Forex Trading: Why Avoid Brokers from Vanuatu

• What is VFSC?
• Why not trade with a VFSC-registered broker?
• Is there a way to submit a complaint to VFSC?
• List of VFSC Brokers
• Conclusion on VFSC

Introduction to VFSC

What is VFSC?

Vanuatu is a popular offshore zone for Forex Brokers and Financial firms run Vanuatu Financial Services Commission (VFSC) as a regulatory body to oversee investment and credit services, as well as other financial providers formally established in December 1993. See the snapshot of the VFSC mission below. Vanuatu itself gained its independent status in 1980 and is an archipelago of approximately 83 islands situated in the Southwestern Pacific Ocean. (Read more about VFSC on Wikipedia)

• The Securities License in Vanuatu allows one to carry out international brokerage services with the ability to buy, sell and trade securities such as shares, bonds, options, etc, as well as manage a portfolio of investments for and on behalf of clients. 
• VFSC supported by a Deputy Commissioner with four departments divides their functional responsibilities, including Corporate Services, Insolvency, Legal Enforcement, and Compliance and Registration. Each of the departments performs with the purpose of meeting obligations and ensuring the current administrative and support assignment with an aim to establish a recognized internationally reputable and commercially attractive Vanuatu’s Financial industry.
• However, the main note is that Vanuatu is offshore jurisdiction like VFSC regulation is offshore too, therefore its standards are far beyond the top-tier regulations and can not be placed in the same line of safety, be sure to continue reading the next paragraphs

Why not trade with a VFSC-registered broker?

In fact, Vanuatu jurisdiction gained its popularity among the investors and business owners in the Forex industry looking to become a regulated broker, yet obtain its status through a simplified process and operate almost without supervision. Eventually, the small Pacific island of Vanuatu became very well-known and a paradise for financial industry owners, as Vanuatu proposed not only the opportunity to become an official financial service firm but to enjoy a variety of tax benefits and avoid legal challenges.

Therefore, many international companies looking for a solution and an offshore zone to enable their business ideas placed their interest in Vanuatu and incorporate their firms there. See some of our finds about Vanuatu Trading below and why it is considered not safe to deal with Vanuatu Brokers:

• Increasingly popular regulation of Vanuatu shows its demand specifically among the Binary Options and other FX Brokers since the set of VFSC demands to establish a business is a very attractive opportunity, while more from the companies understand the necessity of regulation status. Brokers understand that regulations improve their reputation, trust increases dramatically among the traders, as well as other additional benefits are enjoyed, like international payment providing acceptance. (Read our article about Binary Options Scams)

Vanuatu Trading Registration

As a matter of fact, the main responsibility of the VFSC is a registration process only, which is merely implemented through low setup requirements. Consequently, an easy registration process with low costs, and very quick establishment invites various brokerages to be registered out there. Perhaps, Vanuatu is the easiest jurisdiction to open a brokerage, as the opening requires the company to submit a register online and prove initial establish capital which is $2,000 only to pay a fee, and within 2-3 months, the firm is crisp and registered.

• VFSC regulator does not require strict proof of the company background, nor check on the implementation of the secure fund management or operation guidelines, does not require regular reporting, and further on never impose fines in case of fraud operation.
• The authority is in charge of the official reporting of the company's legitimate issues only, which means the broker should submit a report once a year only, with no details of services provided. This opens doors to potential frauds and trading scams, alike compared to the industry-leading authorities’ legislation (like UK FCA or Australian ASIC), the VFSC report requirement is far beyond the necessary level that may protect from the company’s fraud operation and reveal the illegal acts. In fact, the report submits only the company returns and expenses and the general activity and has nothing to do with protective measures towards the clients.
• Consequently, the cost of the brokerage becomes very low compared to industry-leading licensing or even to some other offshore financial centers, while the firm may set up operation even without the need to maintain a physical office. Obviously, it comes to the point that the investment and trading with VFSC brokers do not provide any guarantees of the company's sustainability, its serious measures, and what is extremely risky, does not implement any protection that protects from fall to scam or fraud.
• Overall, the VFSC regulation and Vanuatu itself might be an attractive opportunity to open a business but it is not a likeable regulation for traders or investors. With the growing demand and popularity of trading and the Forex industry itself, before you entrust any broker your funds, strongly consider a sharp check on a broker and engage only with those that are regulated through recommended authorities alike FCA, FINMA, ASIC, or others. Remember also that not every company stated its regulation is indeed regulated one, as many brokerages mention its regulated nature but in fact, holding an offshore license only. We do not recommend trading with an offshore broker that holds no license, as such these offerings should be avoided by every means! (Read Why Trade with FCA UK Brokers)

Complaints and scams

While the main duties of VFSC, as mentioned by the authority, concerning the provision of effective services for the supervision of the financial business to protect the public against financial loss out of dishonesty. Yet, the authority does not assist in case the trader was victimized or falls under scam by a Forex Broker incorporated in Vanuatu. In the scenario of funds lost, the trader remains alone and unprotected to recover funds from the VFSC Broker, while the chances of refunds are minimized.

However, In case you are not satisfied with the investment transaction, you can submit a complaint through a VFSC contact form https://www.vfsc.vu/fees-help-support/contact-us/

• Even though, the VFSC authority tries to promote the development of the Vanuatu financial service industry by submitting from time to time warnings against those companies that mention their registration by VFSC, mislead or false information about service providing. However, this is the maximum the authority can do to protect clients.
• Yet, most often the regulation is not able to assist and will refer to the point that the trader using the services at his own risk.

List of Vanuatu Forex Brokers

Currently, we have reviewed hundreds of Forex Brokers in Vanuatu, and in fact, none of them is included in the list of trusted or regulated brokers which we recommend trading with due to a lack of safety measures. (For example, see our Review of Doo Prime)

The protection of funds always stands first while trading, therefore, check on the broker carefully, and revise the broker’s regulation status, while is best to choose Broker with top-tier licenses and avoid solely offshore offerings, check on updates and other information, along with the reputation by reading reviews and checking on the legit documentation. And of course, choose only reputable companies that were established in known financial centers through implementing the strictest regulation of forex business and financial service itself.

• List of Vanuatu licensed brokers along with additional information about Vanuatu Registered companies available to check through an official online source. But as we advise solely Vanuatu registration does not mean Broker is safe.
• Verify company reputation through the list of Brokers to avoid, or contact us in case you can’t find a particular one and better not respond or keep a distance from any cooperation with Vanuatu brokers, offshore brokers, or non-regulated entities at all costs.

Conclusion on VFSC

Obviously, Forex Brokerage service, as becoming popular, must be issued with a respected regulation of Forex Broker License. It is not a matter of protection only, but international banks or payment providers do not accept applications from unlicensed companies. However, the licenses can be granted either by an offshore jurisdiction, which has no ability to implement the strictest qualification of the financial firms, or an onshore regulatory body through imposed sharp and high requirements or legislation towards brokerages. As such, offshore brokerages including Vanuatu Brokers may fall on various possibilities of the company operation, while in fact many of them are pure frauds.

• Such investment service firms, including Vanuatu Broker and those registered by VFSC bypass legal constraints and do not comply with costly compliance of the jurisdictions that solicitude at first about customer-oriented offerings through protecting tools. 
• So when it comes to the point of choosing the best firm to trade with, the trader or investor should protect himself and better to consider brokerages from reputable jurisdictions that maintain a sustainable level of protection. The financial investment and trading providing itself require the strictest overseeing by the industry authorities, otherwise, the risks may incur traders to lose capital or fall under scams. To assist and discover more about the differences or applicable management of the regulated brokers check out the listing by the link.

• What is BaFIN?
• Why trade with a BaFIN-regulated broker?
• BaFIN Brokers Requirements and Regulation
• How to Complain to BaFIN?
• List of BaFIN-Regulated Forex Brokers
• Conclusion on BaFIN

Introduction to ASIC

What is BaFIN?

Bundesanstalt für Finanzdienstleistungsaufsicht or the Federal Financial Supervisory Authority - known as a BaFIN, is the financial regulatory authority in Germany also one of the most respected and Top-Tier Regulatory authorities known worldwide. BaFIn acts as an independent federal institution under the supervision of the Federal Ministry of Finance Germany, also falls under EU Regulation of MiFID and ESMA being EU part. The German Federal Bank merged the authority along with the insurance and securities regulatory agencies and supervision.

While BaFIN holds a responsibility to supervise and regulate the financial sector in Germany, with the purpose to maintain smooth operations and harmonized offerings. The regulatory role falls in affects law enforcement towards banks, financial services institutions, insurance undertakings, and securities or derivatives brokers. (Read our article about BaFIN Brokers)

• Perhaps, BaFIN is one of the largest and most valuable European regulators due to the fact of German economic and financial positions, as well as the large number of financial market firms that operate in the region. There are no doubts about BaFIN's role in the financial trading sector, since the extensive regulation regarding leveraged products, Forex and CFD trading came up together with the growth of trading offers, and followed the previous strictest development of stringent rules towards financial firms.

• Moreover, BaFIN constantly develops its powers, as of 2016 a new launch was dedicated to encouraging more businesses and exposing misconduct. The major role of BaFIN ensures integrity and transparency of the German financial investment offering, along with its charge of the constant solvency and payment obligations of the regulated institutions and capability to deliver the confidence of services to their clients or traders. That means, BaFIN continuously check on the service providers and market participant in the sector and assures its strongest position on the international scale. (Read more about BaFIN's functions and role on their official website)

Why trade with a BaFIN-regulated broker?

As BaFin operates in the public interest, its primary objective is to ensure that the financial system is properly functioning and delivers stability and trust towards investors or traders. The supervision of securities, CFDs and Forex consistent of integration and protection of offering and controlled on a legal basis throughout the Securities Trading Act (WpHG), the Securities Acquisition and Takeover Act (WpUG), the Securities Prospectus Act (WpPg) and the Prospectus Act (VerkProspG).

• In addition, the provisions of the Stock Exchanges pricing process are monitored by the authority in collaboration with the exchange's own trading surveillance units. In simple words, that means that BaFin as a German authority does not only register or regulated financial market participants, but also supervises exchange-like trading systems and subject cooperation to fulfil the functions at the international level. Therefore trading with BaFIn Brokers clients are ensured of transparency and strict obligation to the laws.
• The Federal Chamber establishes special guidelines for regulated members and particularly interprets an operational standard that enables safety and transparent measures towards traders. The list includes segregation of the client’s funds from the company's operational ones at all time and enabled negative balance protection. This assures that the trader’s funds are safe and not reachable by the company, as well as that volatility market conditions won’t affect the trader’s account into a loss of balance more than the initial invested capital. As a general mean, the regulator acts and enables new rules and controls according to the new developments and findings, therefore current issues follow numerous rules towards Crypto trading and leverage restrictions, while the needs are not to be between 2:1 and 30:1.
• Moreover, with the purpose to protect consumer rights, which is among the top responsibilities of BaFin, the authority serves the Consumer Advisory Council that analysis information about the financial markets and prevents broker’s manipulations. The BaFin broker submits reports on a periodic basis and submits information on company orders, lending and all forms of assets along with disclosure reports. The required regulation allows BaFIN to request operational information, and conduct supervisory or analysis at any time, while in case the regulated broker does not comply with necessary standards this may cost a backwash.

• In the past German authority has hardly made use of enforcement, however recently BaFIN is an effect to initiate legal action when it discovers suspicion of a crime, including market manipulation, illegal action, insider trading or establishment of fraud. Further actions include the creation of a working group together with a professional to define objectives, publication of found information to the public, imposition of fines and heavy penalties, and even raising of a criminal complaint against persons or companies. In addition, BaFIN has the power to ban a product or dealer offer, remove the directors, suspend shareholders and appoint outside supervision.
• Overall, throughout the strict regulatory guidelines, the trader and investor are protected at any stage or scenario from the account opening, and trading process, up to the unlikely events of the broker’s insolvency. BaFIN is responsible for the statutory compensation and guarantee scheme plan, which is mandatory to join with the purpose to protect customers’ deposits. The mechanism clarified compensation up to 100,000€ which any client is entitled to receive.

BaFIN Brokers Requirements and Regulation

From the application of the license, until the company officially obtains its registration, the firm will pass through a serious check of the performance, and its maintenance of sustainability and trust, while their shareholders are required to check also, along with a large number of control systems. In fact, it is not easy to become a regulated BaFin broker and meet the necessary requirements, as minimum requirements should be sharply achieved, otherwise, the company will be suspended, in comparison offshore companies which we advise to avoid are not required to obtain almost any of those rules that guarantee safe trading account. Read Why Avoid Belize Brokers

• The minimum capital requirement depends on the financial company type and averages between 50,000€ to 730,000€. While the system disciplines numerous details for the company to maintain, overall the minimum capital of an investment company which trades on its own account should be not less than 125,000€.
• The broker also checked for its adequacy, should submit a business plan, acknowledge and practice essential experience, apply protection systems and have at least one year of risk control with a record of at least 6 years. The directors and top management are interviewed in terms of their qualifications, so BaFin can rest assured the company's sustainability is protected by the intelligent management and experience to run a successful brokerage as well. 
• After its registration process the broker, as established and regulated in the EU, the company will automatically comply according to respective ESMA regulations, due to an EU directive. The broker received a regulated status maintains a physical office in Germany and is organized to comply with its mandates at all times.

Regulatory Complaint

As a part of the customer protective service, any trader or investor can file a complaint against the broker if the one faces an unfair experience with a particular company. Apart from an applied resolve procedure, which every regulated BaFin broker applied to and you should first refer to the company itself, the trader can submit a complaint in writing with the necessary details and proof of claims to BaFin. The information will be reviewed for evidence, while further the stated company will be contacted for a detailed explanation and treatment plan.

• Regardless of the outcome, BaFin will give final notice to the client, in case it can resolve an issue or not since securities investment complaints are a special character and BaFin has no right to support claims. BaFin can only take action against supervised companies and check on their compliance with the agreed contractual terms and legal requirements.

If you having problems with a bank, an insurance undertaking or a German management company (Kapitalverwaltungsgesellschaft – KVG), the BaFin may respond by suggesting an out-of-court settlement of the dispute or Ombudsman Services company.

Submit the complaint about the BaFin broker: https://www.bafin.de/EN/Verbraucher/BeschwerdenAnsprechpartner/Ansprechpartner/BaFin/bafin_node_en.html

BaFin Trading Education

In addition, BaFin educates the population through its comprehensive information that is available to all. You may find out about financial issues, and a wealth of information about banks, insurance undertakings, and other financial services providers. BaFin also answers frequently asked questions in case there are difficulties with a company or you can find out who to contact to receive advice.

BaFin consumer organizations service: https://www.bafin.de/EN/Verbraucher/verbraucher_node_en.html

List of BaFIN-Regulated Forex Brokers

In order to help traders to verify information about the BaFin forex broker license, the authority’s official website publishes a list of regulated entities with constant updates. In addition, the regulated BaFin broker will display on the footer of its website or regulation page the BaFin license number, which is available to check through official sources. (Search for BaFIN-regulated companies on official website)

In addition, it is advised for any trader or investor to check on BaFin Broker Reviews with updates and recent news from the broker. Currently, the German regulated brokers' list on our website includes 50 BaFin Regulated Brokers and growing, check on Regulated entities by the link. Also, You can learn more about how Forex Trading Scams work in our article linked here.

Conclusion Germany BaFIN

The benefits of trading with the BaFin-regulated Forex Brokers are obvious, as the authority enabled the strictest insurance of strong brokers’ responses, responsibilities, and compliance to its high solvency standards also being Top-Tier Forex Trading authority. That monitoring products, overall run of the trading or investment proposal and other issues along with the compensation provided to the clients when necessary. Overall, the BaFin made it scrupulously to monitor regulated brokers and smooth operation of the German finance system as an important part of international turnover.

The German brokerages are computable to the successful prospective of operation, makes their utmost to develop a market and focus on fair treatment of their client and are very well regarded by us and many traders in community too. For this reason, BaFin gained high consumers rankings, as well as popularity to establish brokerage, particularly under the BaFin regulatory status.