Labuan Vs. Vanuatu – An Offshore License Comparison

The biggest challenge forex brokers face when it comes to offshore licensing is deciding upon the proper jurisdiction. Banking, license permissions, and time frames are some of the choices a forex broker must weigh when deciding upon the ideal licensing region. A cost / benefit analysis of a Labuan, Malaysia license vs. Vanuatu is a perfect example of the many tradeoffs forex brokers must consider when deciding upon an offshore forex broker license.

Time Frame for License Approval

When Vanuatu initially began offering forex & CFD licensing, the process was relatively speedy. Since the introduction of a local office requirement in 2021, we have noticed a significant bottleneck not only in the processing of new licenses but also amendments or changes to existing licensed entities. From our perspective, the license approval period in Labuan is far quicker and predictable than Vanuatu.

Vanuatu Government Bond vs. Available Capital in Labuan

Vanuatu is unique in the realm of offshore forex licenses wherein capital is neither available for immediate use nor locked in a bank account, rather it takes the form of a government bond. Many consultants fail to mention this point, or are simply not aware of the implications. Since the $50,000 government bond cannot be immediately retrieved upon company dissolution, forex brokers pursuing Vanuatu must carefully assess whether they can accept this risk.

Unlike Vanuatu and most offshore jurisdictions, forex brokers licensed in Labuan, Malaysia are able to draw upon the paid up capital throughout the fiscal year. As long as the licensed entity tops up the capital back to 500,000 RM in time for the annual audit, the process can be repeated each year, making Labuan far more lucrative when it comes to capital flexibility.

Permissions & Leverage Restrictions – Vanuatu Is the Clear Winner

The ability to offer leverage greater than 200:1 as well as perform market making activities are two of the major attractions for Vanuatu. In Labuan, Malaysia, the LFSA only permits matched principal / STP order execution. Additionally, leverage in Labuan is capped at 100:1. For some brokers these restrictions make Vanuatu the better choice despite some of the hurdles outlined in this article.

Banking Considerations – Labuan Offers Superior Banking

Vanuatu is not known to have reputable banking relative to other offshore jurisdictions. While a local bank account is indeed possible to obtain upon license approval, it falls far behind current standards for international banking. We do not wish to imply that the safety of funds is at risk in Vanuatu, rather the quality and service one can expect from even offshore standards is lacking.

Labuan, on the other hand, offers access to some of the most reputable banks in South East Asia. The banking is lightyears ahead of Vanuatu in terms of customer service, ease of use, and simplicity. It’s worth highlighting that a direct IBAN and SWIFT code are available in Labuan banks, something not possible in most offshore regions, Vanuatu included.

Atomiq Consulting – Pioneers in Forex & CFD Broker Licensing Since 2014

Steering through the complexities of offshore forex broker licensing demands expertise and a nuanced understanding of the regulatory landscape. Atomiq Consulting stands tall as a trailblazer, bringing unparalleled proficiency in forex and CFD broker licensing since its inception in 2014.

To discuss our services in greater detail, don’t hesitate to contact us today!

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