Cysec regulated broker

Family VIII · Regulation

Not to be confused with forex broker, broker, broker insolvency.

CySEC regulated broker denotes an investment firm holding a licence from the Cyprus Securities and Exchange Commission, the financial regulator of Cyprus. The licence permits the firm to provide investment services and to passport those services into other European Economic Area states, where additional national requirements may apply. Supervision covers conduct, capital and client-asset rules, though the specific protections available vary by entity and jurisdiction.^[1]

What the licence covers

A CySEC licence is issued under Cypriot law implementing the Markets in Financial Instruments Directive. It typically authorises reception and transmission of orders, execution of orders on behalf of clients, dealing on own account, portfolio management and investment advice, depending on the permissions granted. The firm must maintain minimum capital, segregate client money from its own, and report to the regulator. Passporting allows the firm to serve clients in other EEA states either freely or through a branch, but host-state conduct rules can add requirements.

Client protection and its limits

Retail clients of a CySEC-regulated firm may have access to the Investor Compensation Fund, which can pay compensation if the firm fails and cannot return client assets, up to a statutory cap that is set in Cypriot law and may change. This is not a guarantee of trading profits, and it does not cover losses caused by market movements. Compensation schemes in other countries differ in scope and limit, so the protection attached to a given account depends on the legal entity that holds it, not on the brand name.

Worked example: checking a licence

Verifying a CySEC licence number

Licence number shown123/45Format plausible

Regulator register searchNumber foundEntity name matches

Permitted servicesListedIncludes order execution

StatusAuthorisedLicence is current

The check confirms that the entity named on the account agreement holds the licence, not merely that a group company does.

Often confused with

forex broker: A forex broker is defined by the product it offers, foreign exchange, and may be regulated by any authority or none, whereas a CySEC regulated broker is defined by its specific Cyprus licence; the visible sign is the licence number and regulator named in the legal documents.
broker: A broker is any intermediary that executes orders for clients, while a CySEC regulated broker is a narrower category with a particular EEA authorisation; the visible sign is the presence of a Cyprus Securities and Exchange Commission licence reference.
broker insolvency: Broker insolvency is the failure event itself, whereas a CySEC regulated broker is a licensed firm that may or may not become insolvent; the visible sign is whether the matter concerns an ongoing licence or a firm already in administration.

References

↑ European Securities and Markets Authority, product intervention measures on contracts for differences sold to retail clients, 2018 — leverage caps by asset class, margin close-out and negative balance protection; carried into national rules across the EEA thereafter. Applies to clients classified as retail. Professional clients fall outside it.

Family: VIII · Regulation · Index A–Z