Cyprus Investment Firms (CIF’s)

For a Forex company to operate in Cyprus, it must apply for the particular licenses from the Cyprus Securities and Exchange Commission (CySEC).

Article 10 of the Law 144(I)/2007 provides the requirements for establishing a CIF in Cyprus which are the following:

10. (1) A CIF other than those referred to in subsection (2), shall have initial capital of seven hundred and thirty thousand euro (€730.000).

(2) Subject to subsection (4), a CIF that does not deal in any financial instruments for its own account or underwrite issues of financial instruments on a firm commitment basis, but which holds client money or securities and which offers one or more of the following services, shall have initial capital of one hundred and twenty five thousand euro (€125.000):

  1. the reception and transmission of investors’ orders for financial instruments;
  2. the execution of investors’ orders for financial instruments;
  3. the management of individual portfolios of investments in financial instruments.

(3) A CIF which executes investors’ orders for financial instruments is allowed to hold such instruments for its own account if the following conditions are met:

  1. such positions arise only as a result of the CIF’s failure to match investors’ orders precisely;
  2. the total market value of all such positions is subject to a ceiling of fifteen percent (15 %) of the CIF’s initial capital;
  3. the CIF meets the requirements set out in Articles 92 to 95 and Part Four of Regulation (EU) No 575/2013;
  4. such positions are incidental and provisional in nature and strictly limited to the time required to carry out the transaction

(4) A CIF referred to in subsection (2) shall have initial capital of fifty thousand euro (€50.000) where it is not authorised to hold client money or securities, to deal for its own account, or to underwrite issues or on a firm commitment basis.

(5) The holding of non-trading-book positions in financial instruments in order to invest own funds shall not be considered as dealing for its own account for the purposes of subsections (2) and (4).

(6) Coverage for CIFs referred to in point (2)(c) of Article 4(1) of Regulation (EU) No 575/2013, shall take one of the following forms:

(a) initial capital of fifty thousand euro (€50.000);

(b) professional indemnity insurance covering the whole territory of the Union or some other comparable guarantee against liability arising from professional negligence, representing at least one million euro (€1.000.000) applying to each claim, and in aggregate one million five hundred thousand euro (€1.500.000) per annum for all claims;

(c) a combination of initial capital and professional indemnity insurance in a form resulting in a level of coverage equivalent to that referred to in paragraphs (a) or (b).

(7) A CIF referred to in subsection (6), which is also registered under the Insurance Services and other Related Issues Law, shall comply with subsection (1) of article 171 of the said law and shall have coverage in one of the following forms:

  • initial capital of twenty five thousand euro (€25.000);
  • professional indemnity insurance covering the whole territory of the Union or some other comparable guarantee against liability arising from professional negligence, representing at least five hundred thousand euro (€500.000) applying to each claim, and in aggregate seven hundred and fifty thousand (€750.000) per annum for all claims;
  • a combination of initial capital and professional indemnity insurance in a form resulting in a level of coverage equivalent to that referred to in paragraphs (a) or (b)

The management of the company must be comprised by 2 people who must pass the “fit and proper’ test laid out by article 12 of the 2007 Law, must have a clean criminal record and financial investment background. Practically, one of the directors must be a resident of Cyprus so that he can answer to CySEC.

The shareholders too must pass the ‘fit and proper’ test (article 13)

The office of the company must be in Cyprus (art.16)

The company must have a strict internal procedures to deal with the various problems that may arise (article 18)

The application process is estimated at around 1-2 months (realistically must be 3-4 months)