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Why So Many Forex Brokers Choose Cyprus As Their Legal Home


In 2004, Cyprus became a member of the European Union, necessitating revision of the country’s entire constitutional structure, including CySEC’s regulatory framework.

MiFID provided guidelines for all EU-based financial regulators to adopt a consistent code of conduct to guarantee that financial organizations follow a certain level of regulation to combat financial misconduct and keep the markets honest.

As a result, the CySEC had to make significant revisions to its regulatory processes to bring them up to par with EU and MiFID norms, which were already well behind the CySEC.

CySEC licensed brokers are now able to provide their services throughout the European continent as part of the European Economic Area (EEA) accord, as a result of the EU’s unification. As a result, it serves as an additional incentive for brokers to locate in Cyprus in order to take advantage of more affordable brokerage services while still serving European Forex traders.

How Does FX Broker Regulation Work In Cyprus?

In order to keep brokers in line, Cyprus has compiled a comprehensive set of CySEC recommendations that are constantly modified and updated. To get a CySEC license, forex brokers authorized by CySEC must meet the guidelines.

Forex brokers regulated by CySEC are obliged to have operational capital of at least €750,000, which was not the case prior to CySEC regulation. According to the MiFID derivative, which requires FX brokers to be able to retain their customers’ holdings during market volatility, the new operational capital requirement is implemented. All CySEC member companies are required to submit their financial statements to the CySEC on a regular basis for assessment. An impartial third-party auditor should do an audit on a yearly basis and communicate the results to the broker.

CySEC brokers must abide by all CySEC and MiFID requirements, including any new ones. Traders should be protected against broker bankruptcy or insolvency by the ICF if the CySEC identifies any Cyprus FX brokers (Investor Compensation Fund). Customers who lose all of their trading money because a broker goes bankrupt are compensated up to €20,000 by the ICF.

For contemporary financial products, CySEC is one of the few regulatory agencies that are willing to embrace innovative ideas and put them into practice. CySEC has come a long way since joining the EU, and it’s now regarded as one of the industry’s top regulators. Some of the best Forex brokers can be found in Cyprus, and some well-known Forex firms got their start thanks to CySEC regulation.