CySEC is the regulatory body that regulates financial services in Cyprus. The word CySEC is an anagram of “Cyprus Securities and Exchange Commission” and CySEC is one of the busiest regulatory agencies in the world due to the fact that Cyprus is a financial sanctuary for investment companies thanks to the low taxes and much easier entry requirements.
At the time of this writing there are over 40 Forex Brokers in Cyprus, which is probably more forex brokers than any other jurisdiction, and CySEC is responsible for regulating those brokers.
In 2004, Cyprus became a member of MFID (Markets in Financial Instruments Directive), which is part of the European Economic Area (EEA). CySEC’s membership into the MiFID allowed for CySEC Registered Forex brokerage firms admittance into European markets without being subjected to many of the strict requirements placed on several other European financial regulatory agencies.
The main duties and responsibilities of the CySEC are outlined in Article 25 of the Law which regulates organization, powers and duties of the Security and Exchange Commission.
A summary of these duties would include (but are not limited to):
Cyprus is notorious for its many scams in brokerage firm operations, but CySEC is putting in a good effort to stop the scammers. Not only does CySEC publish a list of the current CySEC Regulated Forex Brokers, but it also lists CySEC Forex Brokers who aren’t in good standing with CySEC. This allows you to quickly determine which Cyprus Forex brokers can be trusted and which ones to avoid.
The list includes the address, phone and fax, registration and license number of each Forex Broker.
All CySEC Regulated Forex Brokers must adhere to certain guidelines in order to help to protect investors and preserver the legitimacy of the foreign exchange market. The following is a short list of some of these guidelines:
l In order to operate as a CySEC forex broker, all companies must apply and be approved for CIF (Cyprus Investment Firm) authorization. There are certain exemptions to this rule, such as those Forex Brokers who are already member of the European system of Central Banks or other national bodies who perform similar functions.
l There must be more than 1 person who is involved in the administration of any Forex broker, listed as the appropriate register.
l When applying for license, All CySEC forex brokerage firms are required to include all services they are planning to offer, and are not generally allowed to alter the memorandum and articles of association.
l In order for a broker to qualify for and be issued a license to become a CySEC Forex Broker, they must also meet certain financial requirements. A few of these requirements are as follows:
If a broker does not meet these guidelines any currently held license will be revoked and CySEC will list these brokers on their list of non-regulated Forex Brokers and will issue a warning such as in the following example:
The Cyprus Securities and Exchange Commission (‘CySEC’) wishes to inform investors that the company ‘TD Options Limited’ (www.basicventure.com/abouttdoption):
III. No notification has been received by a competent authority of another Member State, pursuant to sections 77 and 80 of the above mentioned Law.
CySEC is responsible for the administration of foreign exchange tasks and financial service operations in order to confirm and validate complete compliance with all relevant legislation and includes the following bodies or entities:
Traders can ensure safe trading by using only CySEC Regulated Forex Brokers. If you are planning on using a Cyprus based Forex broker, you will find the CySEC website an invaluable aide in helping you to choose the best broker and avoiding the shady brokers and scam artists.
The board of CySEC, charged with administration and regulation of the Forex Market, are appointed by the Council of Ministers at the proposal of the Minister of Finance to a five year term, which is renewable.
By perusing CySEC’s many helpful guides, plans and warnings, foreign exchange investors increase their ability to find the best Forex Brokers and can be assured they are regulated and meet all necessary requirements.