What is CySEC?

The Cyprus Securities Exchange Commission, or just CySEC, is the regulatory body for the financial industry. Its mission is to provide effective supervision to ensure trader protection. It is an independent regulatory authority that controls investment services and transactions in transferable securities carried out in Cyprus.

CySEC was launched in 2001 as a public legal entity, and then in 2004, Cyprus became a European Union member state. From that time, CySEC regulations and operations have had to meet the European financial regulatory framework’s terms.

The Cyprus Securities and Exchange Commission (CySEC) is the financial regulator of the Mediterranean island of Cyprus. Central to CySEC’s regulatory policies are segregated bank accounts for client funds, insurance coverage against broker negligence, a compensation scheme of up to €20,000 per account, and a strict capital adequacy ratio requirement to prevent brokers from defaulting because of client’s trades. 

What does all of that mean? CySEC operates under the branch of European regulators advocating for secure trading, and therefore, connects with European regulations such as the Markets in Financial Instruments Directive (MiFID) and The Markets in Financial Instruments Regulation (MiFIR).

MiFID and MiFIR are required for firms operating in the European Union. These European regulations are responsible for the transparency across the European Union financial markets.

CySEC’s Responsibilities

CySEC supervises the operation of the Cyprus Stock Exchange and of all other organized markets in the country. This means that it regulates all companies listed in it, brokerage firms and other intermediaries participating in the transactions carried out in the exchange. The agency also reviews applications and grant operating licenses to entities under its supervision, including Forex brokers.

It has the full authority to launch investigations against suspected offenders, enter and search premises, and suspend and revoke licenses. CySEC can impose administrative and disciplinary sanctions where malpractices have been identified. Overall, the authority is responsible for the monitoring and regulation of all market participants and investment services providers in Cyprus. Its main objective is to ensure that the securities market is fair and that investors are protected.