Register a EU Forex
Overview
CySEC is the Cyprus Securities and Exchange Commission, is the government regulatory agency that issues all Forex licensing in Cyprus. CySEC is considered one of the leading Forex governmental licensing agencies in the world. Most of the top Forex companies hold a CySEC license for their operations both within and outside the EU.
Why Cyprus?
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 want 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.
Process
There are two types of licenses in Cyprus applicable for forex and usually the companies are known as CIF – Cyprus Investment Firm:
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.
- Standard license –approx. EUR 125,000.00, broker can hold clients’ money but cannot trade on its own account;
- Full license - requires approx. EUR 730,000.00 – broker can deal on its own account (market maker);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
In order to obtain a license, the following steps will be carried out:
- Gathering and preparing all of the documents for initial verification
- Once the initial stage is done, the originals will have to be couriered
- Incorporation of a company in Cyprus
- Applying to CySEC for license
- During the process, CySEC will require additional documents that will have to be provided in order to back-up certain data
- Preparation of ad-hoc documents and communication with CySEC
- Application will be processed with CySEC
- Conditional approval will be provided by CySEC
After the complete application file is submitted to the CySEC it may take 8-10 months for the final approval to be granted.
Once the initial approval is done, the CIF needs to activate its license , meaning maintaining a fully fledged office in Cyprus with local directors , hire staff and have in place all the infrastructure needed. Both risk management processes, anti money laundering procedures and IT support must be in place.
Incorporation & obtaining license: from 8 to 10 months
Minimum paid up capital: EUR ~ 125,000.00 or EUR 730,000.00 depending on the licence type (STP or MM)
License government application fee: from 4,000.00 EUR +19% VAT
Investors compensation fund: EUR 20,000.00- 30,000.00 (approx.)
License renewal government fee: depending on services selected
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