Expert Investor
Author: Mauricio Carrillo
Senior Reporter
Mauricio Carrillo

Bahamas Regulator to Implement Tougher Trading Frameworks

After weeks of pressure from the European Union and the addition of The Bahamas in the EU blacklist of countries amid insufficient anti-money laundering controls, the Securities Commission of The Bahamas is about to launch more strict regulatory measures.

In a nutshell, the SC would implement regulatory changes, including the ban of binary options trading, more leverage restrictions, and marketing restrictions, according to a note published by Finance Magnates.

The New Securities Industry Rules for 2020 says that the Securities Commission of The Bahamas will impose a minimum of 0.5% margin. Besides, the regulator is cutting maximum leverage allowed to 200:1 in all CFDs instruments except cryptocurrencies.

Professional traders will not be subject to the margin requirements, but they will have to comply with specific conditions to qualify as a professional investor. According to the document revealed by Finance Magnates:

  • The trader has carried out transactions, in significant size, on the relevant market at an average frequency of 10 transactions per quarter over the previous four quarters.
  • The client's financial instrument portfolio, including cash deposits and financial instruments, exceeds $500,000.
  • The client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.

Interestingly the crypto case as the regulations for digital assets are not well established globally, and it allows the SC of The Bahamas to remain in its traditional line. However, brokers should ensure that trader's net equity does not fall below 50%.

Long story short, as Jim Manczak, Director of Bahamas Offshore Services, Bahamas is positioning itself as a natural balance between sensible regulation but not as loose as other countries.

A set of rules more sensible than in the EU, but not as loose as most offshore jurisdictions. I'm curious about how clients and brokers will react.

Regarding marketing measures, brokers will not be able to make cold calls or offer unsolicited calls.

Binary Options Prohibited

The big news from the regulator is the ban for trading binary options. Retail traders would not be able to bet on options anymore when the new rules come into effect.

Remember that options have remained as a polemical asset due to its high risk associated.

A Trader's Safety Net

As the Bahamas government is moving closer to the European Union regulation on trading assets, the SC is also adding some protection to users.

Among the measures, three will be negative balance protection, a dedicated supervisor for CFD businesses, seasonal reporting, and standardized risk management and warnings.

Andrew Rolle, Executive Committee Member of the Bahamas Investment & Securities Business Association, said to Finance Magnates that the new rules are in line to protect customers more.

Our aim is to help shape a regulatory environment where industry thrives within the context of protecting the jurisdiction's reputation. The new rules are intended to satisfy consumers' demands for protection and encourage more brokers to choose the Bahamas as their jurisdiction. For the Bahamas, this leads to securing growth within the securities industry and jobs creation.

Meet The Author
Mauricio Carrillo
Mauricio Carrillo
Senior Reporter

Mauricio is a newer member of the team and a very welcome addition. He is a financial journalist and trader with over ten years of experience in stocks, Forex, commodities, and cryptocurrencies. This experience means he has an excellent understanding of the markets and current events.

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