The Cyprus Securities and Exchange Commission, better known as CySEC, is a financial regulatory authority in Cyprus. As you certainly know, Cyprus is an EU member. Thus, the financial regulations and CySEC operations must comply with the legislation of the European Commission (MiFID). Surely you have noticed that recently, a remarkable number of forex companies (brokers) have received their regulations from CySEC. I think that most traders consider CySEC regulation as a quality indicator and as a way of not having to worry about one’s money. Besides, we’ve already written an article on the topic” All Licensed Broker” section of our page. As I mentioned above, Cyprus is a highly popular attraction for Forex brokers who wish to set up base in a relatively easy and convenient location. Cyprus offers a lot of advantages when it comes to setting up a corporate headquarter, which is one of the main reasons why Cyprus sees the maximum number of Forex brokers offering financial services for traders across the world. CySEC Forex brokers are completely accountable to the CySEC under the MiFID directive, and are liable to legal action, including hefty fines and suspension of licenses, for non-compliance of the stipulated laws and guidelines. CySEC History: CySEC was established in 2001. After Cyprus joined the European Union in 2004, CySEC simultaneously become part of European MiFID regulation, which gives companies registered in Cyprus access to all European markets. But by joining the EU and adopting the Euro has significantly changed the financial regulatory framework promoted by CySEC. On May 4th, 2012, CySEC announced a change in policy regarding classification of binary options as financial instruments. This resulted in a fact that the forex brokers operating in Cyprus (most of them are based in Cyprus) had to be regulated. If you are trading with the AvaTrade, Robomarket, easyMarkets, FxPrimus, FXTM, HYCM, XM, ICMarkets, FPMarkets, FBS, you know that this broker is licensed by CySEC almost from the very beginning. Swearing themselves of being the first ones, but who knows where the truth lies.
It is the responsibility of the Cyprus Security and Exchange Commission CySEC:
• To supervise and control the operation of the Cyprus Stock Exchange and the transactions carried out in the Stock Exchange, its listed companies, brokers and brokerage firms.
• Supervise and control licensed companies offering investment services, mutual funds, investment advisors and mutual funds management companies.
• Further, it grants operating licenses to investment firms, including investment consultants, brokerage firms and brokers for trading binary options.
• To impose administrative sanctions and disciplinary penalties to brokers, brokerage firms, investment consultants as well as to in any other legal or natural person whom fall under the provisions of the Stock Market legislation.
Imposing administrative sanctions means that the broker will be penalized for any proven unfair practices. I think, lately, the number of penalized brokers has decreased. I attribute it primarily to the fact that the brokers are trying to have a good reputation and not enter a “blacklist” of fined companies.
CySEC and The Brokers:
In fact, the vast majority of forex brokers are regulated by CySEC. Brokers also need this license in order to legally operate any services within the Eurozone. Forex brokerage companies also know that a regulation by this regulatory body will gain the confidence of many European countries and merchants.
You can check whether the broker is regulated very easily. You should find it on the website of a broker or you could request a 5-digit number (a license number) through a customer support. Entering this number on the CySEC website should show you a valid license of the broker. Here is the official website of CySEC http: //www.cysec.gov.cy/
If the broker’s license cannot be found on the website, then it is a sign that the broker is not fully regulated in the EU. This does not necessarily have to mean that your broker will rob you at the first possible opportunity. It might though.