Cyprus is a well-known and prominent center of Forex trading, considering that it was a tax haven before Cyprus became a member of the EU attracting many foreign Forex investors. After joining the EU, all registered firms in Cyprus gained access to the entire EU market, but the EU officials urged the reforms and changes in the market so it would be harmonized with EU legislations.
The CySEC, therefore, rushed to the task to implement all measures necessary to ensure an EU compatible environment.
What are the responsibilities of CySEC?
First of all, CySEC is in charge of monitoring the Cyprus Stock Exchange, registered brokers and companies, and the transactions taking place on the Stock Exchange. They also monitor licensed collective investment funds, registered investment service companies, companies that operate mutual funds and investment consultants. They issue licenses to the investment consultants, brokerage firms, and brokers.
Within the legal framework regarding Stock Market, they can impose administrative sanctions on and take disciplinary actions against all subjects under their supervision (the above-mentioned) as well as against every other legal or natural person that is subject to this legislation.
The CySEC, as a governmental body, is elected on the proposal of the Finance Minister and appointed by the Council of Ministers. It consists of five members with a five-year term in office. The
Commission works full-time.
Considering that the CySEC offers specific financial services, the number of CySEC registered brokers increased. Nevertheless, in the last two years, the CySEC was subject to criticism for poor regulation of high-risk investment firms. The critics complained that the imposed fines are smaller than in other EU member states.
CySEC is the pioneer financial regulator to include binary options regulation, whereby facilitating operations of the binary options brokers to operate legally across the EU (or they can be internationally registered). Their regulation of binary options is the most popular across Europe and many companies selected CySEC as their binary options regulator.
The CySEC reformed and improved the market by imposing higher fees, revoking licenses, suspending brokers, and establishing a more transparent work ethics regarding CySEC registered brokers and companies.
They also deal with the lack of handling of investors’ complaints.
CySEC Forex brokers and their employees also have to fulfil the criteria regarding qualification.
Their official website features a list of fined companies including the amount of the fines.
The CySEC’s requirements for registration are listed below. Any firm or company that would like to be issued a license has to fulfil the following criteria:
– Appropriate initial capital
– Adequate shareholders
– Adequate persons who run the business efficiently
– Appropriately qualified staff
– No close links
– Cyprus-based head offices
– Member of the Investor Compensation Fund
– Corresponding organizational procedures
The application process is relatively simple. The candidate submits all necessary information to the Commission for a review. Based on the assessment outcome, the company either gets approved or not. The Commission takes six months to make the decision.
The Main Goals
The public legal entity was established back in 2001. Since then, the CySEC faced many challenges in terms of harmonizing with the EU directives. Nevertheless, the Commission manages to keep up with the hardships.
As a previous tax haven, the goal of CySEC is to make Cyprus the major investment center again, this time for being a safe, reliable, and attractive place for investments. Therefore, CySEC works very hard to protect investors and to create a healthy securities market by supervising companies and brokers in Cyprus.
Besides issuance of licenses and supervising the Cyprus Stock Exchange operations, the body is responsible for much more.
They have the authority to request and collect information from any individual, natural and legal person, and any CySEC registered company for purposes of effective operation. They issue regulatory decisions and directives. If they have issues with certain companies they can take them to court to initiate proceedings. They cooperate with other state authorities, as well as with international supervisory agencies and authorities.
In the last years, the CySEC tightened the regulation policy on many CySEC licensed brokers. In return, the brokers have access to the entire EU market and can freely make international business arrangements, while their clients enjoy the legal protection offered by CySEC.
Strategy and International Relations
The CySEC’s Strategy and International Relations Department is in charge of strategic planning, domestic and international communication and relations, promotion of CySEC’s activities and work, educating the public on the capital market, as well as the investment securities services.
Their responsibilities also include support and assistance to the Commission’s Chairman and Vice-Chairman in activity-coordination.
The Financial Ombudsman
The CySEC gives instructions to clients, investors, and the public how to file complaints. Their announcement states that if the customers have any disputes with the CySEC registered brokers, they are welcome to submit their complaint to the financial ombudsman.
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The CySEC, as a powerful organization, maintains good international relations and fosters cooperation with international authorities through bilateral and multilateral agreements. They also participate in international committees of the European Securities and Market Authority (ESMA), as in many other international groups and formations.
The CySEC understands that international cooperation is a top priority considering the capital market is a global market, exceeding state boundaries, especially since Cyprus has become a member state of the European Union.
Regulation bodies like the CySEC give us, the traders, a clear idea whom to trust with our money and which brokers to avoid. The CySEC also discloses information on CySEC Forex brokers that were suspended, giving us a clear picture of the companies’ dealings.
Also, a list of recommended top CySEC registered brokers who are safe for customers, and their investments can be found. These organizations keep the Securities and Forex Market under control and away from vicious malpractice, shady tricks, and scams.
If you are looking for a Forex brokerage company in Cyprus, the safest way is to choose a company from the recommended CySEC list. These broker firms are subject to numerous rules and standards which means that they must operate in your best interest.