Protection: Negative Balance Protection
The Cyprus Securities and Exchange Commission, better known as CySEC, is the financial regulatory watchdog of Cyprus. CySEC came into the Forex scene as early as 2001.
Cyprus joined the European Union in 2004, and as an EU member state, CySEC's financial regulations and operations comply with the European MiFID financial harmonization law.
Cyprus is one of the most attractive regions in Europe to set up a forex company, due to its advantageous fiscal and tax structure. CySEC regulated brokers have elicited a mixed response from the Forex markets, and as far as retail traders are concerned, you either love them or you hate them.
The country witnessed an exponential growth in the number of Forex brokers and soon became a breeding ground for scams and financial malpractices that ultimately diminished the country’s efficiency in dealing with broker irregularities. The CySEC was also notorious for letting companies off with no penalties or simple warnings, even for larger financial crimes, as the country did not want to alienate its investors from shutting down shop and taking their business elsewhere. The lack of a strict regulatory regime did affect the CySEC in advertising its potential as a credible regulatory authority.
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1.Safety of Client Funds：
CySEC asks CIFs/forex brokers put clients funds into segregated accounts. The brokers must, upon receiving any client funds, promptly place those funds into one or more accounts opened with any of the following entities:
a. central bank
b. credit institution as defined in article 2(1) of the Business of Credit Institutions Law
c. bank authorised in a third country
d. qualifying money market fund
2. Requirement on Forex Brokers' Initial Capital:
An initial share capital of at least €200,000
At least €750,000 in operating capital
3. Requirement on Forex Brokers' Reports：
Cyprus forex brokers are asked to provide transactions reports, audit reports, client funds reports and anti-money laundering reports to CySEC.
Generally speaking, CySEC-regulated broker profile will be found at the CIF REGULATED ENTITIES LIST page on CySEC website. Try to find it and check if it will match the info from the broker website.
The detailed steps are as follow:
1. Find the licensed/reference no.(preferred) or name of the forex broker, which you can get from the broker's website;
2. Enter the no. or name into the search bar on https://www.cysec.gov.cy/en-GB/entities/investment-firms/cypriot/;
3. And you’ll get the broker's contents on CySEC website. At this time you need to check if the broker has the authorization to provide '9 - Financial contracts for differences' under 'Investment Services' or 'Foreign exchange services where these are connected to the provision of investment services' under 'Ancillary Services';
4. If all the above steps have been done, don't forget to check the most important information: check if the firm details published on CySEC website matches the ones you'll go to trade with, especially the website and email etc. If no, please keep away the broker because it's probably an unauthorized firm and your money will fall in danger.
Please kindly note that the Cyprus Securities and Exchange Commission (the 'CySEC') does not have restitution powers and therefore does not investigate individual complaints. However all complaints submitted to the CySEC are taken into consideration by the CySEC in the performance of its supervisory mandate.
If you are unhappy with a financial product or service provided to you by a Cyprus Investment Firm (a 'CIF', including the forex broker), follow the following three steps for making a complaint.
Step 1: Contact the CIF directly
If you have a complaint, it is best to first ask the CIF involved to put things right.
The CIF will give you a unique reference number. This unique number reference will be used for all future communication you will have with the Financial Ombudsman and/or with CySEC regarding your complaint.
CIF's are required to respond in writing within 5 days just to let you know they have received your complaint.
CIF's are also required to respond to your complaint in writing within 2 months, telling you whether the complaint has been successfully resolved or why they need more time to look into it (within maximum 3 months from the day of the complaint).
Step 2: Contact the Financial Ombudsman
If you are not satisfied with the firm's response, they rejected your complaint or you do not have answer from them within 3 months, it is recommended that you check with the office of the Financial Ombudsman in case you are eligible to file a complaint with them and seek mediation for possible compensation.
The Financial Ombudsman is an independent service for settling disputes between CIF's and their clients.
It is important to contact the Financial Ombudsman within 4 months of receiving a final response from CIF otherwise the Financial Ombudsman may not be able to deal with your complaint.
The Financial Ombudsman website can be accessed via: http://www.financialombudsman.gov.cy
Step 3: Take the matter to court
If you do not want to accept a decision taken by the Financial Ombudsman as a last resort you may be able to take your case to court. You would usually start civil action in the District Court.
Furthermore, if you want to inform the CySEC about a complaint submitted to a CIF, please click one of the following forms.
COMPLAINTS WITH REF NO. : https://www.cysec.gov.cy/en-GB/complaints/how-to-complain/ref/
COMPLAINTS WITHOUT REF NO.: https://www.cysec.gov.cy/en-GB/complaints/how-to-complain/no-ref/
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