The Virgin Islands, or better known as The British Virgin Islands, are an island group best known as one of the remaining British overseas territories in the Caribbean and an offshore tax haven. The secrecy laws and the 0% tax have attracted offshore businesses for decades, with over 41% of them currently being in the Virgin Islands. For obvious reasons, Forex brokers were also attracted and started moving the businesses to this part of the Caribbean archipelago. This brought the need for regulatory bodies and the ultimate response was the Financial Services Commission (FSC).
The 2010 Securities and Investment Business Act finally formed a statewide regulatory law and obligated Forex brokers in the British Virgin Islands to comply. While there were many brokers ignoring the regulation at first, we can say most of the Forex business in BVI is now authorized – traders are always encouraged to investigate the regulation before taking up business with a specific broker.
Financial Services Commission Regulation
The British Virgin Islands Financial Services Commission authorizes and actively regulates the financial market and brokerages, constantly monitoring the activities. Providing the regulation, the BVIFSC has brought more reliability and transparency into the business and further built the client confidence with the regulated brokers.
However, there are certain limitations to Financial Services Commission’s efficiency with no requirements on the minimum capital, segregated client accounts, or the compensation scheme imposed by the Markets in Financial Services Directive in an attempt to synchronize the regulation throughout the European Union. There are improvements in regulation and the laws that need to be implemented to further satisfy the end-customer needs, but the FSC indeed brings the much-needed directive and the ease of mind to traders with BVIFSC regulated brokers.
How Are BVIFSC Licenses Issued?
Understanding what it takes for a Forex broker to obtain a license from a particular regulator can go a long way in helping traders make up their minds if they want to trade with brokers licensed by that regulatory body. For this reason, we will try to explain what it means to become a BVIFSC regulated Forex broker. First and foremost, the company needs to establish an office in the British Virgin Islands. Requiring a physical presence in the country is always reassuring, as it provides traders with an extra layer of safety. It is much different to send your money to an offshore address thousands of miles away as opposed to dealing with a company situated in your neighborhood. Next, all British Virgin Islands Forex brokers are required to submit a clear and concise business plan, along with relevant accompanying documents.
These documents cover different company rules and manuals, explaining business practices, procedures, etc. Only when the company submits all the required documents and have an established location in the country, their application will be reviewed. This review process is very thorough and detailed, which ensures that no shady brokers will fall through the cracks. It can take several months between the moment an application is submitted and the moment the license is issued; and that only happens if the review process finds everything is in order and the company possesses all prerequisites to start offering brokerage services in the country.
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Improving Transparency One Step at a Time
Although we’ve mentioned that there are still things that BVIFSC needs to improve in terms of regulation, they’ve certainly made a great headway in this regard, and they continue to do so. More and more traders can sleep well, knowing that BVIFSC regulated brokers will act in their best interest and keep their money safe, separated from the company’s cash. While there is no such thing as a perfect Forex operator (or a perfect operating license, for that matter), efforts by the BVIFSC are more than evident.
They want to create a safe and transparent Forex trading environment, which welcomes only fair and honest brokerage companies and offers the best conditions for the traders. They understand the Forex market can only develop if both of these sides work smoothly. People will not invest with shady British Virgin Islands brokers, and shady brokers damage the reputation of the entire business. That’s why regulation (and application thereof) is the key and the only way forward.
Another Developing Market With Potential
The Forex brokers in the British Virgin Islands are widely popular for the conditions they offer, being most probably the best-known offshore destination for the companies and the big individual traders. Forex trading is authorized and regulated by the Financial Services Commission, which was formed in need of such a regulatory body but still has limited powers. The BVIFSC regulated brokers are reliable and offer high-quality services to traders worldwide, many being regulated outside the Virgin Islands too. With the standard and the unique features as well as the high-quality customer service, these brokers continue to attract numbers of traders with the well-rounded offshore based, yet regulated services.