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Cypriot brokers with new duties from CySEC
Cypriot financial supervision, CySEC, has recently published a document entitled: "Provision of investment and ancillary services and / or conducting investment activities in a third country". It is a set of rules that are designed to improve the quality of the domestic sector of foreign currency transactions. These principles have been prepared for Forex / CFD / binary options brokers who are based in Cyprus (and use the license there) and at the same time accept customers from abroad.
Conditions introduced by CySEC
Additional requirements have been imposed on entities licensed by CySEC to limit unlawful activities of Cypriot entities in other countries.
So far, Cypriot brokers have been able to serve clients from all over the world except for United States citizens. However, in order to be able to legally operate in another country, or at least to open a resident's account, the consent of the local regulator was required. In practice, not everyone owned them, and customers accepted them.
In case they did not apply for, or did not receive the appropriate license, permit or so-called notification from the local financial supervision, the only consequence on the part of foreign regulators could be to enter the company on the so-called black list (list of public warnings). The introduced changes, however, are to force the broker to present his agreement to operate in a third country to his regulator, CySEC. If he does not, and the matter comes to light, the supervision will be able to draw him to more severe consequences (eg imposition of a financial penalty, loss of license).
A collection of new rules
1. The Cyprus Securities and Exchange Commission ("CySEC") would like to inform Cypriot investment companies ("CIFs") that intend to provide investment and advisory services and / or engage in investment activities in the territory of third countries on the following matters:
(i) CIFs that wish to provide and / or perform the services mentioned above and operate in third countries must notify CYSEC in advance via a letter.
(ii) Prior to the delivery / execution of these services / activities in third countries, CIFs must obtain the necessary authorizations from the competent authorities of these countries, in line with their legislative framework.
(iii) CIFs must provide CySEC with a certified copy of the authorization to provide these services by the competent authority of the country of destination.
(iv) In the event that a third country does not require such permission, CIF must provide CySEC with a legal opinion or a certified copy issued by a lawyer or a law firm with appropriate jurisdiction who will confirm that such authorization is not required.
(v) The letter referred to in the first paragraph should include a list of third countries in which CIF intends to provide investment or advisory services and / or conduct investment activities, confirming that it has obtained the appropriate authorization from the competent authorities or certifying that it is not required.
2. All responsibility for obtaining such authorization by competent authorities of third countries belongs to CIF.
3. CIFs must submit this information both on the CySEC website and notify the regulator in writing of any subsequent changes in the third countries in which they operate.
4. All existing and newly created CIFs must display information on third countries in which they provide services or operate on their websites.
