Good afternoon, dear readers. When choosing a broker, many investors are faced with the question of how important a license is to ensure the security of a deposit and operations with it. In particular, does the Cyprus CYSEC license guarantee the safety of your funds? Read my post today about the regulator.

I will briefly try to describe what kind of organization this is and what it does. CYSEC from English - Cyprus Securities and Exchange Commission - Cyprus Securities and Exchange Commission securities and exchanges.

The official CySEC website clearly defines the regulator’s mission: to provide effective supervision to ensure investor protection and development of the securities market.

Today the Commission performs the following functions:

1. Controls the operation of the Cyprus Stock Exchange and the transactions carried out on it, its listing companies, brokers and other trading participants (licensed investment companies, collective investment funds, etc.).
2. Provides licenses to carry out activities.
3. Imposes administrative sanctions and disciplinary actions on brokers and other participants.

History of creation

CySEC was formed in 2001 under Section 5 of the Cyprus Securities and Exchange Law as a public government corporation.

When Cyprus officially became part of the European Union in 2004, CySEC automatically became subject to the rules of the new EU MiFID Directive, which allowed all companies registered in Cyprus to provide services on European markets. However, joining the EU and adopting the euro significantly changed the structure of financial regulation that CySEC created as a tax haven.

Commission structure

CySEC is governed by a Council of five members - the Chairman, the Deputy Chairman and three others, who are appointed by the Council of Ministers on the proposal of the Minister of Finance. In addition, Chapter Central Bank Cyprus is a non-voting member of the Commission's council.

The regulator’s commission itself includes 11 departments that are in charge of the following areas:

1. Strategy and international relations.
2. Issuers.
3. Licensing.
4. Anti-money laundering.
5. Supervision of general procedures.
6. Investigation of violations.
7. Legal Department.
8. Administration and staff.
9. Information Technology.
10. Risk Assessment and Statistics Department.
11. Internal audit.

Who does the regulator control?

CySEC monitors the transactions of the following entities:

1. Cyprus Investment Firms (CIF).
2. Cyprus branches of investment firms (IFS) of other EU member states.
3. CIF affiliated companies.
4. Regulated hedge funds (UCITS) and related entities.
5. Administrator companies are trusted and fiduciary providers.
6. Alternative Investment Fund Managers (AIFM).
7. Regulated markets.
8. Central Clearing House (CCP).
9. Depositories.

In the near future, the regulator CySEC will also be the supervisory authority for alternative investment funds (AIFs).

Based on what laws does it work?

The main responsibilities, structure and powers of the Commission are set out in Article 25 of the Securities and Exchange Law (L73(I)/2009).

In addition, the Commission also has powers and responsibilities under the following laws:

1. Public Offering Act and Prospectus 2005.
2. Anti-Illicit Trafficking and Market Manipulation Act 2005.
3. Takeover Act 2007.
4. Requirements for information disclosure (about securities admitted to trading on regulated market) 2007.
5. The main tasks and responsibilities of the organization.

The law also, in addition to its main functions, entrusts the Commission with the following responsibilities:

• request and collect information;
• demand the cessation of practices that are contrary to securities market laws;
• apply to the competent court to order the detention, prosecution, freezing or prevention of alienation of property or termination of a transaction with assets;
• issue regulatory directives and decisions;
• cooperate and exchange data with other government departments of Cyprus, as well as with competent foreign authorities and organizations.

How are brokers licensed?

Registering a company in Cyprus on your own is quite problematic. Therefore, there are many service companies that provide full list services, including collection and submission of documents to CySEC. In any case, the company will certainly have to go through several mandatory stages.

Requirements for obtaining a license

1. The company's head office must be located in Cyprus.
2. The fee must be paid in central bank, its size will depend on the type of activity of the company.
3. All procedures, including internal audit, must be established.
4. A mandatory business plan outlining the company's growth prospects.
5. High professional level of employees (you will have to prove that the local population is unable or unwilling to take this position).
6. Legality authorized capital company and further investment in business.

License cost

Filing an application to CySEC, which does not include translation and registration costs, as well as other direct costs, costs 59 thousand euros. But this amount only covers all necessary meetings between employees in Cyprus and Commission employees.

Sanctions against violators

The CySEC regulator can impose sanctions and collect fines (albeit minor) if:

• records of open trading accounts are not kept or kept improperly - from 10,000 euros;
• the terms of payment to investors were violated - from 5,000 euros;
• the broker's charter is not observed - from 5,000 euros;
• broker does not respond to client requests - from 5,000 euros;
• underlying assets are not fixed - from 5,000 euros;
• the broker failed to submit reports on time - from 5,000 euros.

Brokers regulated by CySEC

As of October 2018, 250 investment companies were registered with CySEC (some are undergoing re-registration). Among Russian ones, these are mainly Forex brokers, but there are also large investment companies, such as Finam.

Below is a list of brokers licensed by the Cyprus Commission who operate on the Russian market:

1. Exness.
2. NordFX.
3. FxPro.
4. Grand Capital.
5. TeleTrade Group of Companies.
6. IFC Markets.
7. HY Options.
8. 24option.
9. HotForex.
10. Finpari.
11. ForexMart.
12. Alpha Forex.
13. FXPRIMUS.
14. Swiss Markets.
15. LiteForex.
16. TrioMarkets.

Brokers that have abandoned regulation

23 companies voluntarily abandoned the regulator’s license (suspended it) after CySEC introduced new rules.

These are mainly binary options traders:

1. Asset Management Advisory Services (AMASS) Ltd.
2. B.O. Trade finances ltd.
3. Blackwell Global Investments (Cyprus) Ltd.
4. Dragon Options Ltd.
5. Glestimon Management Ltd.
6. Glistentree Holdings Ltd.
7. Gobaba FX Cy Ltd.
8. Grow Wealth Assets Ltd.
9. Hellenic Bank (Investments).
10. Lucro Capital Ltd.
11. Newcept Financial Markets (EU) Ltd.
12. NKB Investments Limited.
13. Ouroboros Derivatives Trading Ltd.
14. Plasma Enterprises Ltd.
15. Reserve Invest (Cyprus) Ltd.
16. SA&PM (Cyprus) Limited.
17. Saxo Capital Markets CY Limited (ex FT World Ltd).
18. Starfish Markets (Cy) Ltd.
19. Topic Markets Ltd.
20. U.P.M Ltd.
21. Vinson Financials Ltd.
22. Xenon Capital Partners Ltd.

List of brokers with sanctions

There are also outright violating companies whose licenses were canceled by the Commission (withdrawn) or suspended for non-compliance with the rules (suspended). Although this is unlikely to console deceived investors.

P.M. Investment Capital Limited	Pulp International Business Ltd	Trademarker (Cyprus) Ltd	UBFS Invest Powered By Moneychoice Brokers Ltd	UFS Capital Limited (ex Exscale Investments Limited)
License Number: 243/14 (Withdrawn)	License Number: 095/08 (Withdrawn)	License Number: 151/11 (Suspended)	License Number: 239/14 (Withdrawn)	License Number: 137/11 (Withdrawn)
License Date: 07/21/2014	License Date: 06/11/2008	License Date: 08/08/2011	License Date: 06/24/2014	License Date: 04/19/2011
Date of Termination: 06/07/2015	Date of Termination: 16/03/2015	Date of Termination: 04/25/2016	Date of Termination: 28/11/2016	Date of Termination: 02/02/2015
Company Registration Number: 317840	Company Registration Number: 232026	Company Registration Number: 282594	Company Registration Number: 326309	Company Registration Number: 270917
	Telephone: 25 366 324, Fax: 25 366 326	Telephone: 25 028 236, Fax: 25 028 235	Telephone: 22 261 700, Fax: 22 262 003	Telephone: 25 253 213, Fax: 25 342 634
		Country: Cyprus	Country: Cyprus

This is data from the official website of the Commission on the termination of licenses. However, in the News and Warnings section you can find information about minor violations of the rules by other companies. Please note that many Russian brokers work through Cypriot companies and their names are different.

Loud scandals with the regulator

CySEC is perhaps the most scandalous EU regulator. Over the past 5 years, there have been several glaring cases involving corruption and deception of investors by companies holding a Commission license.

IronFX

At IronFX, the first signs of problems appeared in 2014. Traders began to complain that the broker was not paying out money. Six months later, CySEC issued a small fine (335 thousand euros), the company continued to operate under a different name. Even investors’ appeals to the Financial Ombudsman Service did not help: not a single client, as far as I know, received compensation.

Pantheon-Finance

Panteon Finance is one of many pyramids created by Kazakh businessman Pavel Krymov in the CIS.

In February 2015, TsRFIN announced the blacklisting of Panteon-Finance LTD because the CySEC regulator received many complaints from defrauded investors. But I still see reviews online of a non-existent company. Back in October 2015, the company lost the license of another miracle regulator, IFSC (Belize).

And many others

Mr. Krymov has defrauded thousands of investors for over 15 years through various fraudulent projects, including Forex Trend, AGAM, Private FX, Panteon Finance, Questra World and dozens of others. It is strange that regulators such as CySEC are unable to protect depositors. On the other hand, saving a drowning person is the work of the drowning person himself.

How to write a complaint against a broker to the regulator

Filing a complaint against a broker is relatively simple: the main thing is to make sure that he actually has a license from CySEC.

Here's the algorithm:

1. Find the license number on the company's website, then enter it in the search on the Commission's website.
2. Fill out the form via the link ( https://www.cysec.gov.cy/en-GB/complaints/).
3. Submit your complaint to the email address of the Cyprus Financial Ombudsman ( [email protected]).

Oh yes. The complaint to CYSEC must be in English or Greek.

How to check if your broker actually has a CySEC license

Advantages and disadvantages of the CySEC license

The advantages of the CySEC license include the relatively low cost of registration, more short time issuance compared to other regulators, compliance with European laws. But these are rather advantages for the broker.

For investors, I would first of all highlight the following shortcomings of CYSEC as a regulator:

• deadlines for consideration of complaints;
• deadlines for payment of compensation;
• until now, companies trading binary options can obtain a license (simply disguising their scope of activity);
• from state fund the investor can receive a maximum of 20 thousand euros in compensation. In fact, I have not heard any stories of anyone receiving this compensation.

Most Forex brokers operating in the Russian Federation and European countries receive for their financial activities permitting license from the Cyprus regulator. This government body responsible for overseeing local financial markets is called the Cyprus Securities and Exchange Commission. It is better known among traders and investors by its abbreviation CySEC. It stands for Cyprus Securities and Exchange Commission, and the level of trust in this structure is now quite high, although this was not always the case.

It is worth remembering that Cyprus is an offshore zone with very soft tax legislation, but after the country joined the European Union the legislative framework The state has become more stringent, in particular in the area of ​​regulation of financial markets. At the same time, most of the charms of offshore companies were preserved.

This combination makes obtaining a CySEC license extremely attractive for fairly reliable Forex brokers and binary options, so now such well-known companies in the Russian Federation as Roboforex, Exness, Alfa Forex, XM, 24option, Lite Forex, FX Pro, eToro, Iron FX, etc. work here.

How did CySEC come into being?

The emergence of the Cyprus Securities and Exchange Commission occurred at the beginning of the 21st century, when the island's government passed legislation regulating the investment and financial sectors. This legislative act it was called “On Exchanges and Securities”. During this period, Cyprus became a real offshore paradise, but the situation changed radically in 2008.

At this moment, Cyprus is part of the EU, which means it is forced to tighten requirements in relation to the work of financial companies, although tax rates still remain extremely low. Therefore, with low costs, Forex brokers were already forced to make a number of concessions to regulatory structures, ensuring compliance with the high European standards prescribed in the relevant Directive.

Functional features of the work of the Cyprus Commission

Despite the fact that Cyprus actually remains an offshore, the Cyprus Securities and Exchange Commission, which, we recall, is a government regulator, has the right to issue licenses to financial companies to operate in any European country! That is, every Forex broker that has been registered in Cyprus and received a CySEC license must work in accordance with the European Directive - a set of strict rules governing the activities of all financial organizations.

Among the list of main powers of CySEC are:

• issuing licenses to investment and brokerage organizations;
• monitoring the performance of licensed companies;
• full-scale regulation of the national stock market of Cyprus, including the activities of issuers;
• assessment of the activities of investment advisers, institutional managers, monitoring the results of individual areas of investment;
• collection and analysis of data about each company that is regulated by the Cyprus Commission;
• carrying out inspections of the work of individual companies.

Each of the directives adopted by CySEC is published on the official website of the Cyprus regulator and in a special government publication. In case of detection of violations by financial companies, CySEC has the right:

• apply a number of administrative sanctions;
• impose fines;
• revoke the license;
• initiate liquidation of the company.

Benefits of obtaining a Cyprus license

Given the strictness of European regulations, trust in companies that are allowed to operate in the EU is extremely high, but at the same time, Cyprus continues to please brokers themselves, offering:

• zero income tax rate for financial transactions off the island;
• tax rate of 10% for profits received directly within Cyprus;
• no taxes on dividends paid;
• complete anonymity;
• the absence of such a regular expense item as income tax on the labor of foreigners.

Contact information for CySEC clients

To communicate with CySEC representatives you need to know English language, and you can contact them through:

• official website cysec.gov.cy;
• office in Cyprus 27 Diagorou Str. CY-1097;
• by email [email protected].

How financial companies are licensed in Cyprus

Obtaining a license in Cyprus is not difficult, but please note that from a Forex broker in mandatory will require monetary participation in the compensation fund in case of bankruptcy of the company. In this case, clients will receive a refund in full or in part if the amount of money on deposit exceeds 22 thousand EUR. Such a compensation fund is filled from membership fees, which financial companies are required to send to it once a year, in accordance with CySEC requirements.

It should be borne in mind that the financial regulator of Cyprus has the right to cooperate with law enforcement agencies to conduct investigations into the activities of any regulated company and its individual employees, as well as forcibly limit the functions of a Forex broker or even liquidate its legal entity through the courts. In addition, if serious violations are detected, CySEC initiates criminal prosecution in order to catch and punish the perpetrators, and the Cypriot regulator also has the right to freeze accounts until the circumstances are clarified.

In general, the list of mechanisms of influence on financial companies with a CySEC license is very wide and similar to how financial regulation in the UK, the FCA is one of the strictest bodies, guaranteeing maximum protection of the interests of traders and investors.

As for the actual mechanism for going through the procedure for obtaining a license, the company only needs to:

• submit a completed special application form;
• pay for authorization services (3-130 thousand EUR);
• provide data regarding structure;
• confirm a sufficient financial situation.

After submitting documents, it takes from 1 to 3 weeks to review the circumstances and verify the documents as usual. If desired, you can initiate an accelerated procedure for obtaining a license by paying an additional 1.5-1.7 thousand EUR.

To summarize the above, we can say that the CySEC license serves as a sufficient guarantee for clients of financial companies who know that their interests are reliably protected. In addition, it is quite easy for companies to obtain a license, and further work is also very convenient, because Cyprus continues to delight with its lenient tax legislation.

Penalties for Forex brokers

Forex brokers and other financial organizations in whose work violations are identified are immediately subject to the following types of penalties depending on their misconduct:

• 10 thousand EUR for inaccuracies regarding the accounting of their clients;
• 5 thousand EUR for any delays in transferring client money;
• 5 thousand EUR for violations of the internal regulations;
• 5 thousand EUR for lack of classification data;
• 10 thousand EUR for the use of inaccurate data regarding the experience or qualifications of people making investments;
• 5 thousand EUR in the absence of appropriate reporting on transactions.

Examples of CySEC's response in times of crisis

High-profile investigations after CySEC acquired modern look, did not have. The only thing that can be remembered is the financial market crisis in Cyprus, which occurred at the very end of 2012. Banks, in order to protect their position, began to freeze client accounts, and this worsened the investment climate and almost led to the death of Cyprus as a reliable offshore.

In such conditions, in order to stabilize the region’s economy, CySEC even considered the option of introducing a restriction for all financial companies, forcing them to work exclusively with EU citizens, ignoring the wishes of other clients. In addition, Cyprus companies were prohibited from establishing new branches outside the territory of the state, thus expanding their customer base.

It is not difficult to imagine the reaction such restrictions caused among Forex brokers, some of whom continued to work as usual, ignoring the regulator’s instructions. However, CySEC itself soberly assessed the emerging situation, and it never came to the point of introducing the most stringent restrictions, since in the fall of 2013, while deliberations lasted, economic situation the region has improved and there is no need for extreme measures.

Today, all binary options and Forex brokers strive to obtain a CySEC license, since such a document allows them to:

• work in conditions of soft tax legislation;
• serve clients from the EU, agreeing to the MiFID directive;
• it is easy to expand the client base, since the degree of trust in the CySEC license is quite high.

Results of the CySEC review

Thus, despite the “offshore component”, you can trust companies that have received a CySEC license, since strict rules and a compensation fund make cooperation completely safe if the deposit size is less than 22 thousand euros.

CYSEC license - what is it?

Is the CySEC license a European regulator or a fiction?!

Financial regulators are government and non-government structures charged with monitoring the activities of financial organizations, in particular brokers. The presence of a broker's current regulator indicates the degree of its reliability, but how reliable is the regulator itself? How quickly will it perform its functions?

The most respected regulators in the world are NFA (USA), FCA (UK), BaFin (Germany), but for some reason most domestic brokers prefer to obtain a license from the Cyprus regulator CySEC. I’ll discuss what the “CySEC License” is and what it means, how much it costs and other questions in this article.

1. What is CySEC and what are the functions of the regulator;
2. How to file a complaint with the regulator against a broker in CySEC;
3. CySEC and IronFX: should you trust offshore brokers?

What is CySEC and what functions does the regulator have?

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CySEC is the Cyprus Securities and Exchange Commission (official website cysec.gov.cy), which acts as a supervisory authority over the activities of financial companies in the country. Since Cyprus is part of the European Union, the work of the regulator is based on the European MiFID Directive. The CySEC regulator was founded in 2001; since 2008, it has expanded rights in the field of control over work legal entities, for example, interference with work in the case of . The following are subject to mandatory control and licensing (obtaining a CySEC license is mandatory!)

• all investment companies with Cyprus registration;
• all branches and agents of investment companies that are located in Cyprus.

Cyprus jurisdiction attracts many companies due to its ease of registration, tax legislation and anonymity.

The main responsibilities of a financial regulator include the following:

• monitoring and control over the activities of financial market participants licensed by the regulator;
• control over transactions carried out on the Cyprus Stock Exchange;
• collection and analysis of information from companies reporting to the regulator;
• consideration of complaints from clients of investment companies.

In Russia, the list of brokerage companies registered with CySEC can be continued for a long time: at least 20% of brokers from the top 30 have this license. As an example, which received a license in 2015, etc.

The regulator's tools of influence are limited: imposing fines and... To obtain a license, the broker must provide full information about the company and pay for authorization services (from 3 thousand euros). The list of CySEC documents required for consideration with an application is small in comparison with the requirements of the FCA and NFA, which require disclosure of information about management personnel and require the mandatory presence of one of the executive directors.

The CySEC license is a kind of golden mean between offshore and European regulators. On the one hand, CySEC is still far from meeting the strict requirements imposed on brokers by European regulators. On the other hand, work in accordance with the European MiFID Directive still distinguishes CySEC from other offshore regulators:

• The directive has clear requirements for the provision financial statements and reporting on transactions by the broker, while offshore regulators are limited in collecting information;
• according to the directive financial entities MiFID have a single passport, which allows the same provision of services to all clients of the Common Economic Space;
• The division of clients into several statuses determines the degree of investor protection.

In other words, CySEC, compared to other offshore regulators, has more tools to control its “wards”. Investors receive a little more protection and the opportunity to receive services in accordance with European standards.

How to write a complaint against a broker to the CySEC regulator

Officially filing a complaint against a broker who has a valid license from the Cypriot regulator is relatively simple, although the speed of its processing, unfortunately, leaves much to be desired. The procedure is as follows:

• make sure that the broker actually has a valid license by finding it on the regulator’s website (there is no Russian-language version of the site);
• go to the appropriate section on the regulator’s website and fill out the form (cysec.gov.cy/en-GB/complaints/tip-off-cifs/);
• duplicate the complaint to the Financial Ombudsman of Cyprus (financialombudsman.gov.cy/forc/forc.nsf/index_en/index_en?OpenDocument).

You can learn more about how to write a CySEC complaint in this video:

The situation of CySEC and IronFX

I think most blog readers remember well last year the scandal with the offshore regulator IFCS and the company PANTEON FINANCE LTD (by the way, one of the largest is licensed by this regulator). Then, the curious thing about the situation was that the broker stopped fulfilling its obligations back in January 2015, but the financial regulator responded with a corresponding message on its website only 9 months later.

Something similar is happening in the conflict between CySEC and the IronFX broker. IronFX, a company with more than 60 offices around the world, began delaying payments to its clients back in March 2015. Dissatisfied clients began actively filing complaints against the broker, but the regulator was in no hurry to begin an investigation. Only in August-September 2015 did CySEC begin an investigation into the situation. Yes, it’s an investigation, not helping clients get their money back! But it turned out to be even more interesting official position regulator, announced in April 2016 (that is, 1 year after the problems began!).

The essence of the position is as follows:

• CySEC does not have the appropriate powers to compensate victims (although it does have an Investor Compensation Fund of €17 million). Compensation is possible only when the broker loses his license or declares himself bankrupt (which will not happen in the near future);
• IronFX must repay debts to clients and pay a fine of 335 thousand euros. In other words, in addition to the symbolic fine, the regulator took the position of an observer, since there were no real actions to implement the decision from CySEC.

In the meantime, IronFX continues to do a great job growing its presence in China. If in October 2014 the broker had some problems in China (accusations of fraud), then in March 2016, after the imposition of a fine by CySEC, the broker, after rebranding (three names of new companies controlled by the broker were registered), began working in China again. By the way, it is unknown whether the fine was paid, but settlements with the affected clients have not yet been fully made.

Summary

Based on all of the above, I would conclude that my level of trust in this regulator can hardly be called high. Yes, having a CySEC license really sounds more significant than, which can hardly be called regulators (although they claim to be SRO status, see). But you shouldn’t count on the fact that the Cypriot regulator will help quickly resolve the issue with a problematic broker or be able to warn in advance about potential problems with payments.

CySEC is a mid-level financial regulator. Let us remember how the FSA allowed WorldSpreads to go bankrupt (which is why it was reformatted into the FCA), and the eminent American regulators SEC and CFTS did not keep track of MF Global, another global corporate bankruptcy.

However, there is also a fly in the ointment. CySEC still performs a number of useful functions:

• monitors the work of companies without a license and publishes a warning on its website (example: Option500, EveryOption);
• checks the compliance of the broker's operating standards with the European MiFID standards (example: a series of comments in the field of processing client applications, insufficient attention to, misleading advertising and a fine of 156,000 euros - 24Option).

However, the last mention of fines by the regulator dates back to the spring of 2016. In short, there are still a lot of questions in the work of CySEC. If any of the readers have had experience communicating with CySEC, please write your reviews.

Profit to everyone!

Compensation Fund investors - the Cyprus Securities and Exchange Commission CySEC, is the regulator between clients and participants in this organization. The main function of this compensation fund is the possibility of reimbursing one’s Money traders in controversial situations.

Read more about the purpose, regulation and form of filing for compensation in this review.

This commission is managed by financial experts who regulate the relationship between clients and brokers on foreign exchange market Forex. For more information about these experts, see the official website of this commission - https://www.cysec.gov.cy/en-GB/cysec/board.

Members of the CySEC Council are appointed by the Council of Ministers of Cyprus on the proposal of the Minister of Finance for a period of five years. At the end of the five-year term, the council is re-elected.

CySEC Investor Compensation Fund (ICF)

The ICF Investor Compensation Fund was established by the Cyprus Securities and Exchange Commission. The purpose of which is to reimburse clients’ funds in the event of financial disputes with brokers.

The total amount of compensation paid to each insured client of a member of the Fund does not exceed 20,000 euros.

Services of this fund, can be used by clients of those brokerage companies that are participants in its composition - https://www.cysec.gov.cy/en-GB/entities/investment-firms/cypriot/, and are authorized by the Cyprus Securities and Exchange Commission (CySEC) and registered with European Union regulators.

The essence and purpose of the Cyprus Securities and Exchange Commission CySEC

The main purpose of the commission is to supervise and regulate relations between clients (investors) and brokerage companies on financial markets. If disputes arise between clients and brokers, CySEC is an independent authorized organization for resolving disputes between them.

If a compromise is not reached, the insured client of a member of the Fund will be reimbursed compensation up to 20,000 euros.

Form for submitting funds to CySEC

To receive compensation, the client needs to do the following:

1. 1. Fill out the complaint form - span style=»color: #3366ff;»>https://www.cysec.gov.cy/en-GB/complaints/tae/application/.
   2. Specify a broker who does not refund money.
   3. Attach existing files and screenshots of communications with the broker, correspondence, court documents (if any) and other documents that will help resolve the dispute.

*Use only English or Greek when completing and submitting documents to the ICF Investor Compensation Fund.

Cyprus Securities and Exchange Commission ( CySec) – state control body of investment and currency organizations in the Republic of Cyprus. Given the fact that the state is a full member of the European Union, CySec operates according to European standards for the supervision of firms engaged in financial and foreign exchange transactions.

When was CySec created?

The history of CySec is more than ten years of activity in the field of regulation of brokers on the stock exchange. The body was created in 2001. Initially, the body was supposed to control the activities of stock exchange entities in principle, but gradually the scope of activity narrowed to the issuance of licensing documents and further control over brokers.

In 2004, a significant event occurred in the history of the organ. Due to the entry of the republic into European Union, the commission expanded its influence throughout the commonwealth. For the previous three years, the authority had exclusively domestic jurisdiction.

Scope of activity CySec

As indicated above, the main sector of the commission’s activity is the issuance of licenses to brokers and control over their activities. Additional areas include the following:

• Control over the entry of securities on the stock exchange, their analysis and evaluation.
• Supervision of compliance with regulations governing activity on the stock exchange and the activities of brokers.
• Analysis of the results of daily operations on the stock exchange.
• Certification of top managers of investment companies.
• Application of fines to violators of the law.

It is worth noting that CySec has influence on market participants and can apply disciplinary and administrative sanctions to them.

This is explained by the fact that this commission is a non-profit, but a state structure that can use instruments of state coercion.

Which entities does the commission control?

• — Investment firms of Cyprus.
• — Branches of national investment firms and representative offices of investment firms from the European Union in the country.
• — Representative offices of Cypriot companies abroad.
• — Investment funds open type, corresponding to EU parameters.
• — Managers of the above-mentioned funds.
• — Representatives of investment funds and their branches, both nationally registered and foreign (in the European Union).
• — Trust and fiduciary funds.
• — Investment organizations with variable capital.
• — Dealing companies.

These financial exchange entities are required to comply with the law and CySec requirements.

Commission structure

The commission's membership council consists of five people. The commission also has three non-executive members.

Members of the commission board work on a permanent basis as civil servants. They are appointed by the Council of Ministers of Cyprus at the proposal of the Minister of Finance of the Republic for a five-year term. A member of the commission may be re-elected.

The commission itself consists of nine departments and divisions, which are divided by functional purpose (Department of Control, Department of Licensing, Department of International Relations, and so on).

Goals and vision of stock exchange management from CySec

The main goal of the organization is “to protect the investor and ensure the stable development of a fair market.” The purpose of the organization is to transform stock market Cyprus into one of the most reliable and attractive investment properties.

Investor protection

An investor who has been defrauded by a broker may file a claim against a CySec-regulated entity. In this case, claims are divided into two types:

• Against Cypriot investment fund, its representative offices and branches.
• Against a body not controlled by CySec.

If the first claim is a lever for full-fledged proceedings and intervention of the commission to apply sanctions, then the second claim does not provide for the participation of CySec in protecting the rights of the investor.

When participating in the trading of a fund not controlled by CySec, an investor can file such a claim only to be referred to a court of general jurisdiction through the authorities of CySec. In this case, the latter will not take part in the proceedings, and sanctions will be applied in accordance with the national legislation of Cyprus.

CySec reporting

Every year the commission reports on its work to the Minister of Finance of Cyprus. The document displays the results of CySec’s activities, namely:

• Market changes, trends.
• Offenses on the stock exchange, results of investigation and application of sanctions.
• Investor protection.

Issuance of CySec licenses

A license from CySec is a guarantee of broker reliability and investor protection.

In order to receive the document, the company representative must appear in Cyprus in person and provide a development plan brokerage company, reporting on previous activities. A necessary condition for obtaining a license is also a guarantee deposit to the bank.

In addition, CySec will check the availability of sufficient staff and analyze the company’s income.

Additionally, you will need documents such as the company's charter and main policy directions.

CySec sanctions

The main offenses under the jurisdiction of CySec are:

• Confidential information on transactions.
• Inconsistency with the activity program.
• Failure to comply with reporting.
• Delayed payments.

For each of the above crimes, a fine of 5,000 euros is provided. The total number of possible offenses is six. Using simple calculations, we get more than 36,000 for a one-time violation of all norms. A considerable amount even for a large broker.

In case of persistent failure to comply with the laws and requirements of the Securities and Exchange Commission, stock exchanges, the controlled entity risks losing its license to engage in brokerage activities from CySec. In this case, re-licensing can become quite problematic.