Forex license in Cyprus

If you are considering Forex trading as your venture, Cyprus emerges as the optimal choice for you.

Here is a compilation of services offered by companies holding CIF status under Law 144(I), mentioned in the roster of laws regulating investment services and operations. These firms fall under the supervision of the Cyprus Securities and Exchange Commission (CySEC).

Key services include:

• Receipt and transmission of orders for one or more financial instruments.
• Execution of client orders.
• Portfolio management of securities.
• Consultations on investment matters.
• Guarantee.
• Transfer of financial instruments with or without firm commitment.
• Ancillary activities.

In addition to this roster, in line with the company’s Forex market presence plans, Cyprus offers the choice of one or several supplementary services:

• Management of financial instruments on behalf and in the interest of the client.
• Custody of assets in banking institutions (including collateral management).
• Provision of credits to investors participating in creditor transactions.
• Consultations on various matters such as capital structure, bond purchases, or business strategy.
• Foreign exchange operations related to investments.
• Financial analysis of transactions and capital expenditures with recommendations provided.
• Services related to client obligations and more.

These companies operate using various financial instruments, among which the most demanded are:

• Tradable securities.
• Futures and options.
• Money market instruments.
• Securities packages under statutory commitments.
• Forwards and other derivative instruments linked to financial indices, interest rates, and cash payments.
• Contracts for commodity, cash, or non-cash settlement when operating on multilateral trading platforms.
• Derivative securities and forwards on commodity contracts, which may be executed in non-cash settlements, unless otherwise stipulated in point 6 above.
• Financial cash settlement contracts.
• Options, futures contracts on interest rates, and any other derivative instruments linked to climate variables, freight rates, emissions quotas, expressed in monetary terms, and so forth.

When granting a CySEC business license, due attention is paid to the following aspects:

• Organizational adequacy and administrative measures of the applicant.
• Effectiveness of internal audit mechanisms and their regularity.
• Separation of the applicant’s assets from those of its clients, as well as the separation of clients’ assets from each other.
• Adequacy and effectiveness of mechanisms and procedures for preventing and resolving conflicts of interest.
• Adequate staffing of the applicant.

Here’s a list of requirements to meet to obtain CIF status:

Capital Requirements:

For providing investment services listed in points (1), (2), (4), and (5) above, the initial capital of the firm should not be less than 200,000 euros. For conducting activities described in points (3), (6), (7), and (8), the company must have an initial capital of no less than 1,000,000 euros. Confirmation of the applicant’s capability to create the initial capital and willingness to freeze it in a bank account for settlements as required by CySEC is necessary.”

Organizational Requirements A Cypriot investment firm must:

Establish, implement, and maintain decision-making procedures and an organizational structure that delineates the chain of command and allocates roles and responsibilities in a clear and documented manner. Subsequently, it should create, implement, and maintain adequate internal audit mechanisms ensuring compliance with decisions and procedures at all CIF levels. Establish, implement, and maintain appropriate risk management policies and procedures identifying risks associated with activities, processes, and CIF systems; set a level of risk acceptable to CIF where applicable. Maintain and undertake effective organizational and administrative measures to take all reasonable steps to prevent conflicts of interest and safeguard against adverse impact on client interests. Take reasonable steps to ensure the continuity and regularity of investments, ancillary services, and actions, employing appropriate and proportionate systems, resources, and procedures. Implement appropriate customer identification procedures, record-keeping, and internal reporting. Create and maintain a function of continuous and effective compliance (in compliance with legislation), acting independently. A person accountable for internal control must be appointed and report to CIF management no less than once a year. Establish, implement, and maintain accounting principles and procedures for timely submission of financial reports to CySEC.

Delegatable Functions The following tasks may be outsourced:

Accounting. IT support. Personnel management. Internal control and risk management (the internal control function is performed by the person responsible for internal control and the person responsible for anti-money laundering). Internal audit. At the applicant’s discretion:

Investment committee. Audit committee. Risk management committee.

CIF Headquarters It must be located in the Republic of Cyprus. It’s crucial to adhere to a set of requirements when establishing a firm here:

The Board of Directors includes: At least two executive directors (they may be general managers), one of whom is a resident. Three non-executive directors, at least two of whom are Cypriot citizens. The head of each investment service department works full-time. The above-mentioned outsourcing functions. These are minimum mandatory requirements. However, as practice shows, CySEC evaluates candidates on an individual basis, depending on specific circumstances, the nature of their activities, the range of additional services, the specifics of staffing, etc.

Supporting Documents Organizational structure showing various departments and their managers (e.g., IT, asset management, accounting, etc.). Internal regulations, which must be established for CIF, implemented, and maintained, including all policies, procedures, instructions, and mechanisms developed in accordance with the Law and Directives issued under that Law. A business plan, which must include an analytical description of the nature and ways of development and organization of investments and additional services to ensure what the firm is applying for permission for, with reference to the markets on which CIF intends to operate, the composition of its clientele and prospective clients, the combination, methods of research and customer service, as well as potential development of CIF personnel and its technical and financial capabilities. Individual questionnaires. Basic agreements related to CIF activities. Memorandum and Articles of Association of the firm. These documents attest that the firm operates as a CIF. Cypriot investment companies operate in accordance with the Law, providing primary and ancillary services permitted by relevant laws.

Appendix The process of preparing an application to CySEC typically takes two to three months. The timelines largely depend on how quickly clients provide our specialists with the necessary document package and feedback. There are legally established deadlines within which CySEC must take action on properly completed applications. For this purpose, six months from the date of submission are allotted. A fixed application fee of 3000 euros plus an additional fee (the amount of which may vary) is charged for each requested primary investment service, and 500 euros for each requested ancillary service.

CySEC regulates binary options as part of the global Forex market activity. If you apply for a CIF license for instruments 4-7, it also includes binary options. Therefore, there is no specific procedure for CIF in addition to the standard licensing process. Our proposed fee for establishing a Forex company and its licensing is 30,000 euros. Additional client expenses of no less than 0.6% of the subscribed share capital (required guarantee) should be taken into account.