What an Offshore Broker Licence Actually Obliges a Firm

A broker page carrying the words licensed and regulated is making a claim with specific legal content, and that content differs by regime. The phrase does not say what the firm must do with client money, who checks it, or what exists when something goes wrong.

Published comparisons of offshore regimes almost all rank jurisdictions against one another. A ranking answers a question a client cannot act on. The statute a licence is granted under can be acted on, because it lists obligations.

This page reads one regime end to end rather than surveying several. Seychelles serves as the worked case because its Act, its subsidiary regulations and its licensing guidelines are published and readable. The method transfers; the section numbers and the figures do not.

Registration and a Licence Are Not the Same Act

Creating a company and licensing a regulated business are two decisions taken under two statutes. Incorporation produces a legal person. A securities dealer licence is a permission to carry on a defined activity, granted under financial services legislation, with conditions attached and with discretion in the authority to refuse it.

The two can come apart. A company may exist in a companies registry while holding no permission to deal in securities, and a website may cite the first as though it were the second.

In Seychelles one body sits behind both functions, which makes the distinction easy to see. The Financial Services Authority operates under the Financial Services Authority Act 2013 and supervises the non-bank financial sector, covering business conducted inside Seychelles and business conducted from it. It publishes a search for struck-off international business companies, and separately a register of licensed capital markets entities.

The same section tells the authority what to weigh. On one side sits the safety of investors, of existing and prospective clients, and of the public at large. On the other sits the standing of Seychelles as a financial centre. Both appear in one list.

Which company inside a broker group actually holds a particular account, and how to establish that from documents already in hand, is a separate question set out on our page on escalating a complaint against a broker. Where the firm a client dealt with is not the firm carrying the permission, the arrangement may be one of the different kinds of brokerage firm, or a case of one firm accepting responsibility for another.

What a Securities Dealer Licence Obliges

The obligations sit in three places: the Act, the regulations made under it, and the licensing guidelines the authority publishes for applicants. Read together they are specific.

To be licensed as a securities dealer in Seychelles a firm must have US$100,000 of capital paid up, appoint at least two natural persons as fit and proper directors, employ at least one individual licensed as a representative under section 52, and comply with the insurance requirement in section 73.

It must also have a physical place of business in the jurisdiction and premises suitable for keeping records, and satisfy the authority that it is fit and proper. The authority retains discretion to refuse.

The insurance requirement is worth stating precisely, because it is the obligation most often assumed to be absent offshore. Section 73 makes the firm insure against its own failures: liability arising from anything done or left undone in the course of its securities business, whether by the firm itself or by someone working for it.

The audit obligations are equally concrete. An auditor must be appointed within 30 days of the firm becoming licensed and must be acceptable to the authority. The auditor has to sit outside the firm. Nobody who directs it, works for it, holds shares in it or is in partnership with it qualifies, and neither does anyone employed by or in partnership with such a person.

The authority is notified within seven days, audited accounts are filed with it, the auditor must report to it in defined circumstances, and the authority can appoint an auditor itself.

The Act also imposes standing conduct duties. Among them: keep client assets in its care separated and identifiable as belonging to clients; hold financial resources sufficient to meet its commitments and absorb the risks it runs; keep proper records; and maintain at least two resident fit and proper persons in Seychelles at all times.

The application bundle itself carries policy documents rather than promises, including manuals for complaints handling, compliance and anti-money-laundering, a conflict of interest policy, terms of business, and a business continuity plan.

Where Client Money Sits Under This Kind of Regime

The Act handles client money in a way that is easy to misread. Section 72 is titled client property, and it is an enabling power rather than a self-executing rule. It lets the Minister issue rules governing how licensees separate and safeguard the money and securities they hold for clients, and it makes the Securities Authority the body that recommends those rules.

The section then sets out what such regulations may require. Among the items listed: that money belonging to clients go immediately into a separate bank account carrying the word client in its name; that records be kept of the money and securities held; and that an accountant examine those records and report to the authority.

So the protection reaches a client through two instruments rather than one. The Act supplies the duty in general terms, in the conduct obligation to protect client assets by segregation and identification, together with the power to make detailed rules.

The conduct of business regulations supply the machinery. That they carry it is visible from the amending instrument made in 2024, which inserts new definitions immediately after an existing definition of a client bank account.

This matters for reading any regime. A statute that appears silent on client money may have delegated the subject rather than ignored it, and the answer sits in the regulations made under the section rather than in the section.

What segregation does and does not protect once in place is a different question, covered on our page on where client money actually sits, which sets out why a segregated pool can still pay out less than a statement balance.

The Complaints Obligation Was Rewritten in 2024

The conduct of business regulations were amended at the end of 2024, and the amendment repealed the existing complaints regulation and substituted a new one. The replacement is more demanding than the provision it replaced.

Under it a licensee must employ a resident person, who may be the compliance officer, to undertake complaints handling. It must have internal policies and procedures for that handling, and those procedures must be presented to the Securities Authority for approval before they are implemented. It must ensure complaints are promptly attended to and that the remedial actions available under those procedures are exhausted.

It must also keep a complaints record that stays current and accurate, covering every complaint that arrives. The regulation sets out what is held against each complainant, including an email address and a copy of the biometric page from a passport or national identity card.

Two observations follow, and they point in opposite directions. The obligation is real and it is supervised: a complaints procedure that must be approved before use is a licence condition rather than a customer service policy, and a database the regulator can call for is evidence. But an internal process is not an adjudicator. It does not decide a dispute between a client and the firm, and it awards nothing.

Where a complaint goes after the firm has answered it, and what changes when no statutory scheme covers the entity at all, is set out on our page on how a complaint against a broker is escalated.

The same instrument also gives margin a definition for these purposes: a sum agreed in advance that a retail client has to hold, as money, before a securities trade can be put on.

What the Regulator Can Do, and What It Cannot Do For You

The supervisory apparatus is visible and public. The authority publishes regulatory enforcements and disciplinary actions, warnings about unauthorised activity, and public statements naming firms.

It publishes notices when a securities dealer licence is surrendered, issued under the public-notice power in the Financial Services Authority Act 2013. It maintains the register of licensed capital markets entities against which a claimed licence can be checked.

What the instruments read for this page do not create is equally important. There is no statutory compensation scheme that pays a client when a licensed firm fails, and no statutory ombudsman that hears a client dispute and awards redress against the firm.

The protections in the Act are prudential and conduct obligations owed by the firm and supervised by the regulator: capital, insurance, audit, records, segregation, fit and proper persons. Enforcement of them runs from the regulator to the firm. It does not run from the regulator to the client as a payment.

The insurance requirement in section 73 is the closest thing in the Act to a client-facing backstop, and its shape is worth being clear about. It requires the firm to carry cover against liability for its own acts and omissions. Any route to a client through it runs through establishing that liability, which is a different exercise from claiming on a compensation fund.

Whether a firm deals on its own account or passes an order elsewhere is covered on our page on how a broker handles your order.

The products that only appear under this kind of regime are worth knowing by name, and broker priced instruments such as synthetic indices are the clearest example.

What Changes If You Are Classified a Professional Client

The 2024 amendment also sets out how a licensee classifies clients, and the test for an individual is quantified rather than left to the firm.

A licensee may classify an individual as a professional client only after assessing them and being satisfied that the person holds net assets worth at least US$1,000,000. Two things come out of the calculation: the home the person is domiciled in, and anything that stands for fiat currency in their hands. Other assets may be counted, whether held by legal ownership, beneficial ownership, or both together.

Two things follow for a reader. The threshold is written into a regulation, so a firm that has reclassified someone is asserting that a stated test was met, and that assertion is checkable against the regulation. And the exclusions are specific enough to be worth reading, because a valuation that counts a home or a cash balance toward the threshold is not applying the test as written.

Classification is not a formality: moving out of the retail category moves the protections that attach to it.

Who This Page Is Not For

Anyone looking for a ranking of offshore jurisdictions will not find one here. Ranking regimes against each other produces an ordering rather than an obligation a reader can check.

Anyone looking for a view on a particular firm is also in the wrong place. No broker is named on this page and none is assessed.

And anyone whose account sits with a firm licensed somewhere else should treat the method here as the transferable part. The structure holds in most regimes: a licensing statute, regulations made under it, and published guidelines for applicants. The section numbers and the figures are Seychelles specific and do not carry across.

Frequently Asked Questions

What is an offshore forex broker licence?

It is a permission granted by a financial regulator outside the major onshore jurisdictions to carry on a defined regulated activity, such as dealing in securities. The conditions come from the governing statute and its regulations, which differ by regime, so the phrase names a category rather than a standard.

Is an offshore broker safe?

Safety is not a property of a jurisdiction. What can be established is what a licence obliges the firm to do about capital, insurance, audit and complaints, and what it does not provide, such as a compensation scheme. The obligations are checkable; a reputation is not.

Does an offshore licence require segregated client accounts?

It depends on the instrument. In the Seychelles regime the Act imposes a general duty to protect client assets by segregation and identification, and empowers the Minister to issue rules sending money belonging to clients into a separate bank account that carries the word client in its name.

What happens to client money if an offshore broker fails?

Nothing in the Seychelles Act read for this page creates a statutory scheme that pays clients when a licensed firm fails. The protections are duties on the firm, including insurance against liability for its own acts and omissions, so recovery runs through insolvency and liability instead.

How do I check an offshore broker licence?

Take the legal name and the licence number of the entity and look both up on the register the regulator itself publishes, rather than on the broker website. The Seychelles authority publishes that register alongside enforcement notices and notices of licence surrender.