Foreign exchange trading (FOREX) is an innovative type of business that
brings together buyers and sellers from all over the world regardless of
time and place. In other words, sellers and buyers conduct foreign
exchange transactions immediately. Cyprus is considered to be an
attractive location for the FOREX market. The attractive regulatory and
taxation schemes together with the low operation cost and high quality
financial, accounting and legal services motivate international FOREX
firms to install their business activities in Cyprus. In addition, the
Cyprus legislation is harmonised with EU Directives as Cyprus is a full
member of the European Union. Precisely, as an EU member-state, Cyprus
is fully harmonised with the EU Market in Financial Instrument
Directive.
Nevertheless, it should be underlined that a FOREX firm needs to be
authorised by the Cyprus Securities and Exchange Commission (CySEC) in
order to be able to launch its business activities and offer its
services in Cyprus. FOREX firms belong to the category of Cyprus
Investment Firms. As a result, FOREX firms must comply with the
regulations of Law 144(I)/2007.
Application Procedure:
A primary requirement is that the Applicant must be a Cyprus Company,
with particularly drafted Memorandum and Articles of Association. In
addition, the Company must be headquartered in Cyprus.
Criteria for granting a license:
1.Submit all corporate documents, such as incorporation certificate,
certificate of directors/ secretary, shareholders, Memorandum and
Articles of Associations, etc., together with the Cyprus Investment Firm
Application Form (Form 144-03-01).
2.Submit a three-year business plan, internal procedures manual and,
anti-money laundering and know your clients (KYC) procedures.
3.CySEC will decide within six months after the reception of the
application and supporting documents.
Main Requirements:
•The Memorandum of the Company must state clearly the nature of its
business activities.
•The Applicant must fulfill the minimum capital requirements.
•At least one director is a permanent resident of the Republic of Cyprus
and fits CySEC’s criteria, i.e. directors must be individuals of good
reputation and sufficiently experienced.
•The company needs to have an office in Cyprus.
•The company is obliged to develop internal control mechanisms,
procedures and policies.
•CySEC must be satisfied that the company has internal procedures in
order to avoid a potential conflict of interest with its clients.
I.Application fee : According to the provisions of Part I of Directive
DI144-2007-04 of 2011 and Directive DI144-2007-04A of 2012, the
Applicant must pay the relevant fee.
The payable charge is 3.000 euros increased by:
a.1.000 euros per investment service of paragraph 1, 5 and 7 of Part I,
Annex III of the Law;
b.1.500 euros per investment service of paragraph 2 and 4 of Part I,
Annex III of the Law;
c.2.000 euros per investment service/activity of paragraph 3 and 6 of
Part I, Annex III of the Law;
d.10.000 euros for the investment activity 8 of Part I, Annex III, of
the Law;
e.500 euros per ancillary service of Part II of Annex III of the Law;
II.Reporting and Compliance Requirements: Finally, it should be pointed
out that investment firms licensed by CySEC have an ongoing reporting
duty to CySEC. Furthermore, they are obliged to comply with Anti-Money
Laundering regulations and develop "Know Your Client" procedures.