Interest in setting up new Securities Firms in Panama has increased in the past few years, so much so that the number of registered firms has jumped from thirty-two in 1990 to seventy-nine at present, according to a report published in November 2011 by the Superintendency of the Securities Market of the Republic of Panama.

The new securities firms are mostly based on capital from Venezuela, Brazil, Andorra, Uruguay and Canada.

Panama is already known throughout the world for having a stable and fast-growing securities market.  There are few jurisdictions in the world today that have such traits, which are essential in order to convey the confidence needed in this line of business.  The Panamanian market has great advantages from a legal-financial standpoint, thus the demand for the establishment of Securities Firms in Panama has been rapidly increasing in the financial sector.

Generally, Securities Firms operating in Panama may engage in the purchase and sale of securities or financial instruments, whether through third parties or directly.

In addition, Securities Firms may engage in activities or businesses related to the Securities Firms business, such as Forex, investment advisory and the lending of securities or money for the purchase of securities.

What are the requirements for obtaining a license and establishing a Securities Firm in Panama?

In order to obtain a Securities Firm license, the applicant must secure the services of an attorney-at-law to properly submit the application to the Superintendency of the Securities Market.  There is a ten thousand dollar (US$10,000.00) registration fee and the time-frame for the license to be granted varies depending on the number of remarks made by the Superintendency and how quickly the applicant manages to correct or submit any additional documents that the entity may require.

Securities Firms must pay an inspection fee of 0.0025% of the annual amount generated by the trade of securities and financial instruments, the minimum amount being five thousand dollars (US$5,000.00) and the maximum one hundred thousand dollars (US$100,000.00).

Upon submitting the application, the applicant must provide evidence that he/she has the technical, managerial and financial capacity, as well as the staff required in order to render the relevant services.  The applicant must appoint at least one Chief Executive, a Compliance Officer and a Securities Broker, all of whom must have the pertinent licenses issued by the Superintendency of the Securities Market of the Republic of Panama.

Securities Firms must have a physical office in the Republic of Panama, where they shall keep and maintain the Shareholder Registers and business books.  The directors named in the Articles of Incorporation may not be legal entities and only registered shares may be issued, i.e., bearer shares are not allowed.  Any changes to the shareholding structure must have the prior approval of the Superintendency of the Securities Market of the Republic of Panama.

According to the provisions of Article 57 of the Consolidated Text of the Securities Market Law, foreign Securities Firms may be established in Panama, and they must be registered at the Public Registry of the Republic of Panama.

The entity that oversees Securities Firms is the Superintendency of the Securities Market, an independent Government agency with the power to impose administrative penalties that vary in accordance with the seriousness of the offense.  Penalties range from warnings and fines to the suspension or cancellation of the license.

Finally, the sector is experiencing significant growth, which has generated a great demand for highly qualified personnel, such as Chief Executive Officers, Compliance Officers and Brokers, among others.  This demand may be seen as a great opportunity for both Panamanian and foreign license holders, but it is also a challenge, since demand has far outpaced the availability of qualified staff.

If you are interested in obtaining a license to operate a Securities Firm in Panama, we recommend that you seek expert legal advice, since strict compliance with the requirements of the Superintendency of the Securities Market will enable your application to be processed as quickly as possible.