Founded in 2001, CySEC is a public corporation from Cyprus. Once Cyprus becomes a member of the EU, all registered brokers and licensed companies are granted access to the European market. As a result, a large number of online brokers are regulated by CySEC and you will find more regulated forex brokers in Cyprus than in any other jurisdiction.
Advantages and Disadvantages of Trading in CySEC Regulated Brokers
The main focus of CySEC is to provide oversight to companies operating in Cyprus. Protection for clients is limited to clarifying whether an entity is registered or not. Therefore, traders who want to register with a CySEC regulated broker must be very thorough. Many forex scam brokers claim to be regulated by CySEC. To anticipate this, the Cypriot regulator requires its official brokers to include the applicable regulatory numbers on the website and distributed promotional material.
There are CySEC regulated forex broker brokers who offer their services throughout the world. Providing large leverage, affordable minimum deposits, and a simple registration process become the selling points of CySEC regulated broker. For traders who want to start with limited funds and looking for brokers that require simple registration but are still regulated by Europe, CySEC brokers are approved as a reference.
But keep in mind, the protection provided by CySEC approves the application of Separate Accounts and regular financial reporting. CySEC is also known to have a loosen capacity for supervision and light punishment. CySEC regulated forex brokers generally only need to pay a fine to remain regulated, while refunds in the form of refunds are not handled by CySEC. If there is a loss or broker bankruptcy, traders should contact the broker independently.
What does CySEC regulated mean?
Being regulated by CySEC means operating under the standards of the Cyprus financial regulator. With the acceptance of Cyprus to the European Union in 2004, CySEC automatically becomes a subsidiary of MiFID, a European regulatory organization, enabling CySEC regulated brokerages to carry out their business activities in the European region.
What are the CySEC rules?
The Cypriot regulator requires its brokers to include the applicable regulatory numbers on the website and distributed promotional material. As a whole, SySEC regulated brokers must conform to the following rules:
Maintaining at least €750,000 in operating capital.
Keeping regular financial statements and submit them to the CySEC for review on a periodic basis.
Keeping traders’ capital in high-profile and tier-1 banks in Europe in segregated accounts
Adhering to all new rules and regulations enforced by the CySEC and the MiFID from time to time.
Protecting their traders from broker insolvency or bankruptcy by providing protection under the ICF (Investor Compensation Fund), which compensates clients up to €20,000.
What is the main purpose of CySEC?
The main focus of CySEC is to provide oversight to companies operating in Cyprus. Their responsibilities include:
Supervising and controlling the operation of the Cyprus Stock Exchange and the transactions carried out in the Stock Exchange, its listed companies, brokers and brokerage firms.
Supervising and controlling Licensed Investment Services Companies, Collective Investment funds, investment consultants, and mutual fund management companies.
Granting operation licences to investment firms, including investment consultants, brokerage firms and brokers.
Imposing administrative sanctions and disciplinary penalties to brokers, brokerage firms, investment consultants as well as to in any other legal or natural person whom fall under the provisions of the Stock Market legislation.
What are the powers of CySEC?
CySEC is known to have a loose capacity for supervision and light punishment. CySEC regulated forex brokers generally only need to pay a fine to remain regulated, while refunds in the form of refunds are not handled by CySEC. If there is a loss or broker bankruptcy, it is better for traders to contact the broker independently.
But in recent years, CySEC has implement changes to both the registration and regulation processes of all registered entities that include more transparency, tougher fines, broker suspensions, and license revoking.
If you are interested to open an account in one of the brokers in the list above, make sure to try the forex demo account before proceeding to register in the live account.