The Cyprus Securities and Exchange Commission (CySEC) is the financial regulatory authority of Cyprus and one of the most important regulators in the global forex industry. Thanks to Cyprus's EU membership and the MiFID II passporting framework, a CySEC license allows brokers to operate across all 27 EU member states. This has made Cyprus the regulatory home for a huge number of international forex brokers.
What Is CySEC?
CySEC was established in 2001 as an independent public supervisory authority. Its role is to supervise the investment services market, enforce securities legislation, and protect investors in the Republic of Cyprus. Crucially, because Cyprus is an EU member state, CySEC operates within the European Union's regulatory framework — specifically MiFID II (Markets in Financial Instruments Directive).
Over 300 forex and CFD brokers hold CySEC licenses (CIF — Cyprus Investment Firm). This makes CySEC possibly the single most common regulator you'll encounter when comparing forex brokers globally.
Why Did So Many Brokers Choose Cyprus?
Several factors made Cyprus the go-to jurisdiction for forex brokers:
- EU Passporting — A CySEC license (CIF) allows a broker to offer services in all 27 EU countries without needing separate licenses in each
- Competitive Tax Regime — Cyprus has a corporate tax rate of 12.5%, one of the lowest in the EU
- Strategic Location — Cyprus bridges Europe, the Middle East, and Africa, making it ideal for international operations
- English-Speaking — Cyprus has a large English-speaking professional workforce with financial expertise
- Efficient Licensing — While rigorous, CySEC's licensing process is more streamlined than some other EU regulators
- Time Zone — Cyprus time (EET/EEST) covers Asian, European, and partially US trading sessions
CySEC Regulatory Requirements
1. Capital Requirements
CySEC-licensed brokers (CIFs) must maintain minimum initial capital of €750,000 for firms dealing on own account (market makers) or €150,000 for firms that don't hold client money. These requirements ensure the broker has sufficient financial cushion to operate safely.
2. ESMA Leverage Rules
As an EU regulator, CySEC enforces the European Securities and Markets Authority (ESMA) product intervention measures:
| Instrument | Max Retail Leverage |
|---|---|
| Major Forex Pairs | 1:30 |
| Minor Forex Pairs, Gold | 1:20 |
| Major Indices | 1:20 |
| Commodities (excl. Gold) | 1:10 |
| Individual Equities | 1:5 |
| Cryptocurrencies | 1:2 |
3. Investor Compensation Fund (ICF)
CySEC-regulated brokers must be members of the Investor Compensation Fund (ICF), which provides compensation to clients of CySEC-regulated firms that fail. The ICF covers up to €20,000 per client.
The ICF compensation limit of €20,000 is lower than the FCA's FSCS (£85,000). However, it's still significant and provides a meaningful safety net. Many traders consider this adequate for typical retail account sizes.
4. MiFID II Compliance
CySEC-regulated brokers must comply with the full MiFID II framework, which includes:
- Client categorization (Retail, Professional, Eligible Counterparty)
- Suitability and appropriateness tests for complex products
- Best execution obligations — brokers must take all sufficient steps to get the best result for clients
- Detailed transaction reporting to regulators
- Transparent fee disclosure and cost breakdowns
- Product governance requirements
- Negative balance protection for retail clients
CySEC vs Other EU Regulators
Because all EU financial regulators enforce the same MiFID II framework, the core protections are the same whether a broker is regulated by CySEC, BaFin (Germany), AMF (France), or any other EU regulator. The key differences are in the supervision approach and enforcement track record:
| Feature | CySEC | BaFin (Germany) | AMF (France) |
|---|---|---|---|
| Framework | MiFID II | MiFID II | MiFID II |
| Max Leverage | 1:30 (ESMA) | 1:30 (ESMA) | 1:30 (ESMA) |
| Compensation | €20,000 (ICF) | €20,000 (EdW) | €70,000 (FGDR) |
| Fund Segregation | ✅ Yes | ✅ Yes | ✅ Yes |
| Negative Balance Protection | ✅ Yes | ✅ Yes | ✅ Yes |
| Number of FX Brokers | 300+ | ~30 | ~20 |
| EU Passporting | ✅ Yes | ✅ Yes | ✅ Yes |
How to Verify CySEC Regulation
- Visit the CySEC website at cysec.gov.cy
- Navigate to "Regulated Entities" → "Investment Firms (CIFs)"
- Search for the broker by name or CIF license number
- Verify the license status is "Active" (not "Withdrawn" or "Suspended")
- Check the firm's authorized services and financial instruments
- Review any sanctions or penalties imposed on the firm
Some international brokers have a CySEC-regulated EU entity AND a separate offshore entity (e.g., in Seychelles or SVG). Make sure your account is opened under the CySEC-regulated entity to get EU protections. Check your account opening documents carefully.
Popular CySEC-Regulated Forex Brokers
- eToro — Social trading pioneer (CIF: 109/10)
- XM — One of the largest retail forex brokers (CIF: 120/10)
- Exness — High-volume broker known for tight spreads (CIF: 178/12)
- HF Markets — Multi-regulated broker (CIF: 183/12)
- XTB — Publicly listed European broker (CIF: 169/12)
- Admiral Markets — Popular among European traders (CIF: 201/13)
- FxPro — Long-established CySEC-regulated broker (CIF: 078/07)
Summary: Is CySEC Regulation Trustworthy?
CySEC regulation has matured significantly over the past decade. Early on, CySEC had a reputation for being lenient, but it has substantially tightened its oversight in recent years, imposing millions of euros in fines and revoking licenses of non-compliant firms. Combined with ESMA's product intervention measures, CySEC regulation now provides strong, EU-standard protection for traders.
- ✅ Full EU regulatory framework (MiFID II)
- ✅ Up to €20,000 compensation through the ICF
- ✅ Mandatory negative balance protection
- ✅ Client fund segregation required
- ✅ EU passporting — broker can operate across all EU countries
- ✅ ESMA leverage limits protect retail traders
- ✅ Increasingly strict enforcement track record
Use BrokersDB to compare CySEC-regulated brokers alongside FCA, ASIC, and other regulators. Our database of 539+ verified brokers makes it easy to filter and compare by regulation, spreads, leverage, and server infrastructure.
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