25/09/25
This article examines the legal framework governing securities exchanges in Seychelles, key compliance obligations under the Securities Act 2007 (as amended), and the practical implications for any entity wishing to establish or operate an exchange. It outlines the principal legal risks and regulatory standards, contrasting Seychelles’ regime with common international practice, and gives examples of how enforcement works in practice.
⚖️ Regulations and Official Standards
Under Seychelles law, a “securities exchange” may only be established or operated under a license granted by the Securities Authority. No person may assist in operating an exchange unless that person is a licensed exchange operator.
The Securities Authority is defined in the Act as the Central Bank of Seychelles or its statutory successor; it has a wide remit to regulate exchanges, clearing agencies, securities dealers, investment advisors and related persons.
Failure to obtain a license for a securities exchange carries serious criminal and financial penalties: currently, for individuals, fines up to US$100,000 or imprisonment for two years (or both); and for companies, fines up to US$200,000, plus continuing penalties for persistent non-compliance.
Licensed exchanges must satisfy various conditions, including rules for listing, disclosure, trading procedures, investor protection, and operation of clearing agencies. The Act gives the Securities Authority power to approve or require amendments to the rules of an exchange.
There are also compliance obligations around annual reporting: licensed clearing agencies must submit audited financial statements, risk management reports, governance policies and other disclosures within specific timelines.
Regulation extends to enforcement powers: the Securities Authority may suspend or revoke licenses; require exchanges to close markets temporarily in emergencies; issue directives; and generally supervise licensees to protect investors and ensure market integrity.
Other related laws contribute to the regulatory landscape. The Foreign Exchange Act (2009) regulates currency conversion and foreign exchange dealings, which may involve payment or settlement in foreign currency. Recent cabinet decisions have proposed amendments to section 8(3), so that conversions under certain subsections must use rates published by authorised dealers on the date payment is accepted.
The broader legal environment in Seychelles is mixed: the legal system combines elements of French civil law (especially in property, obligations) with British common law procedures, especially in commercial, company and insolvency law.
🌍 Analysis and International Comparison
Compared to many jurisdictions, Seychelles imposes relatively stringent licensing and supervisory requirements on exchanges and related entities. The heavy penalties for operating without a license, plus the possibility of suspension, revocation or directives, mean that observance is non-negotiable.
International best practice, including under IOSCO standards, emphasises transparency, governance, risk management, and investor protection. Seychelles’ regime aligns in many respects: the requirement for disclosures, approved periodic audits, risk-management reports, and the licensing of clearing agencies reflect these norms.
However, some gaps or challenges emerge. For example, the definitions of “recognised overseas securities exchange” and “recognised jurisdiction” imply that cross-border listings are possible, but their viability depends heavily on whether the overseas exchange is recognised by the Authorities.
Because Seychelles’ financial services sector is relatively small, institutions seeking to enter the market should consider whether local infrastructure and supervisory capacity are sufficient for their business model – particularly for high-volume, technology-driven or crypto-adjacent exchanges.
The amendments or proposals in related legislation (such as the Foreign Exchange Act) show that Seychelles is updating its regulatory framework to reduce regulatory arbitrage and improve alignment with international financial integrity standards. This suggests increased enforcement risk for entities that might previously have operated at the margins.
In comparison with EU jurisdictions or other established markets, Seychelles’ rules are less developed in some areas (for instance, detailed rules on market abuse, insider trading, or algorithmic trading), though the Securities Act does allow for regulations to cover such matters. Entities should not assume full equivalence of regulatory depth.
📌 Evidence, Case Examples, and Applicability
A concrete example of application of the licensing requirement is that a company incorporated under the Companies Act whose sole activity is to operate a securities exchange may apply for a securities exchange license; it must submit constitutional documents, the prescribed fee, and any other information the Securities Authority demands.
There have been cases of enforcement: entities operating without a license face heavy fines or criminal liability. The law explicitly mandates that monies obtained unlawfully by operating an exchange without a license may be payable to the Securities Authority.
The recent cabinet proposal to amend section 8(3) of the Foreign Exchange Act demonstrates that even outside strictly securities regulation, related laws are being tightened. For payment or conversion of foreign currency, entities must use exchange rates set by authorised dealers on the date the foreign currency is accepted. This has consequences for settlement practices in exchanges and clearing operations.
Entities listing securities from overseas recognised exchanges on a Seychelles securities exchange are eligible, subject to the rules of the Seychelles Securities Exchange. This may facilitate cross-listing opportunities, but it also means compliance with both the overseas jurisdiction’s standards and the local rules.
Moreover, there is the requirement for licensed exchanges and clearing agencies to maintain proper governance, risk management, and annual audited accounts - failure to do so risks suspension or revocation of licenses. Regulatory oversight here is active.
Entities that fail to file required returns or fail to meet competence or “fit and proper” criteria (for example, for representative persons or auditors) run the risk not only of administrative sanctions but possibly criminal liability in serious breaches. The law treats such obligations as material to the integrity of the market.
🔎 Conclusion
In summary, Seychelles’ legal regime for securities exchanges is rigorous: licensing is essential, disclosure and governance obligations are substantial, and enforcement is backed by meaningful penalties. While many of the standards conform to international practice, there are areas-such as cross-border recognition, market abuse controls, infrastructure for tech-intensive trading-that may require additional attention.
Entities entering or operating exchanges in Seychelles must ensure they comply with the Securities Act, the Foreign Exchange Act (as applicable), and related regulations.
If your business is considering setting up, operating or listing on a securities exchange in Seychelles, or providing services (clearing, advising, representing), you would benefit from tailored legal advice.
NUR Legal has deep experience in securities regulation, licensing, compliance and cross-border financial law. Contact us to ensure your operations are fully compliant and protected.
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Emil Korpinen