Forex major regulators: what is CySEC?

Financial regulators are state and non-state structures that are entrusted with the control of the activities of financial organizations, in particular brokers. The fact that a broker has a valid Forex license from a regulator indicates the degree of its reliability, but how reliable is the regulator itself? How quickly will it perform its functions?

The most respected regulators in the world are NFA (USA), FCA (UK), BaFin (Germany), but for some reason most domestic brokers prefer to obtain a license from CySEC, the Cypriot regulator. In this article we will talk about CySEC, what it means, how much it costs and other issues regarding the regulator.

CySEC is the Cyprus Securities and Exchange Commission, which acts as a supervisory authority over the activities of financial companies in the country. Since Cyprus is a member of the European Union, the work of the regulator is based on the European MiFID Directive. The CySEC regulator was founded in 2001; since 2008, it has extended rights in the field of control over the work of legal entities, for example, interference in work in the event of default.

CySEC is often associated with another major regulator FCA, and sometimes people misled them, thinking they both have the same roles, but if we take a look at CySEC and FCA differences thoroughly, we will find out that they significantly distinguish from each other.

Compulsory control and licensing (obtaining a CySEC license is required!) Includes:

The main responsibilities of the financial regulator include the following:

The regulator's tools of influence are limited: imposition of a fine and revocation of a license. To obtain a license, a broker must fully provide information about the company and pay for authorization services (from 3 thousand euros). The CySEC list of documents required for consideration with the application is small in comparison with the requirements of the FCA and NFA, which require the disclosure of information about the managing personnel and require the mandatory presence of one of the executive directors.

CySEC licence is a kind of golden mean between offshore and European regulators. On the one hand, CySEC is still far from the stringent requirements set by European regulators for brokers. On the other hand, work in accordance with the European MiFID Directive still distinguishes CySEC from other offshore regulators:

In other words, CySEC, in comparison with other offshore regulators, has more tools to control its counterparts. Investors, on the other hand, receive slightly more protection and the opportunity to receive services in accordance with European standards.