CySEC is one of the most popular regulatory agencies in the world when it comes to regulating all types of financial companies operating out of Cyprus. Cyprus is a highly popular attraction for Forex brokers who wish to set up base in a relatively easy and convenient location.
Cyprus offers a lot of advantages when it comes to setting up a corporate headquarter, which is one of the main reasons why Cyprus sees the maximum number of Forex brokers offering financial services for traders across the world. CySEC Forex brokers are completely accountable to the CySEC under the MiFID directive, and are liable to legal action, including hefty fines and suspension of licenses, for non-compliance of the stipulated laws and guidelines.
CySEC has relatively easy regulatory guidelines and a fast approval process that allows CySEC regulated brokers to set up camp in Cyprus with minimum formalities. Cyprus was also formerly known as a tax haven before being admitted into the EU, which provided additional incentives for companies who wished to save on taxes and increase their revenue.
CySEC also used to be broker friendly in terms of fines or suspension of licenses for misdeeds, which attracted criticism from all quarters of the globe, especially from other European Union members and their regulatory agencies. CySEC regulated Forex brokers have been known to indulge in financial malpractices and fraud, which had resulted in clients losing millions of dollars on an annual basis.
While CySEC received wide-spread criticism for its governing policies during the initial days, CySEC is clearly a pioneer in terms of bringing ground-breaking regulatory guidelines that changed the financial markets for the better. CySEC is the first regulatory agency in the world to regulate binary options by terming it as a valid financial instrument and is at the forefront of regulating a majority of leading binary options brokers in the entire world.
CySEC paved the way for all the other regulatory agencies to quickly follow in their footsteps by recognizing binary options as a valid financial instrument and regulating related brokers in their respective countries. Since , CySEC has been continuously updating their regulatory framework to incorporate several new initiatives that are designed to safeguard consumers against financial crimes and abuse.
CySEC now works extensively with the European MiFID to create guidelines that concentrate on ensuring that all compliant members are honest in their dealings with the general public to ensure the integrity of the markets. Therefore, a trader should contact their broker directly regarding any complaints and await further instructions on a problem resolution. In case the client does not receive an amicable solution, CySEC recommends contacting the Financial Ombudsman, or the Court as a last resort.
While investor protection is a top priority in their updated mission, consumers can not contact the CySEC directly for any complaint resolution or arbitration services. The relatively easy CySEC regulations provided scam Forex brokers to make false regulatory claims and trick unsuspecting users. Consumers are also encouraged to verify the authenticity of a Forex broker by confirming the license information through the official CySEC website.
CySEC frequently updates its circulars and warning notices to inform the public about members that have been fined or have their licenses revoked for any financial wrongdoings. In case the consumers are confused about the status of any particular company, they can directly contact the CySEC to get more information. Most regulators often feel that the fines levied on members for non-compliance is small, and companies are let off with a simple warning for financial frauds that can get them banned in other countries.
Therefore, the MiFID constantly oversees the working of the CySEC to ensure that their regulatory guidelines are continually adjusted to bring financial firms in line with standard protocols.
Despite the fact that CySEC has a long way to move forward in terms of regulation, it is indeed one of the most popular regulatory organizations that have achieved a tremendous growth rate. Financial companies still favour CySEC over other agencies due to the relative ease of regulation and lesser formalities.
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