Bahamas Securities Dealer License (SDL)

Permissions

• Dealing in Securities
• Arranging deals in Securities
• Managing Securities
• Advising on Securities

Capital Requirement

• Minimum of USD 300,000 for Dealing as Agent and Principal
• Minimum of USD 120,000 for Dealing only as Agent
• Minimum of USD 25,000 for Advising on Securities

All market participants, subject to certain exemptions, must adhere to minimum physical presence requirements in the Bahamas, including:

• Have a chief executive officer resident in the Bahamas and appoint at least one director who is a Bahamian resident;
• Keep such books, records and other documents as necessary and prudent for the proper recording of its business transactions, financial affairs and the transactions that it executes on behalf of others;
• Maintain an established place of business in and operating from the Bahamas and maintain premises and equipment necessary for the administration of its affairs;
• Unless a waiver has been provided, bear appropriate exterior identification of its presence and;
• Have public access telephone and list all other numbers, codes, mailing and street addresses.

A registered firm can appoint a managing representative that is approved by the Securities Commission and must be one of the following: a registered firm under the Act; an investment fund administrator operating in the Bahamas; a financial and corporate service provider; or an unrestricted bank & trust company licensed by the Central Bank of the Bahamas.

The Securities Commission will require that the registered firm and the managing representative enter into a service level agreement which details the arrangement between the parties.

A registered firm shall at all times maintain insurance policies in an amount appropriate to the complexity, size and nature of the securities business of the firm to cover at least professional indemnity.

Registration will not be granted should the Commission thinks that the coverage amount is insufficient.

However, this requirement does not apply to firms engaging exclusively in advising on securities.

Enigmatig shall seek to understand your business activities and goals to assist with your business plan drafting that best encompasses this whilst still being compliant to the prevailing regulations. Enigmatig shall also advise on the possible questions that might be posed by the regulator.

Filing and Reporting Requirements

Section 8 of the Banks and Trust Companies Regulation Act, 2000, requires that each licensee produce annual audited financial statements. Such statements are to be produced in accordance with International Financial Reporting Standards. Such financial statements must be furnished to the Inspector of Banks and Trust Companies and published in the Gazette within four months of the end of the licensee’s financial year. Further, all licensees (except where specifically exempt) are required to submit quarterly unaudited financial statements within twenty-one days of quarter-end.

Leverage

• With the new rules, all underlying CFD assets must have a minimum margin of 0.5% and a maximum leverage ratio of 200:1, as compared to the previous ratio of 500:1. These rules will be relooked on a case by case basis for cryptocurrencies. Forex brokers must also ensure that retail client accounts have a net equity at least 50%. These retail clients are also no longer allowed to trade in binary options. Stop-loss orders will now be set at 50% instead of the previous 20 or 30%.
• Professional clients are not subjected to the leverage requirements or margin requirement.
• Professional clients are clients who satisfy at least two out of the three criteria, which would demonstrate their expertise, knowledge and experience in CFDs, and that they understand the nature of such transactions and services. The criteria are as follows:

(i) The client has made significantly large transactions on the market. The must have been an average of 10 of these transactions being made every quarter-year for the past 4 quarters.

(ii) Professional clients are not subjected to the leverage requirements or margin requirement.

(iii) Professional clients are not subjected to the leverage requirements or margin requirement.

Due Diligence is necessary to formally verify the identity of all clients of the firm. The following documents are required to conduct due diligence for the license application:

• A copy of the photo page of the passport ceritifed by a notary public for each director and shareholder;
• A copy of proof of address (issued within the last 3 months) by a notary public for each director and shareholder;
• Curriculum Vitae (CV);
• Business Plan;
• Financial Forecast;
• Organisation Chart;
• For company directorship or shareholdership, a certified copy of the constitution documents of the company and above details on each director and shareholder of the company;
• Other supporting document when necessary.

Please note for a company listed on a major stock exchange or subject to regulatory supervision in a country with equivalent AML regulations to the Bahamas, evidence of such listing or regulation will suffice in place of the above information. Where the directors to be appointed are employees of such a listed or regulated company, a certified passport copy and confirmation of employment (to include position) will suffice.

• Bahamas Investment Authority Approval (if Non-Bahamian Principals)
• Company Incorporation
• National Insurance Board Registration (Company and Employees)
• Value Added Tax Registration
• Business License Application
• Central Bank Approval (US Dollar and other Forex Bank Accounts)
• Department of Immigration Work Permit Application(s) (Non Bahamian Employees)
• Appointment of Chief Executive Officer and Compliance Officer (Minimum Staff Compliment & Must be resident)*
• Securities Commission of The Bahamas Registration as Registered Firm
• Securities Commission License Application (*Dealer/Arranger/Manager/Advisor)
• Securities Commission Registration of each employee (as either Trading Representative Discretionary Management Representative or Advising Representative)*
• Leasehold Agreement for Physical Presence (Mandatory)*
• Appointment of Approved Auditor (Audited Reports to be filed 120 days after end of financial year)
• Central Bank Additional Approvals (e.g. If Non-resident principals et cetera)
• Optional Membership Applications with local associations (e.g. Bahamas Financial Services Board et cetera)

Securities Commission of the Bahamas, established in 1995, is committed to the growth and development of a vibrant, competitive financial services sector renowned for regulatory excellence. The Commission is responsible for regulating and overseeing investment funds, securities and the capital markets in The Bahamas. The Commission utilizes market surveillance, regulatory oversight, enforcement of securities laws and its investor education program to protect investors, maintain fair, efficient and transparent markets, and reduce systemic risk.

The Commission also functions as the Inspector of Financial and Corporate Services (“the Inspector”), having been appointed the Inspector on 1 January 2008. In this capacity, the Commission is responsible for ensuring that all persons operate in accordance with the Financial and Corporate Services Providers Act, 2000, which provides for the licensing and regulation of financial and corporate service providers.