Anyone who has browsed a number of Forex comparison sites may have noticed that there are significant number of Forex brokers based in Cyprus. Today we are going to explain the reasons behind why so many Forex brokers choose the small island of Cyprus as a base for operations.

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Low Taxes

Being based in Cyprus has a number of benefits; one of the most obvious benefits is the low rate of corporation. The Cyprus boasts the European Union’s lowest rate of corporation tax. The rate of corporation tax on the island is currently a flat 10%. The only other European Union country to charge such a low rate of corporation tax is Bulgaria, which itself has seen a small influx of Foreign exchange brokerages in recent years. This makes Cyprus a very attractive destination for those who looking to open a brokerage, as company can reduce its overall tax bill significantly.

European Union Membership and MiFID 

MiFID stands for the Markets In Financial Instruments Directive and is a European law that harmonises investment regulation throughout the 30 states of the European Economic Area. Essentially MiFID sets out a minimum regulatory framework which must be adopted and followed by all the countries in the European Economic Area. MiFID also maintained the passport principle introduced by previous European Union law, this principle means that a firm regulated in a MiFID country can offer its services to citizens and residents of other European Economic Area countries. Cyprus is a member of European Economic Area and the European Union, meaning that Cypriot based brokerages can offer their services to citizens of any other EEA country. While MiFID ensures a minimum standard of financial regulation, regulation does vary in each jurisdiction. For instance, Cyprus insures retail customer funds up to the amount of 20,000 Euros, while in Britain funds are insured up to £70,000 pounds should a regulated investment happen to collapse.

Large Financial Sector and Skilled Workforce

It is not only low taxes and European Union membership which attracts many retail brokers to Cyprus, the island also boasts a large financial sector. Low tax rates and a solid business saw Cyprus grow to be one of Europe’s larger financial hubs, with the financial services sector growing rapidly after the breakup of the USSR in 1991. This means that brokerages are able to recruit all the staff they need without too much hassle. A large retail FX brokerage requires a number of specialist staff including traders, risk managers and compliance staff. These specific needs leads to brokerages being drawn towards jurisdictions which have a strong financial services sector.

Internet & Telecoms Infrastructure

In addition to the other factors mentioned above, Cyprus already has a strong telecommunications infrastructure in place. While Cyprus doesn’t have Europe’s strongest internet infrastructure, in recent years Cyprus has vastly improved its telecoms infrastructure. The nation is currently in the process of making fibre-optic broadband available nationwide and fibre optic broadband is readily available in a number of urban locations including Nicosia, Larnaca and Limassol. One can easily imagine how important a strong telecoms infrastructure would be in running a serious Foreign exchange brokerage.

Concluding Thoughts

It has been suggested that the recent economic crisis in Cyprus might dent the islands reputation and lead to a flock of brokerages to move elsewhere, however this hasn’t been the case. This is mainly due to the fact that the crisis didn’t see any clients losing any of their deposited funds. The draw of Cyprus as a destination for Foreign exchange brokerages has been confirmed in recent months with a number of new brokers applying for licences. As long as Cyprus continues to offer competitive rates of corporation tax and remains a member of the European Union, the island is likely to be favoured by many Forex brokers.

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14 thoughts on “Why are there so many Forex Brokers in Cyprus

  1. Thank you for that very informative article,which has clarified a lot of my doubts and concerns about Cyprus and some of the brokers I have had dealings with eg Trade Rush,as opposed to the “regulated’ other brokers that are being promoted as safer to deal with as far as account security and access to one’s capital at any time is concerned.Much appreciated, my regards, Frank L.

  2. ALL CYPRUS FOREX PLATFORM ARE FRAUD.THEY PAY YOU INITIALLY BUT AFTERWARDS WHEN YOUR AMOUNT IS MORE THAN YOUR DEPOSIT THEY CLOSED YOUR PAYOUT.
    SO BEWARE OF ALL CYPRUS PLATFORMS.

    1. Its probably true. It happened with me that initially they approves withdrawals and later they hold capital and profit by putting conditions as they wish…I am in talks to resolve the matter amicably. Hope I will not have to complaint to authorities or take some recourse action.

  3. ITORO what are you on about? It is obvious you have an issue with one bad apple out of the 150+ brokers on the island and you come here posting here your unbased claims? Compliance is tight in Cyprus and CySEC does put brokers in place when they get out of line. Respect the other brokers on the island and dont go around posting things like that

    1. nicholas,i think a chat with you can clarify a lot in forex matters. let’s communicate. i’ll keep on looking for an email from you each time i get to an internet cafe. My number is : 076 769 1985. let me hear from you.

  4. I deal exclusively with Fx brokers located in Cyprus or the UK. I had the misfortune to have 2 Fx brokers go bankrupt on me. First Alpari UK then SkyFx that was located in Cyprus. Since Cyprus and the UK have strong regulations and more importantly strong customer protection I recovered all the money that was in my accounts. This is not the case with many countries such as the United Stated that regulate Fx brokers but don’t care at all about customers so when a US firm goes bankrupt you lose all your funds.

  5. My funds were reimbursed directly to my bank account. The Cyprus Regulator is much better than the UK Regulator. It took me only 3 months to get my money back from the Cyprus Regulator and 16 months from the UK Regulator.

  6. Cyprus is the location of most of my spam Emails which started after I had received phone-calls from Forex Traders based in Cyprus. This includes ”Adult Dating Spam” which doesn’t just send to adults, it also targets Children’s Emails with Porn Site linked emails this is a Sexual offence in the UK.. They do not stop or have anyway of blocking them.
    As Cyprus is a member of the EU I would encourage all those affected by Spam Emails & Nuisance phone calls to write to their local MP or Politician so that pressure can be put on Cyprus to close these fraudsters down.

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