Labuan is an interesting test case for the FX industry. Some will argue it was not a go to jurisdiction to begin with. This argument is based on several regulatory measures imposed on the holders of the Money Broking licenses, which deterred many FX brokers from entering Labuan:

1. Licensee can act as broker only (no market making);
2. Products must include only currencies as underlying assets (no shares, commodities or indices);
3. Maximum permitted leverage of 1:100.
4. Relatively high capital requirement (approx. 120K USD).

Yet, despite the above, numerous brokers chose to establish their business in Labuan, stating the following reasons:

1. Good local banking solutions.
2. Affordable and competitive set up and maintenance costs.
3. A lenient regulator.
4. A jurisdiction not inflicted by the bad reputation of some of its players.

However, it looks like the money broking landscape in Labuan is set to change dramatically. The reason for this change is a guidance issued by the Labuan Financial Services Authority (LFSA) and addressed to Money Broking licensees.

The said guidance brought in two major restrictions (on top of those already in place):

1. Capital requirement to increase dramatically, literally doubling from the current rate.
2. Most of the clients’ portfolio (more than 50%) will have to include institutional investors and high net worth individuals, with retail clients accounting for less than 50% of the total clients’ portfolio.

There is no doubt the above measures will impact decision makers in currently licensed money broking firms to weigh their options.

Some of the options you may consider are:

1. Setting up from scratch or acquiring a licensed entity in another suitable and affordable jurisdiction such as Seychelles, Mauritius or Vanuatu to replace your Labuan entity.
2. If you are into crypto and digital assets – upgrading your current money broking to include a digital assets authorization form LFSA, or acquiring a money broking form with such permission.
3. Stay put – some may consider the relative advantages of Labuan to be good enough to stay there. Some brokers did chose to stay in Belize even after the capital requirements increased from 100K to 500K. Same might apply here.

Why Choose Clearsky Network?

Clearsky Network—your trusted partner for business success, combining top-tier legal expertise with deep industry knowledge. Our comprehensive, one-stop solution empowers your venture at every stage, ensuring you stay ahead in today’s fast-evolving market.

When you partner with Clearsky Network, you unlock:

1. Expert Legal Guidance
   From concept to execution, we navigate the complexities of multi-jurisdictional licensing. We manage applications, liaise with regulators, draft policies, and ensure you remain fully compliant every step of the way.
2. Tailored Payment Solutions
   We streamline your financial operations, helping you establish bank accounts, integrate with payment providers and crypto exchanges, and secure the payment solutions best suited to your business.
3. Compliance Mastery
   Keep your business in top regulatory shape with our expert compliance services. From providing up-to-date advice to outsourcing compliance officers and AML solutions, we equip you with the tools and training to meet global standards.
4. Global Network of Professionals
   Gain access to a worldwide network of local law firms, accountants, and service providers, ensuring your business thrives in any market, anywhere in the world.
5. Industry Expertise You Can Trust
   Benefit from our extensive industry relationships. Our connections give you direct access to the best service providers, helping you grow faster and smarter by leveraging our established network.

 Contact Us Today

Reach out to Clearsky Network to learn more about how we can assist you in securing your FX  license and expanding your business globally.