Understanding Regulation Cysec

If you have a browse around the internet you will find a huge number of different CFD brokerages of the ones that are regulated you will notice that the majority of these brokerages are regulated by Cysec. For those unversed in regulation you may be confused to what exactly Cysec is and why Cysec regulates the majority of European Brokerages, here in this post I want to explain this to you. 

Firstly, Cysec is a regulatory body which regulates investment activity in the jurisdiction of Cyprus for those who don't know Cyprus is a small island off the coast of Greece. Cyprus happens to be a full member of the European Union. Being a member of the European Union allows investment firms that are regulated in one European state to operate in all of the other member states under the MiFID directives.

Certain things about Cyprus mean that it is a very favorable jurisdiction to operate from. This has led to a huge number of investment firms to decide to base themselves in the jurisdiction and is why a large number of CFD brokerages are based there. Another thing that has attracted a lot of business to Cysec is their differing position on Binary Options, while no other jurisdiction in Europe has considered Binary Options to be financial instruments Cysec has allowing Binary Options operators to set up shop their and become fully regulated. Attracting even more business to the shores of Cyprus. 

Cysec regulation fully complies with that is laid in out in MiFID, but some feels that Cysec offer weaker regulation than some other European Nations and this appears to be true. For example to set up a retail Forex business one has to be regulated as a bank not merely as a investment vehicle as is they case in Cyprus. It can also be pointed out that the Cysec compensation fund only stretches to 20,000 Euros where as the compensation offered by the FSA is much greater something recognized by Alpari (AFS) boss on the announcement of their imminent move to the United Kingdom. 

So what to conclude from all of this well it is clear that Cysec is fully compliant and up to European regulatory standards meaning that you should experience some minimum level of protection when operating with a brokerage based in Cyprus. However it may also be true that Cysec isn't Europes toughest regulatory regime.