When you search for regulated brokerages, CySEC is one of the most popular regulatory authority you will see when comparing various financial companies. The interesting part is most of those companies are not even located in Cyprus. The Cyprus Securities And Exchange Commission has been operating since 2001 and since Cyprus joined EU back in 2004, so did CySEC by becoming a subsidiary of the European MiFID regulatory organization.
Cyprus is one of the highly picked destinations when it comes to Forex brokers. The relative simplicity of the registration is up most attractive and thousands of Forex brokers do not waste time to set their financial businesses for traders all over the world. CySEC Forex brokers have to follow various rules and regulations set by CySEC, which is also compliant with MiFID authorities. Failure to comply with the rules may result in possible legal actions, fines and even loss of licenses all together.
Why there are so many CySEC Regulated Brokers?
CySEC provides simple terms and conditions, and quick approval process, hence allows CySEC regulated brokers operate within Cyprus with minimum headache. After joining European Union, Cyprus is still a great place for companies that which to save on taxes and maximize their profits.
In the past, CySEC used to be too broker friendly and would hardly impose fines or suspension on the regulated companies. This used to cause world-wide uproar and mistrust from other regulatory agencies. CySEC regulated Forex brokers were once marked as fraud and get involved in malpractices causing traders to loose money and be mistreated.
It was time for some serious changes and CySEC decided to rewrite their regulatory terms to ensure that the regulated Forex brokers are taken accountable for mischief and trading clients are protected financially from any type of fraud.
The Leader in Regulations of Financial Companies
Initially, CySEC was frowned upon due to it's loosened regulations in the past. However, these days CySEC has turned around and employed various changes in the conditions of its regulations, leading to much better performance and trust in the financial markets.
CySEC is one of the first regulatory bodies dealing with the world of binary options, crowning it as valid financial instrument. CySEC has opened the minds of other regulatory authorities to consider binay options as valid and in need of regulations for related brokers in their counties.
How Are Traders Protected by Regulations?
CySEC has been improving its regulatory terms and conditions to provide much safer environment for traders all over the world, against fraud and criminal activities. CySEC is now closely linked to European MiFID, which provides outstanding guidelines and updated ways to deal with financial securities of the clients.
The agenda of CySEC is to regulate forex and sustain reliable trading environment from the financial brokerages operating from Cyprus. At the moment, however, costumers are still unable to directly contact CySEC for help, but rather work towards solutions with the broker or apply to the court of law.
How to check whether selected Forex Brokers are Regulated by CySEC?
Do not be fooled by false claims of scam Forex brokers. It is very easy to claim to be regulated by CySEC and confuse the new traders. One of the guidelines of CySEC regulation is that all Forex brokers must state their five digit CySEC license number on their website. Once the user have this number, it can be verified on CySEC website whether a selected Forex broker is indeed regulated by CySEC regulatory body.
VISION, MISSION & RESPONSIBILITIES OF CYSEC
The Cyprus Securities and Exchange Commission (CySEC) is the independent public supervisory Authority responsible for the supervision of the investment services market and transactions in transferable securities carried out in the Republic of Cyprus.
The vision of the CySEC is to establish the Cyprus securities market as one of the safest, most reliable and attractive destinations for investment.
The mission of the CySEC is to exercise effective supervision to ensure investor protection and the healthy development of the securities market.
The main duties and responsibilities of the CySEC are set out in Article 25 of the Law which Regulates the Structure, Duties, Powers, Organisation of the Securities and Exchange Commission and other Related Matters (L73(I)/2009) and may be summarised as follows:
- To examine applications and grant operating licenses to entities under its supervision, as well as to suspend and revoke the said licenses.
- To supervise and regulate the operation of the Cyprus Stock Exchange and of other organised markets in the Republic and the transactions carried out in these markets.
- To supervise and regulate the agencies under its supervision in order to ensure their compliance with the laws governing their operation.
- To carry out all necessary investigations in view of the exercise of its duties under the law as well as on behalf of other foreign competent Authorities.
- To request and collect information which is necessary or conducive to the exercise of its duties under the law and to demand by written request the provision of information from any natural or legal person or organisation deemed to be in a position to provide the required information.
- To impose the administrative and disciplinary sanctions provided by the law.
- To require the cessation of practices which are contrary to the securities market laws.
- To apply to a competent court for the issue of an order for detention, or charge or freezing or prevention of alienation or transaction involving assets.
- To issue regulatory Directives and Decisions.
- To cooperate and exchange data and information with other public Authorities in the Republic, competent foreign supervisory Authorities and other organisations.
The CySEC is responsible for the supervision of operations and ensuring the compliance with the relevant legislation of the following entities:
- Cyprus Investment Firms (CIFs)
- Cyprus branches of Investment Firms (Ifs) of other EU member-states
- Tied Agents of CIFs
- Undertakings for Collective Investment in Transferable Securities (UCITS)
- UCITS (Undertakings for Collective Investment in Transferable Securities) Management Companies
- UCITS Agents
- Cyprus branches of UCITS Management Companies of other EU member-states
- Administrative Services Companies - Trustee and Fiduciary Service Providers
- Variable Capital Investment Companies
- Alternative Investment Fund Managers (AIFMs)
- Regulated Markets
- Central Counterparty Clearing House (CCPs) of over-the-counter (OTC) derivatives
- Trade depositories of over-the-counter (OTC) derivatives
With the enactment of legislation currently undergoing legal vetting, CySEC will be the supervisory Authority also for the Alternative Investment Funds (AIFs). Furthermore, the relevant legislation which will govern the supervision of the Central Securities Depositories (CSDs) is under preparation.
In addition to the above responsibilities, the CySEC has also been entrusted with powers and duties under the following laws:
- The Public Offer and Prospectus Law of 2005
- The Insider Dealing and Market Manipulation (Market Abuse) Law of 2005
- The Public Takeover Bids Law of 2007
- The Transparency Requirements (Transferable Securities Admitted to Trading on a Regulated Market) Law of 2007