The past decade has seen a sizeable increase in the number of brokers looking to get an FX/CFD license in the Seychelles. That includes smaller firms but also large brokers, like Plus500, eToro, and Capital.com. The result is that more than 150 companies have gone to start a FX/CFD broker in the Seychelles.
An FX/CFD license in the Seychelles is known officially as a securities dealers license. It is issued by the local financial regulator – the Financial Services Authority (FSA) of Seychelles.
Why do brokers get an FX/CFD license in the Seychelles?
Brokers tend to want an FX/CFD license in the Seychelles for two reasons – regulation and cost efficiency.
1. Regulation
The FX/CFD license in the Seychelles allows brokers to act as a market maker, meaning they can operate a b-book model.
There are also no restrictions on the leverage you can offer clients. Nor are there any restrictions on other marketing tools, like deposit bonuses or trading contests.
These are the primary reasons that brokers want an FX/CFD license from a regulatory point of view.
2. Cost efficiency
The capital requirement for FX/CFD brokers in the Seychelles is $50,000 at the time of writing.
We appreciate this may sound like a lot if you are trying to run a bootstrapped, start up business.
But even for small or medium-sized FX/CFD brokers, $50,000 is not a significant amount of money. That means getting an FX/CFD license in the Seychelles is a cost-effective option for many brokers.
Overview of FX/CFD license in the Seychelles
| FX/CFD license in Seychelles overview | |
| Time to launch | Approximately 6 months |
| Company registration and licencing costs | We estimate at least $20,000 |
| Company annual operational cost | $3,000 for the regulator + $1,000 to company registrar + other operational costs |
| Tax | 1.5% |
| Accounts filing | Required |
| Physical presence | Local office, with a minimum of two local employees |
| Capital requirement | $50,000 |
| Anonymity | Yes |
| FX/CFD regulations | FX/CFDs are regulated in Seychelles, but there are no restrictions on leverage, deposit bonuses or trading contests |
Steps to getting your FX/CFD Seychelles license
- Company registration in the Seychelles
- Collection of documents from broker executives, including IDs, bank statements, police clearance, utility bills and more
- Preparation of local set up in the Seychelles, including office rental, compliance hires, and local director appointments
- Finalise and submit application to FSA
- Wait for approval
How long does it take to get an FX/CFD license in the Seychelles?
We believe that you should anticipate waiting at least six months to get an FX/CFD license in the Seychelles.
This is not a firm number and it is plausible that the process may be faster than this.
However, many providers of legal services like to lowball the time frames that they give brokers, in order to give the impression that they can get things done quickly.
For example, we see some providers claiming it takes three months to get a license. We believe this is misleading as they are likely referring to it taking three months from the time you submit your application.
As that suggests and as you can likely infer from the overview we give above, you need to do quite a lot of preparation before you submit your application.
So even if it does take three months for the FSA to review your application, you will have to do a lot of work to get to that point, meaning the three month figure is incorrect.
How much does it cost to get an FX/CFD license in the Seychelles?
We estimate that it will cost you around $20,000 to get your license in the Seychelles set up.
The reason we do not give firm numbers is that you will use a legal services provider to help you get the license and these companies all charge different prices.
This may also seem like a large amount of money but you have to keep in mind that the regulator charges $1,500 per application and the company registration process also costs $1,750. These are base level costs that are charged by the FSA and the company registrar, not your legal firm.
You also have to factor in the amount you’ll have to spend on different parts of the application process, like getting documents validated, hiring local directors, or appointing an auditor.
We appreciate that all FX/CFD brokers want to minimise their costs, particularly smaller firms. But the reality is that these things cost money – there is no avoiding it.
What are the capital requirements for an FX/CFD license in the Seychelles?
The capital requirement for an FX/CFD license in the Seychelles is $50,000 at the time of writing.
We believe this is likely to be one of the most appealing factors for forex brokers looking to get a license in the Seychelles.
This is because $50,000 is a comparatively low figure, meaning brokers can free up capital which they can use to improve other parts of their business.
At the same time, the FX/CFD license in the Seychelles allows firms to operate as a market maker, meaning they can use the b-book model to generate revenue.
What are the yearly costs for an FX/CFD broker in the Seychelles?
We estimate that you will have to pay over $20,000 per annum to keep your FX/CFD license in the Seychelles operational.
That is based on the fact you will have to pay $1,000 every year to the company registrar, $3,000 to the local regulator and likely pay $1,000 per month to rent an office.
You will also have to pay tax on your foreign income. Tax for FX/CFD brokers based in the Seychelles is 1.5%.
Then you have to think about other costs, like paying for an annual audit and hiring a local compliance person. Given the minimum wage in the Seychelles is about $400 a month, and compliance is a white collar job that will demand higher pay, this is likely to be another major cost for your broker.
However, as there are always ways you can minimise your costs, these numbers should not be seen as firm figures.
Do FX/CFD brokers need a physical presence in the Seychelles?
Brokers that get an FX/CFD license in the Seychelles do need a physical presence in the country.
The key points here are:
- You have to rent an office
- You have to hire a local compliance person
As always, there are steps you can do to minimise the costs here but you can never take them to zero. For example, the regulator may actually visit your office. If you have a post box set up to receive mail then that’s not going to end well for you.
Are FX/CFDs regulated in the Seychelles?
Derivatives, like CFDs or rolling spot forex contracts, are regulated by the FSA in the Seychelles.
However, the key points here are that brokers are not subject to leverage restrictions like they are in other jurisdictions around the world.
There are also no restrictions on IBs, PAMM/MAM accounts, trading contests, or deposit bonuses.
Having said this, you must realise that you cannot solicit for clients in regions like the UK or EU if you are regulated in the Seychelles. This means you are limited as to where you can onboard clients from.
FX/CFDs license in the Seychelles – positives
There are three primary benefits of getting an FX/CFDs license in the Seychelles.
1. It’s a respectable jurisdiction
The Seychelles is not on the same level as the UK, Australia or an EU entity – we have to be honest about that.
But the country has a long history as an offshore financial services hub. That provides a higher level of respectability to your brand and can help you when you’re trying to onboard clients
2. It’s cost effective
Paying up $50,000 as a minimum capital requirement is not a huge amount of money. This makes the Seychelles an attractive option for brokers looking to minimise the amount they have to put down.
At the same time, the ongoing costs of running a broker in the Seychelles are far lower than they would be in somewhere like London, Singapore, or Sydney.
3. Regulations
The regulatory regime in the Seychelles allows brokers to act as market maker and internalise client flow as a result. Fewer marketing restrictions also mean brokers can be nimbler in how they offer their services to clients.
FX/CFDs license in the Seychelles – negatives
There are two key downsides that you should be aware of if you are thinking about getting an FX/CFDs license in the Seychelles.
1. Banking
If you have no regulatory license aside from one issued by the FSA then you are going to struggle to find a bank that will serve you. The quality of the service may be poor and you may not even get the permissions needed to operate your brokerage. This is something to be extremely wary of before you proceed.
2. Regulation
This may seem odd given that we also listed this as a strength but being regulated in the Seychelles means you do not have permission to solicit clients in most of the wealthier jurisdictions around the world.
As such, the regulatory regime is a positive in terms of how it allows you to market your services in the regions you can be active in. However, it means you are unable to market at all in many of the regions you may want to do business in.