Securities Exchange Application Guidelines

Securities Exchange Application
Guidelines
FINANCIAL SERVICES AUTHORITY
Bois De Rose Avenue
P.O. Box 991
Victoria
Mahé
Seychelles
Tel: +248 4380800
Fax: +248 4380888
Website: www.fsaseychelles.sc
Email: enquiries@fsaseychelles.sc
Version: 27th May, 2025

Table of Contents

1. INTRODUCTION....................................................................................................................................3

2. SCOPE ...................................................................................................................................................3

3. PURPOSE ..............................................................................................................................................4

4. CONSIDERATION...................................................................................................................................4

5. DEFINITION OF SECURITIES EXCHANGE LICENCE AS PER THE SECURITIES ACT ...................................5

6. OFFENCE...............................................................................................................................................5

7. SECURITIES EXCHANGE LICENCE APPLICATION....................................................................................6

8. SUBMISSION OF APPLICATION .............................................................................................................8

9. ADMINISTRATIVE PROCESS OF LICENCE APPLICATIONS.......................................................................8

10. SERVICE STANDARDS ...........................................................................................................................9

11. GRANTING OF LICENCE .......................................................................................................................9

12. FITNESS AND PROPRIETY.....................................................................................................................9

13. CONDITIONS TO A SECURITIES EXCHANGE LICENCE .........................................................................10

14. RENEWAL OF LICENCE.......................................................................................................................11

15. SUSPENSION OF A SECURITIES EXCHANGE LICENCE.........................................................................11

16. REVOCATION OF A SECURITIES EXCHANGE LICENCE.........................................................................12

17. COMPLIANCE OFFICER ......................................................................................................................12

18. AUDITOR............................................................................................................................................12

19. AUDITED ACCOUNTS .........................................................................................................................13

20. NOTIFICATIONS TO THE AUTHORITY .................................................................................................13

21. EXEMPTIONS AND CONCESSIONS .....................................................................................................13
    Appendix 1 ........................................................................................................................................15
    Appendix 2 ........................................................................................................................................16
    Appendix 3 ........................................................................................................................................18

22. INTRODUCTION
    1.1. The Financial Services Authority (“FSA/Authority”) is issuing the Securities Exchange Application
    guidelines in conjunction with the Securities Act, 2007 (“the Act”) to provide guidance and assistance in matters relating to applications of Securities Exchange Licence.
    1.2. The regulatory framework surrounding securities exchanges is pivotal in ensuring the integrity
    and efficiency of financial markets. The Act provides the necessary requirements for companies seeking licenses to operate as a Securities Exchange.
    1.3. This delves into detailed requirements outlined in the Act for obtaining a licence to operate as
    a Securities Exchange as referred to in Section 9 of the Act and aims to provide clarity and guidance to these licensed persons.
    1.4. These guidelines are not intended to be comprehensive nor replace or override any legislative
    provisions. Therefore, applicants are advised to read these guidelines in conjunction with the Securities Act, 2007.
    1.5. This guideline establishes the procedure for applying for a Securities Exchange Licence and
    processes outlined throughout this guideline has been adapted to best fit the Seychelles regime.
    1.6. Enquiries relating to the Securities Exchange Application should be forwarded to the Authority:
    By Post: Director of Capital Markets and Collective Investment Schemes Supervision Financial Services Authority P.O. Box 991 Bois de Rose Avenue Victoria Mahé Seychelles By e-mail: capitalmarkets.supervision@fsaseychelles.sc Telephone: +248 4 380 800

23. SCOPE
    2.1 Section 4 (1) (d) & (i) of the Financial Services Authority Act, 2013 (“FSA Act”) permits the
    Authority to receive, review and determine applications and to develop appropriate regulatory and supervisory mechanisms for the efficient and effective administration of the Authority.
    2.2 As a result, to ensure consistency and accountability in the standards of applications, these
    guidelines highlight and establish the criteria required to be approved by the Authority for Securities Exchange.

2.3 These guidelines aim to provide clarity to the applicants. The FSA takes into account that such
practice may cause certain disruption in the business practice, specifically if the Authority’s determination is crucial for the operation.
2.4 In light of the above and to ensure that the processis effective and timely, applicants are advised
to observe these guidelines when submitting an application for Securities Exchange.
2.5 The FSA acknowledges the significant differences that exist in the organisational and legal
structures of applicants and the nature and scope of the business activities conducted. As a result, the guidelines provided in this document serve as the minimum standards expected to be followed for submission of the application.
3. PURPOSE
3.1 These guidelines are applicable whereby an application is required to be submitted to the FSA.
3.2 The application does not guarantee the grant of a licensee. The Authority shall only grant a
license dependent on if approval is granted, the licensee must comply with the criteria and any additional requirements set by the Authority.
3.3 This guideline is not exhaustive or binding on the Authority. The licensing system allows the
Authority to exercise its discretion and the Authority’s approach will vary depending on the specific circumstances of the applicant.
4. CONSIDERATION
4.1 Companies interested in applying for licenses to operate as securities exchanges should conduct
the following:
4.1.1 Regulatory Compliance Review:
Conduct a thorough review of the Securities Act and associated regulations to understand the requirements and obligations for operating in the securities market.
4.1.2 Documentation Preparation:
Prepare all necessary documentation, including constitutional documents, rules, and other relevant information, in accordance with the prescribed forms provided by the Authority.
4.1.3 Fee payment and submission:
Ensure compliance with the fee payment requirements and any additional information requests from the Authority.

4.1.4 Compensation Fund:
Establish arrangements for a compensation fund, if applicable, to protect securities dealers and clients in case of insolvency or winding up.
4.1.5 Communication and Transparency:
Maintain transparency and open communication with the Authority throughout the application process, addressing any queries or concerns promptly.
4.1.6 Ongoing Compliance:
Upon successful licensing, continue to adhere to regulatory requirements and fulfill ongoing obligations to ensure continued compliance and the integrity of the securities market.
4.2 By following these steps and demonstrating a commitment to regulatory compliance,
companies can navigate the application process smoothly and contribute to the growth and stability of Seychelles' securities market.
5. DEFINITION OF SECURITIES EXCHANGE LICENCE AS PER THE SECURITIES ACT
5.1 As per the definition of the Act, Securities Exchange means a market, exchange, place or facility
which provides for bringing together on a regular basis purchasers and sellers of securities, and sets rules for the execution of securities transactions or for the negotiation or conclusion of sales and purchases of securities, but does not include – (a) the office or facilities of a member of a licensed securities exchange; or (b) the office or facilities of a clearing agency or securities facility;
5.2 Section 8 and Section 9 of the Act also outline the specific requirements and documents that
must be submitted with the application. Furthermore, they detail the obligations that need to be fulfilled to meet the Authority's expectations.
5.3 For the purpose of clarity, “operations” within Section 9 (2) (g) of the Act means the functions
and activities undertaken by listed companies, including regulatory compliance, financial reporting, governance, day-to-day business activities, and engagement with investors in securities within a recognisable jurisdiction.
6. OFFENCE
Pursuant to Section 7(3) of the Act, any person who commits an offence as a securities exchange licensee of the Authority, or who commits an offence other than in accordance with a licence granted by the Authority, is liable to summary conviction:

(a) In the case of an individual to a fine of US$100,000 or the equivalent in Seychelles Rupees or to imprisonment for two years or to both; (b) In the case of a company, to a fine of US$200,000 or the equivalent in Seychelles Rupees and if the offence is a continuing offence, the individual or company is liable to a further fine not exceeding US$500 or the equivalent in Seychelles rupees, for failing to supply any particulars which that person is required to supply, for every day that the offence continues after conviction.
7. SECURITIES EXCHANGE LICENCE APPLICATION
7.1 According to the Act, only a company incorporated under the Companies Act, 1972 and whose
sole activity is the operation of a securities exchange may apply for a Securities Exchange Licence.
7.2 An application submitted to the Authority for a Securities Exchange Licence must comprise of
the following documents:
(i) A cover letter1 signed by the applicant or the agent of the applicant (ii) A completed Application Form (iii) The prescribed application fee (i.e. US$5,000) (iv) Certified true copies of the constitutional documents of the applicant (refer to Appendix 1) (v) Personal Questionnaire Forms completed by each Director or any other key persons of the applicant (refer to Appendix 2) (vi) Questionnaire Form for Shareholders and Beneficial Owners completed by each shareholder and beneficial owner that hold no management position in the proposed Securities Exchange (refer to Appendix 2) (vii) Audited Financial Statements of the applicant for the past 2 years except in the case of an applicant who was incorporated within the last 12 months (viii) The last Audited Financial Statements of the controlling owners of the applicant if the controlling owner is a non-individual (ix) Proof of source of funds or wealth (x) Proof of Physical Place of Office (Title Deed of Premises or Lease Agreement for premises or Sub Leasing Agreement and consent letter from the owner of the premises stipulating that the lessee can sublease) (refer to Appendix 3) (xi) A copy of the insurance quotation (appropriate to the proposed nature and size of the business) of the applicant 1 The cover letter must include reasons the applicant is applying for the licence and a list of all the documents that have been included in the application pack.

(xii) A copy of the Draft Rules of the Securities Exchange in line with section 12 of the Act2 (xiii) A draft copy on arrangement for a compensation fund in line with section 8(3) of the Act (xiv) A detailed Business Plan (xv) Internal Operations Manual (xvi) Client Service Agreement or Terms of Business (xvii) Conflict of Interest Policy (xviii) Compliance Manual (xix) Anti – Money Laundering Manual (xx) Complaints Handling Manual (xxi) Business Continuity Plan (xxii) Market Surveillance Manual (xxiii) Any other information the Authority may require
7.3 In order to increase the efficiency of the application process, the Authority may pre-approve
standard manuals and policies from service providers to be used in future applications.
7.4 Where pre-approved documents are submitted as part of an application, the applicant shall
make a declaration on whether any changes have been made to each of the pre-approved document and indicating the relevant paragraph or section of the document where the changes have been made.
7.5 The Authority will only process an application if the application fee and the complete
application has been submitted.
7.6 During the processing of the application, the Authority may request additional information or
supporting documents for the purpose of determining the application.
7.7 A person who supplies, to the Authority, information in connection with an application which
he knows or reasonably knows is false or misleading, is guilty of an offence and liable to conviction to a fine of US$25,000. 2 The draft rules shall be subjected to the FSA’s approval in line with section 12 (1) of the Securities Act and thus the approval letter (If applicable) shall be issued upon first license issuance. Following licensing of a securities exchange, any amendments to listing rules shall also be subjected to the FSA’s approval in line with section 13 (1) of the Securities Act.

8. SUBMISSION OF APPLICATION
   8.1 All applications seeking the approval of the Authority must be addressed and either hand￾delivered or mailed to:
   The Chief Executive Officer
   Financial Services Authority
   P.O. Box 991
   Bois De Rose Avenue,
   Victoria
   Mahé
   Seychelles
   8.2 All application forms and other documents are available from the Authority’s website
   (www.fsaseychelles.sc).

9. ADMINISTRATIVE PROCESS OF LICENCE APPLICATIONS
   9.1 The Authority will initiate the processing of a complete application, only upon payment of the
   required application fee. The following steps will then be carried out:
   Step 1: Acknowledge receipt of the application.
   Step 2: Carry out an initial review of the application to assess whether the application is complete according to the requirements detailed herein. Step 3: Begin to process the application if the application is deemed to be complete; or return the application to the applicant if the application is deemed to be incomplete, highlighting the area(s) of deficiencies.3 Step 4: Request for additional information or supporting documents for consideration of the application from the applicant, if necessary. Step 5: Inform the applicant on whether the application has been approved for licensing or not.
   9.2 A person who supplies, to the Authority, information in connection with an application which
   he knows or reasonably knows is false or misleading, is guilty of an offence. 3 Please note that the Authority may provide general and brief guidance on the area(s) of deficiencies, but it is the responsibility of the applicant to engage suitable professionals or service providers to ensure the completeness of the application.

10. SERVICE STANDARDS
    10.1 The Authority’s current Service Standards for processing the application for a Securities
    Exchange, from receipt of a completed application for consideration by the Authority, is six months.
    10.2 It is important to note that this service standard will only be achievable if all the requisite
    information/documents are provided at the time the application is lodged. The Authority is not responsible for delays arising from the submission of incomplete applications. The following is to be further noted:
    (a) The Authority will only process complete applications. Applications that are deemed to be incomplete will be returned to the applicant. Applicants will have a period of 3 months for resubmission of the application. (b) Applications not submitted within the 3-months cut-off period will be considered as void and a new application would have to be lodged along with payment of the required application fee, should the applicant remain interested in proceeding further with the application.

11. GRANTING OF LICENCE
    11.1 The Securities Authority may grant a securities exchange licence if it is satisfied that:
    (a) it is appropriate to do so in the public interest and for the proper regulation of markets in securities; and (b) the applicant satisfies the conditions specified in subsection 9 (2) of the Act.
    11.2 The Authority has discretion in granting or refusing a licence. The Authority may in dealing
    with an application take into consideration matters other than those mentioned above including, but not limited to, ensuring that all other parties to an application (e.g. legal advisors and company secretaries) are of satisfactory repute. In the event that the application is successful and the licence is issued, the Authority may publish on its website or other publications, the name of the licensee, address, contact details and websites (if applicable).

12. FITNESS AND PROPRIETY
    When considering the fitness and propriety of the applicant the Authority shall have regard to the applicants:
    (a) financial status
    (b) educational or other qualifications or experience having regard to the nature of the application

(c) ability to perform his proposed function competently, honestly and fairly (d) reputation, character, financial integrity and reliability (e) satisfactory completion of any examination requirements prescribed by the Authority
13. CONDITIONS TO A SECURITIES EXCHANGE LICENCE
13.1 The conditions to be satisfied by the applicant are that –
(a) the applicant’s activities be limited to the operation of a securities exchange; (b) the applicant can provide and maintain, to the satisfaction of the Securities Authority, adequate and properly equipped facilities or systems for the conduct of the business of a securities exchange; (c) the applicant shall have not less than three members who are engaged in the business of dealing in securities independently of and in competition with each other; (d) the rules and practices proposed to be followed by the applicant must be such as will ensure that business conducted by means of its facilities or systems will be conducted in an orderly manner and so as to accord proper protection to investors; (e) the applicant has made such arrangements as the Securities Authority considers satisfactory for – (i) the clearing and settlement of dealings in securities to ensure the performance of transactions effected on the securities exchange, and for the recording and publication of such transactions; (ii) market surveillance; (iii) the effective monitoring and enforcement of compliance with its rules, this Act and regulations made under this Act; and (iv) investigating complaints in respect of business transacted by any of its members; (f) the applicant must have default rules which, where a member of the securities exchange appears to be unable, or likely to become unable, to meet his obligations in respect of one or more market contracts, enable action to be taken to close out his position in respect of all unsettled market contracts to which he is a party; (g) at least 2 directors of the proposed securities exchange shall have experience in the operations of listed companies and dealing with investors in securities.

13.2 The Authority may impose conditions on a licensee which includes but is not limited to, limiting
the nature and scope of the business carried on by the licensee.
14. RENEWAL OF LICENCE
14.1 The Securities Exchange Licence granted under the Act is valid unless suspended, revoked or
surrendered.
14.2 The annual licence fee shall be US$10,000 as prescribed in the Securities (Forms and Fees)
(Amendment of Second Schedule) Regulations, 2024. The annual licence fee shall be subject to review by the Minister from time to time.
14.3 If a Securities Exchange Licence is not first granted in the month of January, February or March,
the first annual licence fee payable as per paragraph 14.2 shall be reduced on a quarterly pro￾rata basis, calculated having regard to the quarter in which the licence was first granted.
14.4 The Securities Exchange Licence shall in January of each year —
(a) pay the annual licence fee as prescribed by the Regulations; and (b) lodge with the Authority a compliance certificate in the prescribed form.
14.5 If the annual licence fee is not paid by the due date, an additional fee will be charged. The fee
payable shall be equivalent to one twelfth of the annual licence fee for each month or part of a month that the fee remains unpaid.
14.6 The Authority may, for good cause, waive any additional fee imposed.
15. SUSPENSION OF A SECURITIES EXCHANGE LICENCE
The Authority has the discretion to suspend a securities exchange licence under the following circumstances:
(a) If the securities exchange temporarily ceases operations (b) If the securities exchange enters receivership (c) If the securities exchange violates any provision of the Act (d) If the securities exchange operations are deemed harmful to the public interest (e) If the securities exchange fails to provide required information to the Authority (f) If the securities exchange does not comply with a lawful directive issued by the Authority; (g) If the securities exchange fails to pay its annual licence fee by the specified due date each year.

16. REVOCATION OF A SECURITIES EXCHANGE LICENCE
    The Authority may revoke a securities exchange licence if it:
    (a) Ceases its operations as a securities exchange (b) Is in the process of being wound up, or makes arrangements or compromises with its creditors (c) Violates any provision of this Act (d) Operates in a manner that is harmful to the public interest (e) Fails to adhere to the conditions specified in Section 9(2) of the Act (f) Does not pay the annual licence fee by the anniversary date of the licence issuance (g) Requests the Authority to revoke the licence.

17. COMPLIANCE OFFICER
    17.1 Pursuant to Section 23 of the Financial Services Authority Act, 2013, each licensee should
    appoint a Compliance Officer who will be responsible for the maintenance of adequate systems and controls to ensure compliance with the Act, regulations, codes, guidelines and directives issued by the Authority.
    17.2 The appointed Compliance Officer may be a member of the Board of Directors.
    17.3 As part of a licence application, an applicant shall, in line with Section 6 of this guideline
    submit a Personal Questionnaire Form and supporting documents for the proposed Compliance Officer.

18. AUDITOR
    18.1 A licensed Securities Exchange is required to have its accounts audited annually by an auditor.
    The Auditor must be a member (and in good standing) of an accountancy body in compliance with section 2(1)(a) of the Act or a member of any other accountancy body as approved by the Authority.
    18.2 The licensee must appoint an Auditor within 30 days of being licensed under the Act, who is
    acceptable to the Authority. A director, officer, employee, shareholder or partner of the licensee or a partner or employee of such a person shall not be eligible for appointment as an auditor.
    18.3 Upon submission of its application, the applicant must notify the Authority of their proposed
    Auditor.

19. AUDITED ACCOUNTS
    19.1 A licensed Securities Exchange must have its accounts audited annually according to the
    International Financial Reporting Standards.
    19.2 The licensed Securities Exchange must submit to the Authority its audited accounts within 4
    months of the end of each financial year or within such extension period allowed by the Authority.
    19.3 Under section 75(3), the Authority has the power, at any time, to direct a Securities Exchange to
    have its accounts audited and submitted to the Authority.

20. NOTIFICATIONS TO THE AUTHORITY
    20.1 Licensees are advised to read carefully the conditions described on their licence as they may
    impose on the licensee’s obligations in addition to those specifically mentioned in the Act.
    20.2 The Authority must be notified, in writing, within 7 days of:
    (a) Any change of:
    (i) name and address of the licensee
    (ii) name and address of each director, company secretary and shareholder (iii) location of the premises at which records or other documents of the licensed business are kept (b) Any disciplinary action taken against the licensee including an order of suspension or revocation of a licence. (c) Appointment, Removal or Resignation of an Auditor (d) Any change in the business of the licensee which causes it to cease its business as a Securities Exchange.

21. EXEMPTIONS AND CONCESSIONS
    Schedule 3 of the Act grants exemptions and concessions from the applicability of certain legislative
    enactments.
    21.1. Business Tax Act
    Securities Exchange can benefit from a tax rate of 1.5% applicable on the assessable (gross) and zero withholding tax rate on dividends or interest payable, provided that the substantial activity requirements are met by the Securities Exchange.

21.2. Substantial Activity Requirements
21.2.1. To meet the substantial activity requirements, the Core Income Generating
Activities of the Securities Exchange must be undertaken in a physical office in Seychelles by:
(a) employing an adequate number of suitably qualified persons to carry out the core income generating activities; and (b) incurring an adequate amount of operating expenditures for such activities.
21.2.2. The substantial activity requirements are considered to have been met if the
middle office and back office activities are conducted in Seychelles even though the front office activities may be undertaken outside Seychelles. Example:
Front Office
Carried outside Seychelles
CIGA: Entering in agreements with other persons with a view to acquire, dispose of, subscribe for or underwrite securities or in any other way which effects or cause to effect a securities transaction. Middle Office Carried in Seychelles Back Office Carried in Seychelles E.g. Meeting with clients who wish to acquire or dispose of securities. E.g. Compliance and Risk Management. E.g. Human resources, Information Services, Internal accounting substance requirements ✓

Appendix 1
List of Constitutional documents
Certified true copies of the following documents:

• Certificate of Incorporation
• Memorandum and Articles of Association
• Certificate of Good Standing
• Notice of Situation of Registered Office or any change thereof
• Particulars of Directors and Secretaries
• Audited financial statements for the past 3 years

Appendix 2
Due Diligence Requirements

1. The completed Personal Questionnaire Forms by all directors, compliance officer and key persons in
   connection with the application, should be accompanied by:

• 1 certified true copy of passport(s)
• 1 recent passport-sized photograph signed at the back by the certifier
• 1 certified proof of residential address that is not older than three months e.g. utility bill
  (water and/or electricity) and/or bank statement and/or tenancy agreement
• 1 original bank reference from each bank with which you are affiliated and/or a report from
  Credit Rating Agency from Country of Residence (if available)
• Certified copies of stated higher academic qualifications
• Certified copies of stated professional qualifications
• Certified copies of stated membership to professional bodies
• Detailed job description of your proposed role or position
• Latest Employment references (if applicable)
• A list of directorships, partnerships, other business interests or affiliations (if applicable)
• Original Police Character Reference/certificate not older than three (3) months from the
  Country in which the applicant resides or its equivalent
• Tax Clearance Certificate from the Country in which the applicant resides or its equivalent
• Politically Exposed Person Self-Declaration Form

2. The completed Questionnaire Form for Shareholders and Beneficial Owners by all shareholders and
   beneficial owners who do not have a management position in the company should be accompanied by:

• 1 certified true copy of passport(s)
• 1 recent sized passport photograph signed at the back by the certifier
• Proof of Appointment as Nominee E.g. Declaration of Trust, Deed of Indemnity or its
  equivalent
• 1 certified proof of residential address that is not older than three months e.g. utility bill
  (water and/or electricity) and/or bank statement and/or tenancy agreement
• 1 original bank reference from each bank with which you are affiliated and/or a report from
  Credit Rating Agency from Country of Residence (if available)
• A list of directorships, partnerships, other business interests or affiliations (if applicable)
• Original Police Character Reference/certificate not older than three (3) months from the
  Country in which the applicant resides or its equivalent
• Tax Clearance Certificate from the Country in which the applicant resides or its equivalent
• Politically Exposed Person Self-Declaration Form
• Evidence of source of fund/wealth

3. Due Diligence documents for entity shareholders should include the following:

(a) Companies

• Certificate of Incorporation
• Memorandum and Articles of Association
• Notice of Situation of Registered Office or any change thereof
• Particulars of Directors and Secretaries
• Audited financial statements for the past 3 years
• Certificate of Good Standing
  (b) Foundations
• Foundation Charter
• Register of Founder(s), Counsellor(s), Beneficiaries and Protector(s) (if applicable)
• Certificate of Good Standing
  (c) Trusts
• Trust Deed
• Declaration of Trust
• Register of Trustee(s), Settlor, Beneficiaries and Protector(s) (if applicable)
  (d) Limited Partnerships
• Limited Partnership agreement
• Register of General Partner(s) and Limited Partner(s)

Appendix 3
Proof of Physical place of Business and Office Criteria Proof of Physical place of Business should include the following:

• Title Deed of Premises or Lease Agreement for premises; or
• Sub Leasing Agreement and consent letter from the owner of the premises stipulating that the
  lessee can sublease.
  The office identified in Seychelles must satisfy, but not limited, to the following criteria:
• To be fully furnished, in safe and suitable working conditions meeting required safety criteria, and
  appropriate to conduct operation;
• Should not contain any health and safety hazards (e.g. exposed electrical wires, tripping hazards,
  damaged walls/ceiling/floor, etc...);
• Should have a designated bathroom/toilet area for the staffs;
• Should have a local telephone connected and working. (In the event that it is a mobile phone
  number, the applicant should provide proof of registration under the company’s name);
• Should have a stable internet connection (e.g. Local Area Network (LAN), Broadband, Wireless
  Broadband, or Fibreoptics etc…);
• Should have a minimum of one (1) desktop computer/laptop;
• Should have a designated space, either physically or digitally to store and keep business records
  of the company; and
• Should contain a minimum of one (1) fire extinguisher for fire safety purposes.