FSC investment dealer full service or discount broker: Which licence is better?
A snapshot of Mauritius’s financial licensing landscape and practical guidance from a local expert: Blue Azurite.
Mauritius boasts one of the most robust offshore financial systems, benefiting from strong capitalisation and profitability. With a strongly capitalised banking system, with assets accounting for almost 100% of GDP, and an above-average financial literacy rate among adults, Mauritius continues to strengthen its position as a global financial hub.
Its coherent regulatory framework and monetary policies centred on macroeconomic stability have put it on the growth map of many international brokers and prop firms. In this context, Blue Azurite Ltd., a leader in corporate management and financial licensing in the country, emerges as a key adviser to financial industry players expanding overseas.
Holding a licence from the Financial Services Commission Mauritius (FSC), Blue Azurite is the first management company to prepare a successful application for a licensed Securities Trading System (STS) licence with the Mauritian regulator.
Its corporate management and licensing service portfolio spans the full spectrum of retail and institutional financial services, from incorporation to licensing. Among these, the Full Service Dealer and Discount Broker licensing services are some of the most highly sought-after.
Understanding what each of these licences grants to its applicant is essential. The following are the most important aspects that business owners should keep in mind when opting for one or the other.
Full Service Dealer Licence: what it covers and who it is for
Suitable for brokers, dealers, and financial institutions seeking to provide a complete range of securities dealing services, the FSC Mauritius Full Service Dealer (including securities underwriting) licence enables holders to conduct a broad range of financial activities in the securities market, including:
- Security trading intermediation: As investment dealers, financial service providers such as brokers and prop firms are authorised to offer trading in securities, connecting buyers and sellers by facilitating trade execution.
- Principal trading: With a Full Service Dealer licence, platform operators can also trade on their own account and take the other side of the trade when buying and reselling securities to the public.
- Security underwriting: Further expanding the investment dealers’ role, this licence empowers dealers to guarantee the sale of a specific number of securities or shares, thereby reducing the issuers’ risk and supporting capital raising.
- Investment advice: Dealers can also provide financial advice in the form of expert guidance and exclusive insights based on market analysis and trends.
- Portfolio management: Lastly, with a Full Service Dealer Licence, financial institutions can manage client trading portfolios and make investment decisions on behalf of their clients, ensuring optimal returns according to client goals and risk profile.
Given its broad spectrum of licensed financial services, the Full Service Dealer licence, including underwriting, also comes with a minimum unimpaired capital requirement of MUR 10 million or equivalent in foreign currency. Investment platform operators can also opt for a Full Service Dealer licence excluding underwriting, which Blue Azurite also provides.
Authorising holders to buy and sell securities on behalf of clients, provide investment advice, and manage client portfolios, this licence is ideal for larger retail securities and derivatives brokers, operating as principals.
More flexible in scope than its counterpart certification, including underwriting, and with a 10 times lower capital requirement, this type of authorisation ranks among the most popular licensings with Blue Azurite. “Most of our clients first register for a Full Service Dealer licence excluding underwriting, particularly due to its lower risk associated with the resale of securities, which underwriters must be able to absorb,” Thylam argues.
Similarly, businesses wishing to operate on a smaller scale can also benefit from Blue Azurite’s licensing and advisory services according to their needs and capital size.
Discount Broker Licence: what it covers and who it is for
Small retail CFD and commission-free brokers and prop firms running on an ECN/STP or hybrid ECN-STP model can find an inroad to Mauritius’s financial market with an FSC Discount Broker licence. The scope of this financial authorisation allows its holders to provide security trading intermediation by buying and selling securities on behalf of clients.
Generally, they leverage advanced trading technologies to facilitate access to financial products, streamline operations, and reduce overheads. This allows them to provide easier, low-cost access to financial opportunities.
Discount Brokers are not allowed to provide financial advice and portfolio management services. Nevertheless, this type of licence is one of the most widely encountered across the CFD industry.
Amid broker expansion into Africa, CEO Poonum Thylam notices that “Institutional interest in acquiring Full Service Dealer and Discount Broker licences has increased significantly year-over-year. This indicates that regulators and business players like Blue Azurite have worked together to crystallise our island’s position as a secure, business- and investment-friendly economy.”
Setting up a brokerage with Blue Azurite
With Blue Azurite, setting up a brokerage starts long before drafting the FSC application. The company manages the whole process end-to-end. This includes:
- Company incorporation: setting up the applicant’s Mauritius entity from the registered address to the company structure.
- Business plan development: creating a business plan as required by the FSC, covering the desired business model, target markets, and operational setup.
- Compliance manuals and procedures: drafting the applicant’s internal company operations procedures, compliance manuals, risk management framework, and complaint handling and conflict of interest policies in accordance with the FSC norms.
- Financial projections: financial forecasting, including the preparation of reports and financial adequacy documentation supporting the application.
- FSC liaison: Handling the entire communication and follow-up processes with the FSC throughout the review stage, from managing queries to final approval.
Businesses seeking a quicker entry to Mauritius’s financial market can rely on Blue Azurite to assist with the acquisition of an existing Investment Dealer licence. “This is highly common, offering fast-growing firms an almost immediate start,” Thylam notes.
Common pitfalls and how to avoid them
Delving deeper into the essentials of brokerage incorporation, she remarks that “The application process can be quite challenging.” According to her, the following three are recurring issues:
- Incomplete or vague source-of-funds documentation: Information gaps are some of the main causes of delay and rejection. The more details are provided about the source and purpose of funds, the fewer frictions are encountered.
- Lack of information on stakeholders and business providers: Delays also happen because of the lack of transparency on the applicant’s stakeholders and providers such as auditors.
“Applications move faster if we have clear information about strategic people within and outside the organisation, from directors to compliance officers to bankers and auditors. Having this information readily available is crucial to the success of the application,” Thylam explains.
- Undefined or insufficiently defined business activities: The FSC expects clarity on all the details of business operations. Applications vaguely or insufficiently describing the business model face additional scrutiny and, sometimes, rejection.
To avoid these setbacks and expedite the application review process, Blue Azurite advises all its applicants to source all the required information well in advance.
Why choose Blue Azurite?
Managing approximately 25% of Mauritius’s Investment Dealer licences, Blue Azurite has built a track record few financial licensing providers can match in the jurisdiction. This figure is emblematic of the company’s trustworthiness with the FSC and its corporate clients in the region, securing it a leading position in this field.
What distinguishes Blue Azurite from similar corporate management firms is its expertise. As Thylam put it, “Staying abreast of the latest regulatory changes is vital. Beyond that, we spend a significant amount of time understanding our clients’ needs, business structures, and operating models. This way, we can ensure they benefit from the most suitable solutions to navigate the complexities of FSC compliance.”
With extensive experience in corporate management and licensing, working closely with financial institutions and assisting them in securing a licence that matches their business, risk profile, and operations, Blue Azurite is well-positioned at the industry's forefront. Trusted by some of the world’s biggest brokerage firms, it is broadly recognised as one of the established corporate authorities for securing a Full Service Investment Dealer or Discount Broker licence.
Considering a financial licence in Mauritius? Contact Blue Azurite to explore options.