On 15 June 2020, the Financial Services Commission (FSC) issued its guidance notes with regards to the implementation of a common set of standards for STO & the licensing of STO Trading systems In Mauritius. This initiative is a welcome move amidst the rising importance of Fintech related activities across the globe.

Securities Tokens are the digitalized version of “Securities" as defined in the Securities Act 2005 (SA 2005) which include shares, debentures, derivatives, bonds and interests/units in Collective Investment Schemes.

Securities Tokens Offerings (STOs) may be undertaken by Reporting Issuers as defined under the SA 2005, Collective Investment Schemes authorised as Expert Funds or Professional Collective Investment Schemes (“PCIS") and any other issuers as approved by the FSC.

Security Token trading systems (STTS) will also be licensed by the FSC to allow for the trading of Security Tokens. Applicants will be required to apply for the Trading Securities System licence.

STTS are different from traditional securities exchanges inasmuch as they do not require clearing and settlement facilities. They are usually pre-funded allowing transactions to be cleared automatically on the systems on a T+0 basis.

The holder of a Trading Securities System licence (TSS) will inter-alia, be required to:

• have and maintain a minimum stated unimpaired capital of 35 million rupees or an equivalent amount
• subscribe to an adequate professional indemnity insurance policy which shall indemnify the TSS, its employees and any person acting on its behalf against liability for any act, error or omission in the conduct of its operations
• comply with the relevant and applicable Principles for Financial Market Infrastructures (FMIs) issued by the Committee on Payments and Market Infrastructures (CPMI) of the International Organization of Securities Commissions (IOSCO)
• be controlled and managed from Mauritius and will be required to have at least 3 directors comprising of 30% independent directors and at least 1 resident director
• appoint an external and independent third party to undertake an audit of its IT systems and processes at least once every year
• appoint a Chief Technology Officer and will need to develop and apply proper safeguards to ensure that its systems and networks are fully protected, consequently limiting or containing the impact of a possible cybersecurity breach
• make use of custodians licensed by the FSC in accordance with the Financial Services (Custodian services (digital assets)) Rules 2019 or such other custodian of digital assets regulated in jurisdictions which are signatories to the IOSCO MMOU and acceptable to the FSC for the safeguard of Security Tokens. Fiat currency will be required to be held by a bank licensed as a custodian in Mauritius

To access the Guidance Notes issued by the FSC, please click Here