Company / Analytics

Analytics, 06 February 2020

How To Find The Best Offshore Stock Broker?

Did you ever wake up and find out that your broker holding your portfolio, suddenly, went into administration for no apparent reason?

After all, you did carry out all your due diligence on the broker before deciding to open an account but something sneaked into under your radar. How did that experience affect your confidence in finding an actual stockbroker that gives you that peace of mind?

I’m going to presume that this did affect you.

So this is why we decided to create some guidelines to help, investors like you, selecting a broker and jurisdiction that helps you achieve your financial goals and at the same time give you more confidence with the company you are doing business with.

Are you ready to get started? Then let’s get into it.

Laws & Regulations

It’s a fact, in the last few decades there have been scandals after scandals from Panama Papers, Money Laundering and Tax Avoidance from Politically Exposed Person (PEPs). This affects the jurisdiction so the country is pushed by other World Organizations like OECD, or by nations like the United States, to clarify their rules and regulation for the lack of transparency within their Financial Industry.

So the first basic question you should ask yourself is “which Legal System is in place in the jurisdiction I’m about to choose?”. Is it Civil Law, Common-Law, a Religious Legal System or a mix of all the above? An important factor is whether one of the official languages of the country is a language you understand (e.g. English)?

You may be wondering why this is important? Consider a situation where you invested your funds in a Financial Institution and suddenly that company went bankrupt by using clients’ money to bet on the stock markets? Financial Regulations got a lot stricter since 2008 and it may be a lot harder for Financial Institutions to use client’s funds for their liquidity but not impossible.

So let’s assume it happened. I could things in a perspective if you ask yourself the following questions: Would I be able to fight it in court based on the Legal System? How long would this take? Can I contact the regulator myself or there is a language barrier? Is there any investor’s protection scheme set up by the local regulator?

As an additional task, you can also check how tough are the applicable fines imposed to the Financial Companies by the Regulators if they breach any of the laws & regulations. You can find more information from the World Bank that shows the rank of each country Protecting minority investors.

The Reputation of a Jurisdiction

So now you found a jurisdiction that provides a legal system that you are more familiar with as a language you understand but also, more importantly, it protects small investors. Other key factors you might want to consider are:

It is important to understand how stable is the economy and the whole geopolitical climate in the area. Any major war conflicts, frequent change of government or, on the opposite, dictatorship rule can be a potential threat to the safety of your funds.

Offshore Jurisdictions tend to be always the most affected by organizations like the OECD when it comes to transparency and establishing effective exchange of information & AML rules. Although many of these jurisdictions are not white-listed by OECD and a member of Financial Action Task Force (FATF), they are part of FATF Associate Members (e.g. APG, ESAAMLG, CFATF, and so on..) which carries out the same objective of providing transparency throughout the different global jurisdictions.

Since the EU decided to implement the General Data Protection Regulation (GDPR), other countries outside the EU have followed the same standards by implementing laws to protect personal data. An example in Mauritius is the Data Protection Act. Are there any laws protecting personal data within the jurisdiction you chose?

Constant improvement in the banking & financial sector is a must on your chosen Jurisdiction. A country that is not investing in its banking infrastructure will ultimately create major constrains to investors as well as in the financial sectors. Transactions costs will remain higher than in other jurisdictions and service providers will not be able to provide you the service you wish, due to bureaucratic procedures. So avoid giving yourself a headache!

KYC and Due Diligence procedures are a must anywhere these days, but in many jurisdictions, you will find them way too bureaucratic and unnecessary complicated. If you realize the requirements to open a simple investment or bank account impose a lot of paperwork, the best is to move on.

When it comes to protecting your assets, you first want to ask yourself is if I place my funds at Broker ABC, assets, portfolio, are they truly protected? Adding to that, what would happen if my broker would go bankrupt? Could I repatriate my assets? Or would I lose everything?

You can start by doing some research on where the broker is regulated and licensed, which are the main custodians and banks they use (the top banks like CitiBank, JPM, Nomura and similar would be big plus), are they physically present in the country of their jurisdiction, who is the person behind the company e.g. CEO and are there any mentioned names on the broker’s website.

Although the majority of the companies advertising their services, do show the main person who is leading the company, such as the founder or CEO, it is still recommended to carry out some basic due diligence to ensure the information about the person stated on the website is authentic and legit.

You made it this far!

So you did your research and gather all the information about the Jurisdiction for a broker “ABC”. Now it’s time to see if they can offer all the financial instruments you require, user-friendly professional trading platform (or several) and 24/5 service support for those unexpected cases.

Nowadays, where we all have smartphones and the world has gone fully digital, it is easy to assume that you, as an investor, can place, monitor or download your portfolio online (as supposed to sending/receiving letters, emails or fax). But do not get me wrong, dealing with people is still an excellent advantage (even if you can still do everything online). Especially if you are traveling, have technical issues with your machine or simply want to develop your relationship with your broker.

Also, check whether the broker of your choice can accommodate you as a client, especially if your case is a little bit specific. Let’s take an example that you are a UK citizen residing in South East Asia, hold a Trust in the Fiji Islands and want to invest in the US Stock Market. Can the broker onboard you as their client? If yes, what type of account can the broker “ABC” provide you?

I hope these guidelines help you find the offshore broker that truly serves your needs and can help and reach your financial goals.

Now, you may have noticed that in all the questions when you refer to Investors Europe and Mauritius, you will find that “the boxes” are ticked positively. If you are in the process of searching for an Offshore Broker, consider Investors Europe (Mauritius) as we are a company that creates long term relationships with our clients for almost 20 years.

If you are ready to speak with one of our representatives, go ahead and click here.

Choose one or several trading platforms and achieve your goals with Investors Europe

Investors Europe (Mauritius) Limited is authorised and regulated by the FSC Mauritius, license C112011088. Registered address: 3rd Floor Ebene House, Hotel Avenue,33 Cybercity, Ebene 72201, Republic of Mauritius. Registered Number: 113933.

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