Cyprus Regulated Forex Company
Cyprus is the leading country in the EU regulating the Forex market due to its numerous tax advantages, low set up and operational expenses along with the “passport effect” to offer services in all EU countries. It’s a well-known financial and banking centre for international investors, who wanted to take advantage of low taxes, political and economic stability, the flexibility and progressiveness of the common law system, legislation protecting privacy of information, excellent telecommunications and travel infrastructure, ideal geographic location at the crossroads of three continents, and the availability of well-trained professionals to manage their business and financial affairs. All the above make it an ideal location in the EU to setup a Forex firm.
|The set up of a Regulated Forex Company in Cyprus
- There are more than 100 forex firms based in Cyprus, operating through Cyprus Investment Firms (CIFs) regulated by the Cyprus Securities & Exchange Commission (CySEC).
- The Cyprus Forex Firm needs to maintain a fully fledged office in Cyprus with local directors and proper infrastructure. Both risk management processes, anti money laundering procedures and IT support must be in place.
- Depending on the risk profile of the investors, the CIF can act as a pure Straight-Through-Processing (STP) broker (which means it does not take any risk and covers all client positions with third parties) or the CIF can act as Market Maker, running its own book (which means it can take the full risk, share some of it with third parties, and benefit from client losses).
- The Capital requirement to obtain a FOREX license depends mostly if the company will hold clients money or not. If it holds client money then the capital needed is EUR 200.000 while the capital requirement to set up a “Market Maker Forex firm” is EUR 1 mln, which must be maintained at all times.
- Every CIF also needs to contribute to the Investor Protection Fund based on the number of licenses it obtains and customer deposits and turnover.
- Licensing process: After the complete application file is submitted to the CySEC it may take 8-16 months for the final approval to be granted.
After final approval is granted then the CIF has 12 months period to activate its license, meaning to set up office, hire staff and have in place all the infrastructure needed.
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