Investment Dealer/ Broker Companies

Investment Dealer/ Broker Companies

The Securities Act 2005 and rules & regulations made under it allow for Investment Dealer Companies to be set up and licensed in Mauritius.

Type of Company

A GBL1 can apply for an Investment Dealer Broker License from the Mauritius Financial Services Commission (FSC).

Type of Licence/Investment Services

An Investment Dealer Broker is authorized to execute orders for clients, to manage portfolios of clients and to give advice on securities transactions to clients.

Capital Requirements

Minimum stated unimpaired capital of MUR 700,000 (USD 20,000) shall be fully paid and no amount shall be due or payable.

Financial Instruments
“securities” means –

  1. shares or stocks in the share capital of a company, whether incorporated in Mauritius or elsewhere, other than a collective investment scheme;
  2. debentures, debenture stock, loan stock, bonds, convertible bonds or other similar instruments;
  3. rights warrants, options or interests in respect of securities mentioned in paragraphs (a) and (b);
  4. treasury bills, loan stock, bonds and other instruments creating or acknowledging indebtedness and issued by or on behalf of or guaranteed by the Government of the Republic of Mauritius or the government of another country, a local authority or public authority, as may be prescribed;
  5. shares in, securities of, or rights to participate in, a collective investment scheme;
  6. depository receipts or similar instruments;
  7. options, futures, forwards and other derivatives whether on securities or commodities;
  8. any other transferable securities, interests or assets as may be approved by the Commission; or
  9. any such other instruments as may be prescribed.

Jurisdictions

World-wide but subject to rules and regulations applicable to each individual country.

Licensing conditions for investment dealers

  1. The Commission shall not grant a full service investment dealer license, unless it is satisfied that the applicant has established procedures designed to prevent conflicts of interest and the use of inside information by an effective segregation of its different activities.
  2. The procedures mentioned in paragraph (1) shall ensure that the investment decisions concerning the portfolio of clients shall not be communicated or be available to any unauthorized third party.

Organization and supervision

  1. An applicant for a license of investment dealer or investment adviser shall satisfy the Commission that such internal structures as its organization, its technical and financial means and its staffing are appropriate and sufficient for the efficient operation of its business.
  2. Every applicant shall establish systems and procedures to ensure that non-public information is strictly controlled and not circulated to unauthorized third parties.
  3. Every applicant shall put into place systems and procedures designed to prevent money laundering and the financing of terrorism.These are particularly beneficial for Brokerage Houses operating worldwide. Mauritius has the advantage of having a modern and flexible securities law, it issues clear Investment Dealer licences within a reasonable time, requires reasonable minimum capital requirement and has a low tax rate. Mauritius is one of the best places to save on costs for Brokerage Houses and at the same time enjoy the range of service providers in the country.

 

Other Features

There are five categories of Investment Dealers under the Securities Act:

1. Full Service Dealer with or without Underwriting

These are authorised to:

  • act as an intermediary in the implementation of securities transactions for clients
  • trade in securities with the intention of reselling these securities to the public
  • underwrite or issue securities on behalf of an issuer or a holder of securities (if this option is chosen)
  • give investment advice which is supplementary to the normal course of his business activities
  • manage portfolios of clients

2.Investment Dealer Discount broker

These types of brokers are authorised to execute orders for clients without giving advice.

  • Broker

Brokers are authorised to execute orders for clients, to manage portfolios of clients and to give advice on securities transactions to clients.

3.Investment Dealer (commodities derivatives)

These are authorised to act as broker in Commodity Derivatives only.

4.Investment Dealer (currency derivatives)

These brokers are authorised to act as broker in Currency Derivatives only.

 

  • Licensing conditions for Investment Dealer

The Financial Services Commission shall not grant a full-service investment dealer licence, unless it is satisfied that the applicant has established procedures designed to avoid conflicts of interest and the use of inside information by an effective separation of its different activities.

The procedures shall ensure that the investment decisions concerning the portfolio of clients shall not be communicated or be available to any unauthorized third party.

  • Establishment and management
  • An applicant for a licence of Investment Dealer shall satisfy the Commission in such a way that the internal structures, its organisation, its technical and financial means and its staffing are appropriate and sufficient for the efficient operation of its business.
  • Where the applicant for a licence is a subsidiary of another company, FSC may require that some or all the employees/officers of the applicant shall be able to perform independently from the parent company.
  • Whenever a licensee operates or intends to operate branches, it shall elect an officer responsible for each branch and shall inform FSC accordingly.
  • Every applicant shall establish procedures to ensure that non-public information is strictly controlled and not distributed to unauthorised third parties.
  • Every applicant shall put into place procedures intended to avoid money laundering and financing of terrorism.

Where the applicant is part of a group of companies, the procedures put in place shall prevent the distribution of non-public information to other members of the group.