seychelles and Vanuatu, it has become popular for companies in the retail industry to go to start a FX/CFD broker in Mauritius over the past few years. This is primarily due to cost, regulation, and a beneficial tax regime.
The FX/CFD license in Mauritius is issued by the local regulator, the Financial Services Commission (FSC), and is a relatively quick, low-cost way for forex brokers to get regulated.
In this article we’ll look at why you may want to get an FX/CFD license in Mauritius, what the benefits of doing so are, as well as some of the downsides.
Why do brokers want an FX/CFD license in Mauritius?
There are three main reasons why executives want to get a FX/CFD license in Mauritius
1. Cost efficiency
Mauritius has a low capital requirement threshold of MUR 1m or around $22,000 at the time of writing. This means FX/CFD brokers do not have to stump up a huge amount of cash if they want to get regulated in Mauritius.
2. Regulations
The FSC regulates FX/CFD trading. However, there are no restrictions on offering leverage, nor are there any on offering deposit bonuses or other, similar marketing tactics.
3. Tax
Corporate entities in Mauritius only have to pay 3% in corporation tax. This means that someone that goes to start a FX/CFD broker in Mauritius can expect to much lower taxes than in other jurisdictions.
| FX/CFD license in Mauritius overview | |
| Time to launch | Approximately 8 months |
| Company registration and licencing costs | We estimate at least $15,000 |
| Company annual operational cost | $2,500 for the regulator + $950 to company registrar + other operational costs |
| Tax | 3% |
| Accounts filing | Required |
| Physical presence | Local office, with a minimum of two local employees |
| Capital requirement | MUR 1,000,000 (approx. $22,500 at the time of writing) |
| Anonymity | Yes |
| FX/CFD regulations | FX/CFDs are regulated in Mauritius, but there are no restrictions on leverage, deposit bonuses or trading contests |
How long does it take to get an FX/CFD license in Mauritius?
We estimate that you will need at least six months to get an FX/CFD license in Mauritius.
We appreciate that brokers, whether they are a startup or an established firm, like to get things done as quickly as possible. This is completely understandable.
However, the process of getting the investment dealer license in Mauritius can be a long one.
To give just one example, you will need to provide the FSC with a detailed account of your compliance process, who will be managing your compliance function, and how they will be doing it if you are outsourcing the function to another company. Note that this is one of more than 40 tasks listed on the application document.
It is plausible that with the help of a good consultant or legal firm that you will be able to speed this process up. However, many firms make a lot of promises but don’t necessarily deliver, so be wary of any company that claims they can get you a license in a very short period of time.
How much does it cost to get an FX/CFD license in Mauritius?
We estimate that companies looking to get a forex broker license in Mauritius will have to pay at least $15,000 to get set up, not factoring in capital requirements costs or legal fees.
There are a lot of compliance consultants out there that can help you get the investment dealer license, so as with the timings section of this article, that $15,000 figure should not be seen as a firm number – it could be more or it could be less.
To be fair, there are good reasons why you will have to pay that sort of money to get set up.
One is that the application process is bureaucratic and lengthy. This is not like setting up a simple company in the UK, for example. You will have to put together things like a business forecast for the next three years and find a company that will act as your auditor.
These things are time consuming and also require a level of specialised knowledge. You need to know how to put together the documents for your application to the FSC in a way that is most likely to guarantee you getting the investment dealer license. A good legal firm should know how to help you do that.
The other factor is that some of these things do cost quite a lot of money. For example, hiring an auditor is not free. You also have to pay to register your business and pay the FSC an application fee for your license.
What is the minimum capital requirement for a forex broker in Mauritius?
FX/CFD brokers that get a license from the FSC must maintain a minimum capital requirement of 1,000,000 Mauritian rupees. At the time of writing this equates to approximately $22,500.
We believe that this is one of the most attractive features of the Mauritius license today.
Ultimately most brokers want to free up the level of cash they hold, so that they can invest in other parts of the business.
At the same time, you want to be able to access banking services to smoothly onboard clients. Other jurisdictions may offer a lower start up cost for brokers, but the banking solutions on offer to them are very likely to be inferior to those offered by Mauritius.
What are the yearly costs for an FX/CFD license in Mauritius?
We estimate that the ongoing costs of keeping your broker in Mauritius operational are likely to be over $30,000 per year.
Again, this is not a firm number and it’s entirely plausible you will be able to structure your company in such a way that you can lower this cost substantially.
On the absolute basic level, a company with an FX/CFD license in Mauritius has to pay $2,500 to the local regulator annually. You will also have to pay $950 a year to keep your company active.
However, the biggest cost is due to the fact that you must have a local presence in Mauritius.
For example, FX/CFD brokers in Mauritius must have
- Two local directors
- One local employee
- A local office
- An annual audit
As noted, there are things you can do to keep these costs down but you are never going to get the cost of them to zero – nor would we recommend trying!
The result is that keeping your FX/CFD license in Mauritius operational will cost you more than other offshore jurisdictions, which may only have annual fee to pay to the company registrar.
Do brokers with an FX/CFD license need a physical presence in the country?
As the above suggests, you do need a physical presence in Mauritius if you get a license from the FSC.
This includes a local office, having two local directors, and one local employee.
There are steps brokers can take to reduce their costs in the country, such as minimizing office spend but staying within the regulatory framework and outsourcing your compliance function to a third-party.
Are FX/CFDs regulated in Mauritius?
The short answer to this question is yes, derivatives products, like rolling spot FX or CFDs, are regulated in Mauritius. For example, there are rules around best execution and the need to segregate client funds.
However, FX and CFDs are not regulated in the same way that they are in Europe. That means there are no restrictions on leverage or certain marketing practices, like deposit bonuses or trading contests.
At the same time, brokers must realise that they are not in Europe and thus not in the EU. As a result, they are limited in how and where they can market their products if they only have an FX/CFD license in Mauritius
Mauritius FX/CFD license – positives
We believe getting an FX/CFD license in Mauritius is attractive because it offers a good balance between cost, brand, and banking.
Mauritius is not the cheapest place to start a forex broker but the capital requirements and ongoing costs are still far lower than in a tier-1 jurisdiction.
At the same time, Mauritius has some history as a financial offshore centre, meaning there is a level of respectability to the region, even if it is not on a par with somewhere like the UK.
Finally, we understand that banking options in Mauritius are superior to those on offer in other offshore jurisdictions, both in terms of actual access and the quality of the service provided.
Mauritius FX/CFD license – negatives
The downsides of an FX/CFD license in Mauritius are primarily due to your market access. Mauritius is not in the European Union, nor is it a tier-1 jurisdiction like the UK.
Getting an FX/CFD license in Mauritius means that your company is more constricted in terms of where it can do business as a result.
Banking is also likely to be imperfect. You will not have the same number of issues as a broker based in a region like St Lucia or St Vincent and the Grenadines but you also have to realise you aren’t in the UK and the options on offer, as well as the service provided, are not at the same level as they would be in a tier-1 jurisdiction.