The Belize financial regulator, the International Financial Services Commission (IFSC), has increased the minimum requirement for initial capital for financial and commodity-based derivatives brokers to $500,000, according to the latest version of the licensing regulation. The change affects brokers of forex, futures, options, contracts for differences (CFDs), interest rates, shares, and stocks.
Prior to the hike, the required capital was a minimum $100,000.
The new fees come into effect on 1 April, 2016. Companies that are yet to be registered and licensed in Belize will need to meet the new requirement, while those who already hold a license will have a period of two years to hike their capitals.
Furthermore IFSC has increased the annual licence fee from $5,000 to $25,000.
The change was voted by the IFSC board on 30 December, 2015, and was reflected on the regulator’s website in mid-January 2016.
Belize is known as an offshore destination for financial service providers, where the regulation and licensing requirements are not as strict as in other countries. Incorporation costs are also significantly lower there. Many forex brokers choose to register and be regulated in Belize since the provision of a license there requires them to meet fewer and softer criteria and to comply with less strict rules and requirements than if they registered in other countries. In fact, the IFSC rather relies on self-regulation of the companies.
Nevertheless, a broker license attracts traders as it bring them confidence and safety in choosing a broker.
The Belize financial watchdog keep a list of financial service providers registered and regulated in the country. Investors can look up any broker to check whether it holds a Belizean license and whether it falls under the regulation of the IFSC.
Still, even with the increased minimum requirement for initial capital, Belize remains one of the countries with lowest such requirements.
In comparison, in the UK brokers who want to obtain a license from the UK’s Financial Conduct Authority (FCA) need to present a capital of at least €730,000. In other countries capital requirements are even higher – €1 million for full license and €200,000 for limited license in Cyprus, and $1 million in Australia. In the USA and Switzerland the required minimum capital is $20 million and CHF 20 million, respectively.
Other brokers licensed and regulated in Belize include, FX Choice, RoboTrade, FBS, Weltrade, and MFX Broker.