Reasons to Trade with BVI FSC Forex Brokers
BVI FSC stands for the British Virgin Islands Financial Services Commission and is the regulatory body with ultimate responsibility for the regulation, supervision and inspection of all financial services in the British Virgin Islands. The services it oversees includes insurance, company management, trustee business, banking, company registration, intellectual property, and limited partnerships. In the words of the commission itself, it serves to “safeguard the public against any illegal and or unauthorized financial services business operating in or from within the British Virgin Islands”.
The core responsibilities of the BVI FSC
- To protect consumers by making sure all firms and individuals providing financial services are proficient and financially sound
- Supervise regulated activities and initiate and follow up on any enforcement action in respect of individuals or businesses which do not comply with the British Virgin Islands financial laws
- Watch out for and investigate any financial crime and help with prosecution
- Seek to improve domestic and international confidence in the British Virgin Islands financial service industry and assist the industry’s development and growth
- Guarantee a proper and fit regulatory environment ensuring quality products and services are provided for the benefit of the country
- Work towards developing the public’s understanding of the benefits and risks involved with different financial products
- Work with the financial industry and government in matters relating to financial services legislation, regulation, practices and supervisory policies
- Educate financial service practitioners
- Monitor legislation and its effectiveness
- Provide for the innovation of financial services legislation
- Keep in touch with other regulatory bodies to raise awareness of international financial regulation and the financial services business
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Regulation of Forex brokers in the British Virgin Islands
The BVI FSC (British Virgin Islands Financial Services Commission) was established in 2001, following the introduction of the Financial Services Commission Act 2001. Regulatory responsibilities previously overseen by the Financial Services Department of the government became the BVI FSC’s concern. This included all financial services carried out in the British Virgin Islands such as insurance business, insolvency services, investment business, banking and of course BVI FSC Forex brokers. It also assumed responsibility for the formation of companies, their management, and intellectual property. It also became the body with the responsibility for issuing financial licenses for those offering services in the Forex industry. A number of firms became interested in becoming BVI FSC regulated brokers leading to the commission drafting and putting into law the Securities and Investment Business Act of 2010. This meant Forex brokers in the British Virgin Islands were forced to follow a new set of rules and regulations aimed specifically at Forex brokers and other investment firms. BVI FSC may be new to the regulation of Forex brokers, but it as been dealing with investment firms and issuing licenses since the middle of the 1990s, as well as having a number of years experience implementing the regulations of the Mutual Funds Act.
How BVI FSC regulated brokers obtain a license
Forex brokers in the British Virgin Islands have to obtain a license from the BVI FSC. To start the application process it is necessary to have a company in the BVI specifically formed to provide Forex services. Special Memorandum and Articles of Association will have to be submitted to the Commission along with a full set of documents covering all aspects of the Forex license requirements. There must also be a rigid business plan and documents covering compliance procedures. The process for obtaining a BVI FSC Forex license is a little complicated and can be rather long-winded. But the Commission is more than happy to assist any brokerage firm that wants to obtain a license.
How does the BVI FSC help Forex traders like you
Many of you reading this will be aware of some of the big guns in the world of Forex regulation such as the FCA, BaFIN, CySEC, and the CFTC. However, there are a large number of regulated bodies you may never have encountered, and are probably wondering whether the same protection is afforded. The British Virgin Islands Financial Services Commission is a name which seems to be popping up more and more. All Forex brokerage firms operating from the British Virgin Islands have to be regulated by the country’s financial regulator, and in this case, it is the BVI FSC. Since 2010, it has been responsible for regulating companies falling within the 2010 Securities and Investment Business Act. This Act requires brokers offering Forex services to comply with the regulation, although it seems a number of firms have managed to slip under the radar of the Commission and operate without regulatory approval. This is something you should look out for. The British Virgin Islands regulatory law has received some criticism from industry experts because the regulations don’t include any threshold conditions imposed by more respected regulatory bodies. After taking a look at some of the requirements we discovered Forex brokers are not required to keep minimum levels of capital, to segregate client funds, to contribute to a compensation scheme, or outline their execution policy to customers. These are minimum requirements laid out by MiFID, so the BVI FSC is sadly lacking in this department. The majority of the 2010 Act seems to be concerned more with regulating mutual funds and preventing insider trading, and there is little which deals with the provision of retail trading and investment services. It appears the BVI FSC has an extremely light touch when it comes to regulating Forex service providers and consumers aren’t given the same kind of protection expected from a reputable regulatory body such as the FCA. For the time being, it would seem Forex traders are better served by brokers regulated in more reputable jurisdictions. That’s not to say, however, the BVI FSC isn’t making steps in the right direction. It works closely with other regulatory bodies and over time it should be able to make its own regulatory law much more effective.