Why Are There So Many Forex Brokers in Cyprus?
Both experienced traders and even those relatively new to online forex trading have most likely noticed that a significant number of forex brokers are regulated on the island of Cyprus. This discovery prompts traders of all backgrounds to ask: why are so many forex brokers located in Cyprus? The answer, as we’ll discuss in today’s column, is rather straightforward.
Why Are There So Many Forex Brokers in Cyprus?
The reason there are so many forex brokers located on the island of Cyprus is that it happens to be the quickest and easiest country in the European Union to obtain a forex broker license. CySEC, the regulator which oversees forex trading in Cyprus, has by far the most experience and longest track record when it comes to forex regulation throughout the European Union.
A new forex broker looking to establish a presence in the Europe will usually obtain a license in Cyprus due to the ease and relatively fast license approval process. Although it’s technically possible to obtain a forex broker license in any EU member state, most countries in the European Union have limited experience approving these type of licenses, resulting in a much more drawn out and costly application process.
The reasons above explain why it is rare to find any licensed forex brokers in countries like Italy, Romania, or Hungary to name just a few examples. Cyprus, on the other hand, has established itself as the defacto EU member state for FX & CFD regulation in Europe which is why most brokers obtain a license in Cyprus instead of other countries in Europe.
Passporting Considerations – An Additional Reason Cyprus is a Popular Destination for Forex Broker Regulation
The ability to “passport” a license to all EU member states is another reason why there are so many forex brokers in Cyprus.
How exactly does passporting work? In short, the concept of passporting means that a broker licensed in one EU country, like Cyprus, can offer their services to all EU member states without the need of having local regulations or an office.
Due to passporting, it doesn’t necessarily matter where an FX broker obtains its first license; it can be in any EU member state. Once the license is approved, the forex broker can target investors across the entire European Union. Because Cyprus was one of the first EU member states to quickly grant forex broker licenses, it emerged as the standard in Europe for FX broker licensing due to the ability to passport into other EU member states.
Forex Consulting Services – Guidance in Selecting the Best Forex Brokers in Europe & Around the Globe
In the last decade, Cyprus has emerged as a globally recognized jurisdiction for the regulation of forex & CFDs. Due to its positive reputation, there are now hundreds of forex brokers regulated on the island of Cyprus. The variety of brokers to choose from poses a challenge for those new to forex & CFD trading; selecting the best forex broker, even among the regulated options, can be overwhelming.
Whether you are looking to trade with a regulated forex broker in Cyprus, or another licensed part of the globe, our team of experienced consultants can provide guidance in selecting a broker that is the best fit for your specific needs.
Don’t hesitate to reach out to our team of consultants today, we are happy to help in selecting a regulated forex broker to partner with.
