RadiantBizRadiantBizRadiantBiz26 February, 2024
Obtaining a Cyprus Forex License (CySEC) is made easy with RadiantBiz assistance.
Cyprus, located in the Eastern Mediterranean, has a thriving economy, a business-friendly environment, and a low corporate tax rate. Despite its reputation as a vacation destination, Cyprus has strategically diversified its economy and met EU admission criteria, joining the EU in 2008. This grants your brokerage EU passporting rights, enabling operations in other European markets without additional licenses or physical offices. The CySEC license covers all forex trading activities, streamlining the licensing process. RadiantBiz offers expertise in CySEC forex license applications, providing consultation and comprehensive services to kickstart your forex business in Europe. Contact us for a consultation; our expert team will respond within 30 minutes.
In Cyprus, opening a bank account is an essential step at the onset of the licensing process, primarily for depositing the authorized capital of the company. This account is established after the company’s registration and serves as a repository for the required company capital. Subsequently, a certificate confirming the capital’s deposit is obtained from the bank, which is necessary for the license application submission to CySEC.
The entire authorized capital amount is maintained in the bank account throughout the licensing period, ensuring the company’s financial stability. These funds are immobilized during the license tenure. The authorized capital for a Cyprus forex broker typically ranges from EUR 50,000 to EUR 725,000, depending on the range of services offered.
In Cyprus, licensing for financial activities falls under the jurisdiction of CySEC, the regulatory body overseeing the application process. Alongside the application, specific documents are required:
A crucial requirement is appointing employees with a pristine reputation and requisite competence to key positions within the company.
CySEC mandates approval for certain company roles:
Furthermore, CySEC stipulates requirements for the brokerage company management structure:
In Cyprus, there are three main tiers of forex licenses granted by CySEC under Law 87(Ι)/2017, depending on your business activities. CySEC oversees forex brokers, ensuring they meet capital adequacy requirements, financial compliance standards, and professional competency criteria for employees. Regardless of the license tier, the licensee must maintain the share capital at or above the required minimum level.
In the European Economic Area (EEA), including Cyprus, the forex market operates under a unified set of regulations outlined in the Markets in Financial Instruments Directive II (MiFID II). Introduced in 2018, MiFID II sets the basic standards for financial activities. While countries like Switzerland and the UK have adopted stringent measures, Cyprus adheres to the fundamental requirements, offering flexibility while ensuring market safety and transparency.
MiFID II mandates funds segregation, requiring forex brokers to keep clients’ funds separate from company funds in distinct bank accounts. This safeguards clients’ funds in case of financial difficulties. Cyprus, however, adopts a more relaxed approach, which our team at Regulated United Europe (RUE) can guide you through in a personalized consultation.
Client categorization is another important aspect of MiFID II. Brokers must classify clients as retail or professional traders based on their knowledge and experience. This allows brokers to assess risks accurately, offer suitable products, and prevent inexperienced traders from engaging in high-risk activities.
The investor compensation rule is vital for protecting clients in event of broker bankruptcy. According to MiFID II, clients in the EEA, including Cyprus, are covered up to 20,000 EUR, while those outside the EEA are eligible for 1,160 EUR. In Cyprus, the Investor Compensation Fund (ICF) manages this function, providing compensation to non-professional investor-clients of ICF members, regardless of their legal status or nationality.
Due to its numerous advantages, many international business people consider establishing a Cyprus Investment Firm (CIF) as a valuable opportunity to conduct forex business across the European Economic Area (EEA). However, the process of setting up a new company in Cyprus, particularly a forex company, requires adherence to the EU’s rules for anti-money laundering/countering the financing of terrorism (AML/CFT).
To establish a CIF, certain requirements must be met:
For incorporation, the following documents are needed:
The business plan should cover management, services description, organizational structure, AML/CFT policies, risk management, compliance procedures, marketing plan, and financial projections.
The financial plan should include a profit and loss statement, balance sheet, cash flow statement, capital requirements, revenue and cost projections, and budget forecasts.
Once all documents are prepared, the application must be submitted to the Registrar of Companies (RCOR) in Cyprus. However, it’s important to note that a newly registered company cannot offer financial services without obtaining a license from CySEC first.
Receiving a Cyprus forex license typically takes around 6 months, as authorities are required to decide within this timeframe after receiving the application. However, if the application is incomplete or inaccurate, or if there are inconsistencies in the submitted documents, the process may extend to 10 months. The application fee is 3,000 EUR, with an additional 1,000 EUR per financial service, except for the Multilateral Trading Facility (MTF), which incurs an extra fee of 10,000 EUR, and 500 EUR per ancillary service. For an expedited process of 3–4 months, an additional fee of 25,000 EUR is required. It’s advisable to consult our legal team before opting for the fast-track option.
Once your Cyprus-based CIF is incorporated, follow these key steps to apply for a forex license:
The application must include:
Each member of the Board of Directors and shareholders with special participation must submit:
RadiantBiz, is ready to assist you in incorporating a Cyprus company and obtaining a forex license. With our team of legal advisors, tax experts, and financial accountants, the application process will be smooth, transparent, and hassle-free.
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