Even traders that are relatively new to forex trading have most likely noticed that a significant number of forex brokers are regulated on the island of Cyprus. This discovery prompts many forex traders to inquire as to why so many forex brokers are located in Cyprus? The answer is rather straightforward, a subject we’ll expand upon in today’s post.
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 the most experience and longest track record when it comes to forex regulation throughout the entire EU.
A new broker that is 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. Cyprus, on the other hand, has established itself as the defacto country for FX regulation in Europe. This is why most brokers obtain a license in Cyprus instead of other countries in Europe.
Passporting Considerations – Another Reason Cyprus is a Popular Jurisdiction for FX Brokerages
The other reason that Cyprus is the most recognized jurisdiction in Europe for forex trading has to do with the passporting options the license affords FX brokers. How 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.
Due to passporting, it doesn’t necessarily matter where a 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.
Forex Consulting Services – We Provide Guidance in Selecting the Best Forex Brokers to Trade With
Due to its long history in regulating forex trading, Cyprus has become a globally recognized region for FX regulation in Europe. With that said, not all brokers are the same. In fact, there are many FX brokers to be found in Cyprus.
If you are looking to trade with a regulated forex broker either in Cyprus or another part of the globe and require help in determining the best option, don’t hesitate to contact us.
Our team of forex consultants are happy to guide you in the right direction!