Cyprus offers a number of benefits to forex and binary options brokers. That is why so many of them are drawn to this small sunny island.
First of all, Cyprus is a jurisdiction with a solid financial services sector. Very much like the UK, Cyprus has strong regulations and more importantly strict customer protection rules.
Cypriot Investment Firms (CIFs) are required to report their transactions to the local financial watchdog, the Cyprus Securities and Exchange Commission (CySEC) on a regular basis. Besides, CIFs must hold at least €730 000 as a proof of their financial stability and keep client funds in segregated accounts, separated from company’s operational funds.
The Cypriot financial watchdog is on the alert, imposing fines on regulated companies, withdrawing licenses, where necessary, and regularly updating its warning list of non-licensed forex and binary options brokers.
Furthermore, CySEC applies a compensation scheme as an additional guarantee to clients’ funds. All licensed brokers are members of the Investor Compensation Fund, which may cover a maximum of 20,000 EUR per person in the event of broker insolvency.
Of course, speaking of the benefits of forex regulation is Cyprus, we also have to mention the European Union Membership. Under the MiFID regulations every CySEC-regulated investment company is entitled to offer its services to citizens of all EEA countries.