CySEC Regulated Forex Brokers

CySEC Forex Brokers

cysecCYSEC is the abbreviation for the Cyprus Securities and Exchange Commission. CySEC is the body which regulates financial services in Cyprus. Of all the regulatory authorities covering several jurisdictions across the world, CySEC is probably the busiest of them all. This is because the investment conditions in Cyprus (low tax and easier entry requirements) make this country a haven for investment by financial services companies. There are probably more forex brokerages in Cyprus than there are in other jurisdictions, and this makes the job of CySEC quite difficult indeed.

By publishing the list of approved CySEC forex brokers as well as brokers whose licenses have been suspended, forex traders can immediately tell where to put their money and where not to go in order to save themselves from a lot of problems.

On our own, we have compiled a list of who we feel are the best CySEC forex brokers to do business with. The information can be accessed via the comparison table we have put up.

 

CySEC Regulated Forex Brokers 2014:

Broker Info Bonus US Traders Open Account
IronFX Spread: 2-3 pips
Leverage: 500:1
Minimum Deposit: $500
Demo Account: Open
60% Welcome Bonus plus Trading Contests Visit BrokerRead Review
FXTM Spread: 0.1 Pips
Leverage: 1000:1
Minimum Deposit: $1
Demo Account: No
$2 Cashback per Lot Traded Visit BrokerRead Review
FXNet Spread: 2.3 pips
Leverage: 500:1
Minimum Deposit: $5
Demo Account: Open
35% New Account Bonus! Visit BrokerRead Review
FXClub Spread: 3 Pips
Leverage: 100:1
Minimum Deposit: $5
Demo Account: No
No Bonuses Available Visit BrokerRead Review
Alpari Spread: 1.2 Pips
Leverage: 500:1
Minimum Deposit: $200
Demo Account: Open
100% up to $5,000! USA AllowedVisit BrokerRead Review

 

About the Regulator

Cyprus became a European Union member country in 2004, thus making it compulsory for CySEC to become a part of the European MiFID regulation. CySEC’s membership of MiFID enabled all forex brokerage firms registered and operating in Cyprus to have access to all European markets. This provided an easier entry point for CySEC forex brokers to gain legitimacy in their operations without being subject to the stringent requirements that other European financial regulatory bodies would have imposed on them, yet still qualify under MiFID to operate freely in all EU member countries.

MiFID 2 regulations require an investment firm to first obtain regulation from the parent country’s regulator prior to applying for MiFID regulation. CySEC thus plays a major role in this regard.

CySEC as a body was launched in 2001 and is tasked with the following responsibilities:

a)    Supervision and control of the operation of the local stock exchange, its listed companies and brokerage firms.

b)    Grant operational licenses to investment and brokerage firms, as well as investment consultants operating in the local stock market and the forex/CFD market.

c)     Enforce sanctions and disciplinary penalties to errant brokers and investment consultants.

 

Guidelines for CySEC Regulated Brokers

There are guidelines regarding the conduct of all listed CySEC forex brokers, and these have to be adhered to in order to preserve investor confidence and protect the sanctity of the forex market. Some of these guidelines are as follows:

a)    A company must be licensed by CySEC as a Cypriot Investment firm before it can operate as a CySEC forex broker.

b)    Administration of the investment firm must be by at least 2 persons, who will be listed in the appropriate register.

c)     A CySEC forex brokerage firm is not allowed to alter its memorandum and articles of association so as to expand its scope of services once a license has been issued, without first informing CySEC. In other words, a CySEC forex brokerage has to try as much as possible to include all the services it plans to offer when applying for a license.

d)    The following financial requirements must be met by a broker to qualify to be issued a license to become a CySEC forex broker:

–       Initial share capital for reception, transmission, execution, portfolio management and investment advice: 200,000 Euros.

–       For reception, transmission, investment advice without handling any clients’ funds/instruments: 80,000 Euros or 40,000 Euros + professional indemnity insurance with coverage in all member state countries for at least 1,000,000 Euros for each loss, and a total of 1,500,000 Euros annually for all losses due to negligence.

–       For own account, underwriting and operation of Multilateral Trading Facilities (MTF):  1,000,000 Euros.

–       reception, transmission, investment advice without handling client funds/instruments and insurance intermediary: 40,000 Euros, or 20,000 Euros + professional indemnity insurance with coverage for all member states for at least 500,000 Euros for each loss and 750,000 Euros for all losses for each year.

Failure to comply with these guidelines can get a broker punished, as we will see later in this article.

Assessing the Standing of a Broker

Despite the efforts of CySEC, Cyprus has become notorious as a safe haven for many scam brokerage operations. However, that is changing as CySEC has started to come down hard on these errant brokers. One of the measures that CySEC has put in place is to publish a list of investment firms that are in good standing with CySEC, and this includes a list of CySEC forex brokers. In addition, the list also features CySEC forex brokers who are not in good standing. Below is a sample of a list of investment firms that are licensed and regulated by CySEC:

cysec investment firms

The list includes the following parameters for each CySEC licensed forex broker:

a)    Address: Many traders overlook this but you will be surprised at how many so-called brokers are simply suitcase carrying fly-by-night operators. A particular brokerage in a European country (not Cyprus) was found to be nothing short of a husband-wife operation which ran out of the kitchen in their home, after investors lodged complaints over non-payment of withdrawal requests. CySEC licensed forex brokers must therefore have verifiable physical addresses.

b)    License number: This gives a clue as to the date the company was licensed and has therefore been in operation.

c)     Registration Number

d)    Telephone and fax numbers.

As mentioned before, the list also features brokers who are not in good standing with CySEC. See a sample below:

cysec

The brokerage in question had its license suspended for various suspected contraventions of the guidelines that all CySEC forex brokers must follow:

cysec announcement

 

Adam

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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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