Why are most binary options brokers located offshore?
When coming to work on the stock exchange, not many people wonder why most binary options brokers are located offshore. We are, of course, talking about the legal address and registration of the company. There are several reasons for brokerage companies to do this.
Offshore regulators
The popularity of binary options is undeniable. But not everyone can understand the intricacies of brokers’ work in order to choose the most reliable company for cooperation.
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The presence of certificates and licenses means that companies are checked and regulated by auditing financial associations and commissions, which, if violations are detected, can revoke or not issue a license.
Inspections of such organizations can be carried out secretly, by registering an inspector under the guise of an ordinary trader. Most organizations are located in offshore economic zones.
The most popular regulators of exchange trading in offshore zones:
• FSC (Financial Services Commission) is located in Mauritius;
• CySEC (Cyprus Securities Commission);
• IFSC (International Financial Services Commission of Belize) – commission for international financial services in Baileys;
• BVIFSC (Financial Services Commission) – financial services commission of the British Virgin Islands;
• FCA – Financial Conduct Authority in the UK.
But the popularity of offshore registration is explained not only by obtaining the status of a reliable organization.
The reason for the popularity of offshore zones
All offshore zones are located in countries with relative economic and political stability. Therefore, a business opened offshore is quite stable. Tax benefits apply to it. There are no sanctions imposed here, there are no military conflicts.
In offshore areas, registration of dealing centers for the provision of financial services, which in fact are all brokerage companies, is simplified, accelerated and offers a lot of advantages.
Also, one of the reasons for turning views towards free economic zones is the acquisition of the status of a foreign counterparty. This allows you to attract foreign investors if necessary and expand the list of participants.
The broker can count on confidentiality and a certain amount of economic freedom.
Legal entities offshore can freely open bank accounts in foreign countries. But, of course, the main reason is to minimize taxes. Reducing the tax burden when registering in a SEZ is beneficial not only for Russian representatives. Many foreign market participants also resort to such tricks.
When registering, Russian organizations often resort to creating two legal entities at the same time. They open an advisory center in the vastness of their homeland, and open the main company through which financial settlements are carried out offshore. This is also beneficial from the point of view of protection from possible claims.
If a trader decides to sue a broker for any reason, he will face the need for high costs to conduct legal proceedings in a foreign country.
Conclusion
Binary options brokers registered offshore receive many benefits, the status of a reliable foreign company, optimized taxation and a lot of other advantages, which is why registration in a free economic zone is so attractive.