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Forex Brokers in Cyprus (CySEC)

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Forex brokers in Cyprus are not just for traders who live in and around this exotic island nation. They are also for those interested in getting the best of what forex brokers in Cyprus have to offer.

Here is what you can expect to encounter when trading with a forex broker in Cyprus.

General Regulation & Cyprus Regulation

For years, Cyprus has been the home of hundreds of retail forex brokerage brands seeking to take advantage of the island nation's relatively friendlier business environment and tax-friendly laws to set up shop. The business landscape for forex brokers in Cyprus has changed quite a bit since the glory years of the 2000s, when retail forex was just gaining a global foothold.

The retail forex brokerage business in Cyprus is regulated, with oversight and licensing provided by the Cyprus Securities and Exchange Commission (CySEC). The role of CySEC in maintaining operating standards for all forex brokers in Cyprus has significantly evolved over the years. This has been in keeping with the overall changes in the regulatory environment in Europe in the last ten years.

Forex Brokers in Cyprus: How Does Regulation Affect the Trader?

Regulation of forex brokers in Cyprus is all about the measure of consumer protection that any trader with a Cyprus forex trading account can get when trading with these brokers. This is important as you will give your money to the forex broker in trust to maintain your trading account while you trade. As a forex trader, you want a situation where you can make deposits easily, trade in a transparent environment and withdraw your profits on demand without any issues along the way. This is only possible if the forex brokers in Cyprus are accountable to the regulators to ensure they do the right thing.

How are forex brokers in Cyprus regulated?

Regulation of forex brokers in Cyprus covers the following:

  • Business structure
  • Staffing
  • Consumer protection mechanisms

Business Structure

Regulation of forex brokers in Cyprus takes a cue from the parent body of all EU regulations, the European Securities and Markets Authority (ESMA). CySEC applies ESMA rules for regulated trading activity and its own rules according to local requirements. All forex brokerages in Cyprus are classified as Cypriot Investment Firms or CIFs. They are required to maintain a physical presence in Cyprus and have to apply for an operating license. A forex broker in Cyprus can only operate legally with a CIF license.

Getting a CIF license involves the following:

  • The forex broker in Cyprus must be a limited liability company and possess a minimum capital requirement of 730,000 Euros if operating as a counterparty/market maker. A non-market-making CIF (i.e. a Cyprus forex broker that operates the Straight-Through Processing or STP model) has a capital requirement of 125,000 Euros.
  • Must have a Memorandum of Association indicating the category of license sought and a manual of its internal operations.
  • A business plan must be presented.
  • Strict AML/KYC (anti-money laundering and Know Your Customer) protocols.
  • The brokerage must have a minimum of 4 board members. At least three must be Cyprus residents, and at least two must be executive board members.
  • Must comply with ESMA's regulations as contained within the MiFID II protocols.
  • Strict reporting standards ensure that the regulator sees how things are going on in the CIF, which helps pick up early warning signs of any issues within the CIF or how it handles its clients' businesses.

These are the business structure requirements that ensure the company is headed by people with verifiable identities, resident on the island and thus reachable at all times by the regulators. It also ensures the company has enough money to pay out large volumes of withdrawal requests without liquidity issues.

Staffing Requirements

All forex brokers in Cyprus must have the appropriate staffing requirements to operate legally in Cyprus. CySEC offers professional assessments that provide a standardized method of providing industry-level qualifications to place industry workers properly.

Only those with the requisite industry qualifications can work with a forex broker in Cyprus. Such staff must have passed the Basic or Advanced CySEC licensing exams for the regular staff or secure industry-level AML certifications for those working in compliance and anti-money laundering departments.

Customer Protection

Customer protection comes in three ways:

  • The Investor Compensation Scheme
  • Account Segregation
  • Register via which customers can confirm a brokerage's status

Apart from being AML/KYC compliant, a forex broker in Cyprus must be a contributor to the Investor Compensation Scheme with paid-up premiums of at least €1.5m. This ensures that traders whose brokers go bankrupt have access to investor insurance that reimburses them up to a maximum of 50,000 euros. The investor compensation scheme works just like any other kind of insurance cover.

Another feature that offers customer protection is account segregation. Keeping clients' trading funds in separate, dedicated accounts, away from the broker's operating accounts, is now mandated by CySEC. This ensures that an unlikely bankruptcy event does not negatively impact traders' funds.

CySEC keeps a register of all forex brokers in Cyprus who are in good standing. There has recently been a change in leadership in CySEC, and the new boss has clarified that standards will be enforced more strictly than they have been over the last few years.

What Can You Expect in Terms of Trading Conditions with a Forex Broker in Cyprus?

A forex broker in Cyprus is required to comply with the new regulations which came into effect in 2018. These rules regard how forex and CFD products are marketed, distributed and administered. It also covers how the brokerage handles conditions that produce slippage risks to clients and presents their clients with additional information on what they can expect regarding trading conditions.

A) Trading Software

Most forex brokers in Cyprus offer the MT4 and MT5 trading platforms. These platforms allow traders to use expert advisors and custom indicators, with the option of connecting their terminals to virtual private servers for round-the-clock trading. Some will offer other platform types, but MT4 and MT5 remain the most popular trading platforms.

B) Margin Requirements

As per ESMA's regulations, margin requirements for FX and CFD products have been increased. For major currencies, the maximum leverage allowed is 1:30, which means that the trader must be willing to put up a margin of $1 for every $30 setup in positions. Simply put, a Standard Lot trade on the EUR/USD worth $100,000 will require $3,300 as margin collateral. For other categories of CFD assets, the requirements are tighter. Minor and exotic currencies, major indices, and gold carry leverage of 1:20, requiring a margin of $5,000 for a Standard Lot. Stocks (1:10) and crypto CFDs (1:5) carry the most restrictive leverage requirements.

C) Commissions & Spreads

Forex brokers in Cyprus offer fixed, tight spreads. Some will offer an option of trading with a zero-commission account. The pricing of assets on most CIFs in Cyprus is the 5-digit decimalized system, except for Yen pairs that carry a 3-digit decimal pricing system. The last digit is a tenth of the fourth, allowing for more precise spreads.

D) Account Types

Various account types are provided on a broker-by-broker basis. Consult each Cyprus forex broker on this site to see what kinds of accounts are available and which ones meet your needs.

E) Tradable Assets

As a trader, your money will not automatically reproduce for you. You must trade it by buying or selling assets listed on the broker's trading software. Generally speaking, forex brokers in Cyprus now offer a wide range of forex and CFD assets spanning stocks, the major global indices (Dow Jones, Nasdaq, DAX40, Nikkei 225, etc.), and, more importantly, cryptocurrency CFD assets. Most of these brokers now offer a much more expanded asset base than was available ten years before.

F) Customer Service

Forex brokers in Cyprus offer a multilingual customer support system using various channels. Social media is gradually becoming an important segment of the customer support system that CIFs offer their clients.

G) Value-Added Services

Some forex brokers in Cyprus offer value-added services as follows:

  • Social trading.
  • Forex VPS services.
  • Trading plug-ins for the MT4, such as those of Trading Central and Autochartist.
  • Access to the MQL market where traders can access various services such as programming of robots, indicators and also free copies of such software.

Conclusion

The list of forex brokers in Cyprus on this site has been specially curated using the abovementioned parameters. This ensures that any broker from this list offers the maximum possible protection for your funds and gives you a rewarding trading experience.