Offshore locations are renowned for their little, if any, regulation as well as their non-existent business taxes. They are appealing for many Forex brokers as it is cost-effective and simple for many startups to set up and run a brokerage company. Some of the more popular jurisdictions offshore are Mauritius, Belize, the Marshall Islands, Saint Vincent and the Grenadines, British Virgin Islands, the Seychelles, Dominica and Vanuatu, and the Cayman Islands. Offshore forex brokers, are considered all brokers that run their business through such locations.
Offshore Forex Brokers List
MAS, JFSA, DIFC
Capital Requirements for Offshore Brokers
In order to register as a Forex broker in some of the offshore locations, brokers must meet certain criteria, such as a certain capital requirement to show their current good financial position. In Vanuatu, this is as little as $2,000. In comparison to this, brokers registered in the UK that comply with the FCA must have net assets of a minimum of 730,000 euro as well as keeping clients’ funds in a different account.
Trading with Offshore Forex Brokers
Trading with these brokers is very risky and many offshore brokers are actually scammers looking to cut corners. Unlike in the EU, the offshore zone regulatory bodies don’t make a point of checking for compliance with companies and, perhaps more importantly, they are not obligated to report any individual transactions. Simply put, an offshore Forex broker can just delete profitable trades or even deny your withdrawal. And there would be nothing you could do about it.
Of course, it would not be right to suggest that all brokers working from offshore locations are involved in fraudulent activity. But, it would be advisable for traders to remain cautious when looking to trade with a broker that is offshore. There’s basically no protection if something were to go wrong. There is no obligation for the companies to arrange compensation if the company goes into insolvency.