Choosing SIBA Forex Brokers For FX Trading & Investments
SIBA (Seychelles International Business Authority) is a Forex regulatory organization situated in Seychelles, a group of islands off the coast of Africa. SIBA is pretty much an unknown entity in the Forex trading market, and unlike its peers, SIBA is an African regulatory agency that caters to a wide variety of offshore companies looking for the most economical option for setting up a Forex brokerage. Although SIBA was initially the primary regulatory agency for all firms in the country, the regulation of non-bank financial companies such as hedge funds, Forex brokers, asset managers, and other financial entities fall directly under the Financial Services Authority Act of 2013.
Such a move puts all SIBA regulated brokers under the watchful eyes of the Financial Services Authority of Seychelles. FSA of Seychelles was introduced to ensure that Forex companies and other financial businesses operating in Seychelles conform to a stringent set of rules and guidelines that are designed to protect client funds and prevent financial crimes. Several regulatory reforms over the years have indeed helped the agency to gain trust and acclaim among international investors and has also enabled SIBA to counter scams in an efficient manner.
History Of SIBA Regulation
SIBA started its regulatory oversight in 1995 and was introduced to the world as a semi-Government initiative that included members and stakeholders from both the Government as well as private sector. The primary aim of SIBA was to advertise the huge incentives offered by the nation to offshore companies that wished to set up base in a foreign country to enjoy tax benefits as well as other welfares. One of the primary attractions of SIBA regulation is the ease with which companies can set up a business without any complicated procedures. The SIBA regulatory process can be completed within a short span of time with minimal bureaucratic interference, which allows companies to concentrate on their core business without incurring additional expenses.
However, with changes in the international financial scene, Seychelles also witnessed a rapid change in its administration, which forced the Government to create a separate entity for regulating non-banking financial companies. The Seychelles Financial Services Authority performs the job of regulating all non-bank financial firms through the direct involvement of the Central Bank of Seychelles, the Seychelles Investment Board, and the Fair Trading Commission. The SIBA FSA agency continually holds annual conferences, meets, and presentations throughout the world to penetrate the global markets, albeit with limited success.
Can Forex Traders & Investors Trust SIBA Regulated Brokers?
You will find it tough to find SIBA Forex brokers when compared to regulated brokers from other jurisdictions such as the FCA, CySEC, NFA, and the ASIC. Also, the geographic location of Seychelles pits the organization directly against another popular African regulatory authority, the FSB of South Africa. Therefore, it does not come as a surprise that Seychelles faces an uphill battle against its European and American counterparts for establishing a significant presence in the global financial markets. Nevertheless, Seychelles offers some of the most attractive incentives to companies for setting up their base of operations in Seychelles, which helps the country to establish itself as a business-friendly nation.
However, as far as broker trust is concerned, traders will find it hard to trust Seychelles Forex brokers, as other regulated brokers are in an entirely different league. The lower market penetration works against FX brokers regulated by the SIBA. A majority of traders will usually resort to the tried and tested brokers from established regulatory agencies, rather than risking their hard-earned money with a broker regulated by a lesser known agency. That said, Seychelles does have some unique advantages that put it in good light, even after factoring in a few drawbacks.
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How Does SIBA Regulated Brokers Operate?
SIBA Forex brokers are required to follow certain rules and guidelines as per the Financial Services Authorities Act of 2013, which states that every regulated member should adhere to strict financial regulations to prevent any instance of financial abuse or malpractice. Therefore, SIBA has a regulatory framework that is broadly similar to the global standards of financial regulation, which stipulates that FX brokers should indulge in honest and ethical practices without misusing client funds in any manner.
SIBA is also very proactive in enforcing strict anti-money laundering laws, which is one of the biggest problems faced by countries that offer attractive incentives for offshore company formation. Money laundering is seen as a serious offense by many international agencies, and the world’s collective financial system has described various procedures and guidelines that are designed to curb money laundering. SIBA, through its FSA of Seychelles initiative and FSA Act, ensures that all money laundering activities are monitored and strictly sanctioned so as to ensure that the agency earns top rank in the international financial market.
Factors That Hinder SIBA Forex Brokers From Succeeding
SIBA and the Seychelles FCA do not have the power to enforce strict sanctions and penalties on member firms fearing the financial backlash it can have on the nation due to companies leaving the country for greener pastures. The tendency of the country to attract investors acts against its principle interests of protecting the investor, as the number of SIBA regulated Forex brokers is pretty low for the nation to alienate anyone. Scam brokers are aware of the Seychelles’ helplessness in tackling financial crimes, and although there are trusted FX brokers in the SIBA board, there is a small chance that brokers are always on the verge of indulging in any financial malpractice to improve their bottom line.
The ever-looming threat of scam is the main reason why traders avoid SIBA regulated brokers; however, genuine and reliable companies do offer some serious benefits that can be hard to ignore. Forex brokers require a higher number of traders to open an account with them for the business to be successful; therefore, companies will offer numerous advantages and benefits that are bound to trump eclipse most of the mainstream brokers in the industry.
By providing larger bonus packages, lower trading costs, higher leverage, and feasible trading conditions, SIBA brokers can make trading seem like an incredibly profitable proposition. Such brokers can provide an incredible trading environment, especially if a trader is willing to do a bit of research to find a genuine and reliable broker that has been consistent in its dealings with traders over an extended period.
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