You will find that many European forex brokers are regulated by CySEC, the regulatory authority in Cyprus.
Cyprus has become a massive hub for forex brokers to set up shop due to low taxes, competent workforce, and ease of incorporation.
Below you will learn more about CySEC and what regulatory protections that entail.
What is CySEC?
The Cyprus Securities and Exchange Commission (CySEC) is the Cypriot regulatory authority that oversees Cyprus Investment Firms (CIFs).
Since Cyprus is an EU member, the financial regulations from CySEC are in line with the Markets in Financial Instruments Directive (MiFID) II from the European Securities and Markets Authority (ESMA).
As a result, CySEC regulated brokers are allowed to passport their services to residents from European Union / EEA.
When you open an account with a CySEC regulated forex broker, you automatically get classified as a non-professional client (retail), which means standard leverage tiers as ruled by ESMA:
– 30:1 for major currency pairs
– 20:1 for non-major currency pairs, gold, and major equity indices
– 10:1 for commodities other than gold and non-major equity indices
– 5:1 for equities
– 2:1 for cryptocurrencies
You can, however, apply to become classified as a professional client and get access to considerable higher leverage.
Security of Funds
Forex Brokers regulated by CySEC are required to keep all client deposits in designated client bank accounts, which ensures that your funds cannot be used for any other purpose than serving as collateral for your trading activity.
If you use a CySEC regulated broker (CIF), you have rights to the Investor Compensation Fund (ICF) which secures the claims of clients against the ICF members through the payment of compensation up to €20.000 per client, if the CIF were to become insolvent.
All CySEC regulated brokers are required to offer negative balance protection to retail clients.
Cyprus Financial Ombudsman
If you have a dispute with a Cyprus Investment Firm (CIF), regulated by CySEC, you should first make a complaint with the firm directly.
The CIF is obligated to give you a response within two months telling you whether the complaint has been successfully resolved or why require more time to look into it (maximum three months to give you a response).
If you are unhappy with the response and unsuccessful in resolving the case with the firm, you can make a complaint with the Cyprus Financial Ombudsman.
The ombudsman will make an independent investigation and make a decision about the complaint.
CySEC Forex Broker List
Below is a list of CySEC regulated brokers highly regarded among forex traders.
Skilling Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) under CIF license No. 357/18.
Skilling is a Scandinavian-owned broker providing trading in FX and CFDs through Skilling Trader, MT4, and cTrader.
Skilling is in addition, authorized and regulated by the Seychelles Financial Services Authority (FSA).
You are free to choose whatever regulated entity your account should be with during the account creation process.
🏆 Best Overall Broker 2022
✅ Up to 1:500 leverage
✅ Skilling Trader, MT4 & cTrader
✅ 900+ instruments
✅ Nordic Fintech
✅ Fast 24/5 customer support
Pepperstone EU Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with license number 388/20.
Pepperstone is in addition, regulated by ASIC, FCA, DFSA, SCB, CMA, and BaFIN.
The CySEC entity is intended for traders within the EU/EEA.
🏆 Best TradingView Broker 2022
✅ 1:30 | 1:400 leverage
✅ MT4, MT5 & cTrader
✅ 1200+ instruments
✅ Raw interbank spreads
✅ Fast 24/5 customer support
CySEC provides a safe regulatory environment for retail traders as it is in line with MiFID II and CIFs are required to keep client funds in segregated accounts.
However, CySEC has received a lot of criticism in the past from both retail traders and firms for not acting appropriately against CIFs that were accused of violating rules and regulations.
Fortunately, it seems that CySEC has undergone a massive shift in recent years and lately revoking licenses and issuing hefty fines against firms that do not comply.