Seychelles Securities Dealer Regulatory Framework

A Strategic Location and Conducive Environment

Seychelles has established itself as an attractive jurisdiction for international financial services, offering a business-friendly regulatory environment, tax efficiency, and a strategic location. The country has developed a comprehensive legal and regulatory framework that supports a wide range of financial services, including securities trading, fund management, and offshore banking.

A Balanced Regulatory Approach

The Financial Services Authority (FSA) oversees the licensing and supervision of financial services in Seychelles. Renowned for its balanced regulatory approach, the FSA emphasizes both investor protection and the promotion of a competitive financial services industry. Committed to transparency and adherence to international standards, the FSA’s regulatory regime is both robust and adaptable, contributing to Seychelles’ growing reputation as a credible and stable financial hub.

Securities Dealer License

For those seeking to act as a broker or market maker and offer services related to securities and derivatives, a Securities Dealer license is essential.

The Securities Dealer Framework

In Seychelles, the licensing and supervision of Securities Dealers fall under the purview of the FSA, regulated by the Securities Act, 2007.

A Securities Dealer license empowers the holder to trade in securities either as a principal (for their own account) or as an agent (on behalf of clients).

Key Requirements for a Securities Dealer License

The general requirements for obtaining a Securities Dealer license in Seychelles include:

• Capital Requirements: A minimum capital requirement of USD 50,000 is in place, with the FSA reserving the right to impose higher capital requirements for riskier activities.
• Operational Infrastructure: Applicants must demonstrate adequate physical and technical infrastructure, including office premises, IT systems, and compliance frameworks.
• Qualified Personnel: Key personnel must possess relevant qualifications and experience in financial services, and at least two directors must be resident in Seychelles.
• Compliance and AML/CFT: Applicants must have robust Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) policies in place, along with a detailed compliance framework tailored to their activities.
• Business Plan: A comprehensive business plan outlining proposed activities, target market, risk management strategies, and financial projections is required.
• Professional Indemnity Insurance: Every Securities Dealer licensee must arrange for appropriate professional indemnity insurance.

Timelines for Application and Licensing

The typical timeline for obtaining a license involves:

• Preparation: Gathering necessary documents, drafting submissions, and completing the application process, which generally takes 2-3 months.
• Regulatory Review: The FSA typically takes 3-4 months to review and process applications, though this can vary based on complexity and additional information requirements.
• Total Timeline: The entire process, from preparation to licensing, typically takes between 5 to 7 months.

Comparison to Other Jurisdictions

Compared to jurisdictions like the Cayman Islands, British Virgin Islands, and the Bahamas, Seychelles offers a more affordable and less restrictive environment without compromising on regulatory standards or professional services. The costs of professional services and capital requirements are significantly higher in those jurisdictions, deterring many businesses.

Regulatory Advantages

Seychelles also provides a straightforward and lenient regulatory framework for trading activities, with no restrictions on leverage or the types of products that can be traded. This contrasts with jurisdictions like Labuan, Malaysia, which impose limitations on trading products and leverage ratios.

Additional Opportunities in Seychelles

Seychelles has taken a proactive step towards regulating the virtual assets industry by enacting legislation to license and supervise Virtual Assets Service Providers (VASPs). This aligns Seychelles with other leading offshore financial centers like the Cayman Islands, Bermuda, and Mauritius. The implementation of detailed rules and regulations for VASPs is forthcoming.

Need More Information?

If you require further details or assistance with setting up a Securities Dealer or VASP operation in Seychelles, or if you’re unsure whether Seychelles can accommodate your planned activities, please don’t hesitate to contact us.

Conclusion

Seychelles offers a well-structured regulatory framework for Securities Dealers, with a range of license categories tailored to different business models and scopes of activity. The Financial Services Authority is highly regarded for its effective regulatory oversight and its role in fostering a competitive financial services sector. For businesses seeking a reputable jurisdiction, Seychelles presents an attractive option due to its regulatory environment and growing stature as a financial hub.

Written by David Woliner, Adv. 
Head of Financial Regulation.