CySEC Regulated Brokers

Sara Patterson

Forex trading is steadily gaining more and more clients all over the planet. You can find dozens of brokers offering intermediary services and access to financial markets. There is a whole list of things you should look for in a brokerage platform, but a key criterion for traders is the presence of a Forex broker license.

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Licenses show which regulator controls the activities and services of the company. Reputable brokerage companies aim to receive approval from the most powerful global regulators. The Cyprus Securities and Exchange Commission (CySEC) is one such regulator. Keep reading to find out how to qualify for this license and its benefits.

CySEC-Regulated Forex Brokers

All Forex companies in Cyprus are under the regulation of CySEC. Companies with this license are in high demand among traders. Let's review the Forex platforms that have gained the highest popularity in the market.

Introduction to Forex Regulations

The activities of all financial intermediaries, which include Forex brokers and dealing centers, are subject to mandatory certification. When issuing a license, regulating authorities usually post information about the company to which the license was issued on their official website. This allows you to easily and quickly check whether a Forex broker's license is valid. Almost all brokers today have licenses today, but not all licenses are equal,

Each country has a governmental regulatory agency that oversees operations in the Forex and financial markets. These agencies function as controlling bodies to ensure that all participants of the Forex trading comply with local rules.

Today, there is a very large number of different regulatory bodies and sometimes the difference in their reliability is significant. Which regulators are the most reputable?

  • CySEC - Cyprus Securities and Exchange Commission (Cyprus)
  • FINRA - Financial Industry Regulatory Authority (USA)
  • NFA - National Futures Association (USA)
  • SIPC - Securities Investor Protection Corporation (USA)
  • ASIC - Australian Securities and Investments Commission (Australia)
  • FSC - Financial Services Commission (Mauritius)

What is CySEC Regulation? (H2)

CySEC is the Cyprus Securities and Exchange Commission. This state regulator issues licenses for investment and brokerage companies and controls their activities. Therefore, Cyprus-based brokers must have a CySEC certificate.

Since Cyprus is a member of the European Union, the CySEC regulator operates in accordance with EU legislation. This means that its requirements are very strict, which makes it difficult for many companies to go through the licensing procedure.

Moreover, European law demands that all CySEC activities be strictly regulated in terms of fulfilling its obligations.

A CySEC license aims to provide the following confirmation that:

  • the broker operates legally;
  • the broker's activities are strictly regulated by European legislation;
  • the broker's financial activities are transparent;
  • the broker provides high-quality services and trading conditions.

CySEC's Responsibilities

This regulator is an extremely popular one in the professional environment. It combines the benefits of offshore registration with strict financial controls in line with EU standards.

CySEC was created with the aim to oversee the financial and investment sectors. Its functions include:

  • licensing of companies involved in investment;
  • control over the activities of brokerage and dealing companies;
  • taking action to regulate and control the activities of the Cyprus stock exchange;
  • supervision of issuers of securities;
  • analysis of the activities of investment consultants and portfolio managers;
  • taking actions to collect information about companies, subject to CySEC regulation;
  • inspection actions in relation to companies operating on the stock exchange.

The regulator has a great amount of influence and rights. It can make a request to law inforcement regarding a particular company, to impose a restriction or completely terminate the activities of the company, to interfere with management or to request the freezing of accounts.

Among the extremely important advantages of the regulator is the amount of insurance coverage, reaching 22,000 euros for each client.

How CySEC Regulation Protects You

The presence of a CySEC license provides the following advantages to traders:

·        Protection against illegal actions of the broker. Constant control and regular license renewal minimize illegal and fraudulent actions of the broker.

·        You can be sure the broker is a reliable partner for trading, which reduces your risks and increases chances for profitable trading. Only the most progressive brokers with high-quality services receive the certificate.

·        A safety guarantee for your funds in the event of a brokerage firm going bankrupt. Companies with CySEC certificates participate in the regulator's compensation fund, which means that in the event of bankruptcy, funds will be returned to traders by CySEC.

You can officially file a complaint against a broker who has a valid CySEC license. The procedure is as follows:

  • Make sure that the broker really has a valid license by finding it on the regulator's website.
  • Go to the appropriate section on the regulator's website and fill out the form at (https://www.cysec.gov.cy/en-GB/complaints/);
  • Send a copy of the complaint to the Cyprus Financial Ombudsman.

Guidelines for CySEC-Regulated Brokers

Many brokers are seeking licensure by this European regulator. But it is not so easy to get a CySEC license.

The main difficulty is that this regulator makes strict demands on its applicants and it is a real challenge to meet them all. To begin with, a potential applicant must operate in the market for at least three years.

The applicant also must be able to pay an initial membership fee and an annual fee to support the activities of the regulator. As for technical support, the applicant must have a high-quality trading platform, a certain number of registered trading accounts and be able to provide its customers with everything necessary for comfortable work.

Perhaps the most important requirement of CySEC is the mandatory presence of a representative office in Cyprus. If the broker, for some reason, does not want or cannot register a physical office in Cyprus, then licensure by the Cyprus regulator will be declined.

Every year, all licensed firms are checked for compliance with the requirements, and the regulator issues fines for certain violations. Note that the amount of fines is quite large. For a minor violation, the regulatory body may fine the violator 1000 euros. In some cases, the regulator may even revoke the license and shut down the company.

Verifying the Authenticity of CySEC-Regulated Forex Brokers

Often, licensure can become an additional advertising tool for a broker that focuses on online trading. This information is usually indicated on the website with the certificate number and date of issue. It is advisable to additionally confirm this data on the official website of the regulator.

To check the license of any financial institution that claims to be CySEC-regulated, just go to this page, where you can search by license number. Do not be surprised if under the number indicated on the broker's website you find an unknown company name.

The regulator shows the legal name of the company and not the broker's trading name. You can find out the legal name of the broker in the support service or on the broker's official website.

Methodology

We create our articles and brokers’ reviews using a strong team of expert traders with extensive experience in trading on many reputable Forex platforms. Many reviews on the Internet contain misleading information about brokerage companies.

We invest our personal involvement in verifying all trading conditions to avoid publishing false information on our website. We focus on honest, objective, and consistent broker information. In our materials, we recommend only reputable brokers who actually provide licensed services.

FAQs

What is CySEC regulation?

CySEC is the Cyprus Securities and Exchange Commission. This state regulator issues licenses for investment and brokerage companies and controls their activities. Therefore, Cyprus-based brokers must have a CySEC license.

Are CySEC-regulated brokers safe?

A CySEC license gives many advantages to a brokerage company and its clients. It also confirms that the broker operates legally. Every year, all licensed firms are checked for compliance with the requirements, and in the case of certain violations, are fined.

What is the best CySEC regulated broker?

There are many brokers that provide excellent trading conditions. You can read reviews, client feedback and test a demo account on several brokerage platforms to decide which one suits you best. You should also analyze the minimum deposit amount. For beginners, it is advisable to start with the smallest investments.

How do I make a complaint to CySEC?

You can officially file a complaint against a broker with a valid CySEC license. The procedure is as follows:

  • Make sure that the broker really has a valid license by finding it on the regulator's website;
  • Go to the appropriate section on the regulator's website and fill out the form (https://www.cysec.gov.cy/en-GB/complaints/);
  • Send a copy of the complaint to the Cyprus Financial Ombudsman Service.

How do I know if a broker is regulated by CySEC?

This information can be found on the official site of the regulator.

Sara Patterson
Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.