That’s right, the GSC is first and utmost an independent statutory board, mainly tasked with the regulation of online gambling activity. What does it then have to do with trading in general and online brokerages in particular?
The services provided by the GSC suit the regulatory/licensing needs of the online trading industry as well. This is probably why the authority got involved with trading in the first place and not because it regards online FX/CFD trading as gambling.
Exactly what services does the GCS provide though? In addition to anti-money laundering, applications forms and guidance, it also offers disaster recovery, player/trader protection and testing. Problem gambling counseling is also among its services as is license issuance and legislation.
Founded way back in 1967, the GCS is indeed one of the oldest regulatory agencies the services of which can be used by the online trading industry.
A word or two about the GCS’s jurisdiction
The Isle of Man is indeed a rather special location in this regard. It actively encourages the setting up of online gambling businesses there, and it provides all assistance to those interested in pulling off such a feat. Whether the same goes for online brokerages too, is difficult to tell. What is certain is that thus far not many brokers have chosen to take advantage of the GCS’s licensing opportunities. Perhaps, for some brokers at least, it is less than ideal to have a Gambling Supervision Commission listed as their main license provider.
The department responsible for the promotion of The Isle of Man as a destination for online gambling businesses, is the Department for Enterprise. This department provides all the information one could possibly need for the establishment of a business on the island.
The Player Protection service (which is presumably the equivalent of a client protection service in trading terms), makes sure that all operators licensed by the authority have a system in place, which is designed to fully protect traders’ funds.
By customer funds, the GCS understands all deposits, as well as bonuses and profits accumulated by the traders.
Three mechanisms are currently accepted in regards to trader fund-protection, the first of which is the bank guarantee. It falls to the licensee to make sure that its bank guarantee does indeed cover all trader funds.
The second method is that of the trust fund. A trust fund account is a special account which allows the operator to move money only for the purpose of paying traders. Other expenses (such as rent and marketing-associated costs) cannot be covered from such an account.
The third method is that of the segregated client account – which is to be preferred from the perspective of online brokerage clients. According to the laws, the money held within such an account is considered to be the property of the client at all times.
Regular quarterly checks are conducted by the GSC to make sure that licensees do indeed observe these customer protection measures to the letter.