CySEC – Cyprus Securities and Exchange Commission. performs the function of state regulation and control over the activities of financial and Forex companies in Cyprus. As Cyprus is in the European Union, the Cyprus Commission work is carried out fully in accordance with the approved standards of the EU (European Directive MiFID).
The financial regulator is one of the most respected in Europe, because it has the same powers as, for example, the UK regulator FCA. Not all regulators can boast of such capabilities to influence financial market participants.
CySEC attractiveness for financial institutions.
Financial controller was founded in 2001 – then its functions were limited to monitoring the investment sector of Cyprus. In 2004, Cyprus became an EU member state and the organization received expanded powers, which now addressed the global monitoring of compliance of clients ‘ rights and national legislation in the financial sector.
In 2008, the regulator received even greater authority to regulate. For example, interference in the work of the legal entity in case of default. Although Finance companies did not like such tightening, Cyprus is still an attractive area for business rules. The status of the offshore company on Cyprus attracts many companies that get here:
- anonymity and confidentiality;
- no income tax for foreign employees;
- no tax on dividends;
- lowest EU income tax – 10% (on transactions in Cyprus), and 0% for transactions outside.
Functions, objectives and responsibilities of CySEC:
- supervision of compliance with investment and other financial companies of EU and Cyprus law in the field of stock trading, monitoring of operations on the stock markets of the country;
- control of activities of brokerage companies and dealing centers;
- licensing of companies that conduct financial activities in Cyprus;
- monitoring the implementation of investment projects, oversight of the operations of companies whose securities are publicly traded to avoid financial fraud;
- monitoring the work of the stock exchange of the country, compliance with the the rules of emission and circulation of securities;
- data collection from legal and private persons, which is necessary for the regulator of their functions, including collecting of financial statements;
- insurance of traders from unscrupulous actions of the broker (the return of funds in case of fraud of licensed mediator). Insurance coverage is from 14 to 22 thousand euros for each client. Insurance funding is provided from the Compensation Fund generated from the annual contribution of regulated companies.
To perform its functions, the regulator takes an active part in the development of laws regulating the stock and currency markets, gathering information on legal entities (including data provided by law enforcement agencies). At the request of CySEC, banks may freeze the accounts.
Under mandatory control and licensing by CySEC fall:
- all investment companies registered in Cyprus (including brokers);
- all branch offices and agents of investment companies located in Cyprus.
It should be noted that the instruments of influence at the financial regulator are quite narrow: the deprivation of the license and the initiation of litigation against the participants of the exchange market. However, revocation of a license is already a serious tool, because in this case the broker or other financial institution are deprived of many rights on the stock market, not to mention reputational risks.
CySEC is known by its regulatory methods, which, despite some stiffness, designed to increase the transparency of financial companies and to ensure maximum reliability of financial market participants. The existing Arsenal of tools and capabilities exceeds similar structures in the countries of Asia, Europe and America. In addition to the official website you can find not only dates and license numbers, but a list of violations identified from controlled companies. Such a high profile of CySEC attracts the attention of brokers from around the world that are opening their “child” structure.
The procedure for obtaining a CySEC license:
- filling out the application form;
- payment authorization services (from 3 to 130 thousand euros);
- provision of complete information about the structure of the company, its owners, financial status.
Registration takes from 1 week to a month. All the necessary details are provided on the website, where you can ask all the questions.
Official CySec website: http://www.cysec.gov