Cyprus has emerged as a prominent hub for forex trading, attracting traders and brokers due to its strategic location, favorable regulatory environment, and membership in the European Union. The country’s regulatory framework, overseen by the Cyprus Securities and Exchange Commission (CySEC), ensures a secure and transparent trading environment. This article delves into the various legal forms of forex trading available in Cyprus, the associated restrictions, regulatory bodies, broker requirements, taxation policies, and guidance on identifying reliable forex brokers.
Top 9 Forex Brokers in Cyprus
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Fusion Markets
- Australia regulated broker
- MT4, MT5, TradingView, Ctrader
- Leverage up to 500
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
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FP Markets
- Australia and CySEC regulated broker
- MT4/MT5, TradingView, Ctrader, Iress
- EUR/USD spread from 0.0 pips
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Energy CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
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ActivTrades
- Winner of 20+ Global Awards
- MT4/MT5, TradingView
- Leverage up to 1:400
Trading InstrumentsDeposit Methods- Bonds CFDs
- Commodities CFDs
- Crypto CFDs
- ETF CFDs
- Forex CFDs
- Indices CFDs
- Share CFDs
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Blueberry Markets
- Well-known broker, established in Australia
- Low trading fees
- MT4, MT5, Mobile Trading Platform
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Forex CFDs
- Indices CFDs
- Share CFDs
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XTB
- XTB is a publicly traded company regulated by FCA and CySEC
- XTB's proprietary mobile app enables traders to trade from anywhere
- Commission-free stock trading with no platform fees and direct access to thousands of shares
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Energy CFDs
- ETF CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Share CFDs
- Stock CFDs
- US Stock CFDs
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Eightcap
- Traders can enjoy competitive trading conditions through different account types
- Offers access to over 800 CFD markets through TradingView
- Platforms like MT4 and MT5 enable multi-device trading
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Forex CFDs
- Indices CFDs
- Share CFDs
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FxPro
- NDD broker offering deep liquidity and ultra-fast execution
- Over 99% instant order executions with no requotes
- Supports MT4, MT5, cTrader, and a proprietary platform
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Energy CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
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Axi
- Raw spreads start from 0.0 pips
- Offers order execution faster than standard ECN model
- Axi Select Funded Trader Program offers funding up to $1 million
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
-
Pepperstone
- Australia and CySEC regulated broker
- MT4/MT5, TradingView, Ctrader, Iress
- EUR/USD spread from 0.0 pips
Trading InstrumentsDeposit Methods- Commodities CFDs
- Crypto CFDs
- Energy CFDs
- Forex CFDs
- Indices CFDs
- Metals CFDs
- Stock CFDs
Brokers Compared by Spread
FX Brokers Deposit Method Comparison
| Brand | Minimum deposit | |
|---|---|---|
| Fusion Markets |  |
$0 |
| FP Markets | |
$50 (AU$100) |
| ActivTrades | |
$0 |
| Blueberry Markets |  |
$100 |
| XTB | |
$250 |
| Eightcap | |
$100 |
| FxPro | |
$100 |
| Axi | |
$0 |
| Pepperstone | |
$0 |
Brokers by Regulator
| Brand | Maximum leverage | |
|---|---|---|
| Fusion Markets | |
1:500 (ASIC | Pro Account), 1:30 (ASIC | Retail Account), 1:500 (VFSC | Retail Account) |
| FP Markets | |
1:500 (CySEC | Pro Account), 1:30 (ASIC | Retail Account), 1:30 (CySEC | Retail Account), 1:500 (FSAS | Retail Account) |
| ActivTrades | |
1:400 (CMVM | Pro Account), 1:30 (CMVM | Retail Account), 1:1000 (FSC), 1:200 (SCB) |
| Blueberry Markets | |
1:30 (ASIC | Retail Account), 1:500 (VFSC) |
| XTB | |
1:200 (CySEC | Pro Account), 1:30 (CySEC | Retail Account), 1:30 (FCA | Retail Account), 1:500 (IFSC | Retail Account) |
| Eightcap | |
1:30 (ASIC | Retail Account), 1:30 (CySEC | Retail Account), 1:30 (FCA | Retail Account), 1:500 (SCB | Retail Account) |
| FxPro | |
1:30 (CySEC | Retail Account), 1:30 (FCA | Retail Account), 1:10000 (SCB | Retail Account) |
| Axi | |
1:500 (Elite Account), 1:400 (Pro Account), 1:30 (ASIC | Retail Account), 1:30 (CySEC | Retail Account), 1:30 (DFSA | Retail Account), 1:30 (FCA | Retail Account), 1:500 (SVGFSA) |
| Pepperstone | |
1:500 (CySEC | Pro Account), 1:500 (SCB | Pro Account), 1:30 (ASIC | Retail Account), 1:30 (CySEC | Retail Account), 1:30 (DFSA | Retail Account), 1:30 (FCA | Retail Account), 1:200 (SCB | Retail Account) |
Forex Brokers Platform Availability
| Brand | FX pairs to trade | |
|---|---|---|
| Fusion Markets | |
cTrader, MetaTrader 4, MetaTrader 5, TradingView |
| FP Markets | |
cTrader, TradingView |
| ActivTrades | |
MetaTrader 4, MetaTrader 5, Proprietary Web, TradingView |
| Blueberry Markets | |
MetaTrader 4, MetaTrader 5, TradingView |
| XTB | |
Proprietary |
| Eightcap | |
MetaTrader 4, MetaTrader 5, TradingView |
| FxPro | |
cTrader, MetaTrader 4, MetaTrader 5 |
| Axi | |
MetaTrader 4 |
| Pepperstone | |
MetaTrader 4, MetaTrader 5, Proprietary Mobile, Proprietary Web |
Comprehensive Comparison of the Best Cyprus Forex Brokers
| Brand | Min. Deposit | Trading Platforms | Spread | Regulation | Trustpilot |
|---|---|---|---|---|---|
 |
$0 |
|
AVG 0.93 pips |
|
|
 |
$50 (AU$100) |
|
AVG 1.2 pips |
|
|
 |
$0 |
|
AVG 0.5 pips |
|
|
 |
$100 |
|
AVG 0.2 pips |
|
|
 |
$250 |
|
AVG 0.9 pips |
|
|
 |
$100 |
|
AVG 1.1 pips |
|
|
 |
$100 |
|
AVG 0.5 pips |
|
|
 |
$0 |
|
AVG 0.1 pips |
|
|
 |
$0 |
|
AVG 1.1 pips |
|
Legal Forms of Forex Trading in Cyprus
Forex trading in Cyprus encompasses various financial instruments, each catering to different trading strategies and risk appetites. The primary forms include:
- Spot Trading
This involves the immediate exchange of one currency for another at the current market rate. Traders engage in spot transactions to capitalize on short-term price movements. - Contracts for Difference (CFDs)
CFDs allow traders to speculate on the price movements of currency pairs without owning the underlying assets. This derivative product enables both long and short positions, offering flexibility in volatile markets. - Spread Betting on Currency Pairs
In spread betting, traders bet on the direction in which a currency pair’s price will move. Profits or losses are determined by the extent of the price movement in the chosen direction. - Futures
These are standardized contracts obligating the trader to buy or sell a specific currency at a predetermined price on a set future date. Futures are commonly used for hedging and speculative purposes. - Options
Options provide the trader with the right, but not the obligation, to buy or sell a currency at a specified price before a certain date. This instrument is useful for managing risk and leveraging potential profits. - Forwards
Similar to futures, forward contracts are agreements to exchange currencies at a future date for a price agreed upon today. Unlike futures, forwards are customizable and traded over-the-counter (OTC), making them suitable for tailored hedging strategies.
Each of these instruments offers unique advantages and risks. Traders should thoroughly understand the mechanics and implications of each before engaging in transactions.
Restrictions on Forex Trading in Cyprus
In Cyprus, the Cyprus Securities and Exchange Commission (CySEC) has implemented specific measures to regulate currency trading, particularly concerning Contracts for Difference (CFDs) and binary options, to enhance investor protection and maintain market integrity.
Leverage Limits on CFDs
CySEC has adopted leverage restrictions for retail clients trading CFDs, aligning with the European Securities and Markets Authority’s (ESMA) guidelines. These limits are designed to mitigate the risks associated with high leverage. The leverage caps are as follows:
- 30:1 for major currency pairs.
- 20:1 for non-major currency pairs, gold, and major indices.
- 10:1 for commodities other than gold and non-major equity indices.
- 5:1 for individual equities and other reference values.
- 2:1 for cryptocurrencies.
These measures aim to limit potential losses for retail investors by reducing exposure to volatile markets.
Ban on Binary Options
CySEC has imposed a ban on the marketing, distribution, and sale of binary options to retail investors. This decision reflects concerns over the high-risk nature of binary options and their potential for significant investor losses.
These restrictions underscore CySEC’s commitment to safeguarding retail investors and ensuring a fair trading environment within Cyprus’s financial markets.
Regulations on Forex Trading in Cyprus
Forex trading in Cyprus is primarily regulated by the Cyprus Securities and Exchange Commission (CySEC), an independent public supervisory authority established in 2001. CySEC’s mission is to exercise effective supervision to ensure investor protection and the healthy development of the securities market.
As a member of the European Union, Cyprus aligns its financial regulations with the European Markets in Financial Instruments Directive (MiFID II). This alignment ensures that investment firms, including forex brokers operating under CySEC’s jurisdiction, adhere to EU-wide standards promoting market transparency, investor protection, and operational efficiency.
CySEC’s responsibilities encompass a broad spectrum of supervisory and regulatory functions, including:
- Licensing and Supervision: CySEC examines applications and grants operating licenses to entities under its supervision, such as Cyprus Investment Firms (CIFs), including forex brokers. It ensures these entities comply with relevant laws and regulations governing their operations.
- Market Oversight: The commission supervises and regulates the operation of the Cyprus Stock Exchange and other organized markets within the Republic, overseeing transactions to maintain market integrity.
- Regulatory Enforcement: CySEC has the authority to conduct investigations, request information, and impose administrative and disciplinary sanctions on entities that violate securities market laws. This includes the power to suspend or revoke licenses and to require the cessation of practices contrary to securities laws.
- Policy Development: The commission is responsible for issuing regulatory directives and decisions to adapt to evolving market conditions. It collaborates with other public authorities in Cyprus, competent foreign supervisory authorities, and international organizations to harmonize regulatory practices.
CySEC’s regulatory framework covers a diverse range of entities, including:
- Cyprus Investment Firms (CIFs)
- Undertakings for Collective Investment in Transferable Securities (UCITS) and their management companies
- Alternative Investment Fund Managers (AIFMs)
- Crypto-Asset Services Providers
By maintaining rigorous oversight and continually updating its regulatory policies, CySEC aims to establish the Cyprus securities market as one of the safest, most reliable, and attractive destinations for investment.
Requirements for Forex Brokers in Cyprus
Forex brokers aiming to operate in Cyprus must comply with stringent regulations established by the Cyprus Securities and Exchange Commission (CySEC). These requirements are designed to uphold market integrity and ensure investor protection.
- Capital Adequacy
Brokers are required to maintain specific minimum capital levels, which vary based on their operational model:- Straight Through Processing (STP) Brokers: A minimum capital requirement of €150,000.
- Market Makers/Dealing on Own Account: A higher threshold of €750,000.
These capital reserves ensure that brokers can meet their financial obligations and effectively manage client positions.
- Organizational Structure and Staffing
CySEC mandates a robust organizational structure for licensed brokers, including:- At least two managing directors.
- A Chief Executive Officer (CEO).
- An internal auditor.
- A risk manager.
- Two certified traders.
- Compliance officers.
- Heads of brokerage, finance, and IT departments.
- A senior accountant.
This structure ensures effective management and oversight within the firm.
- Physical Presence
Brokers must establish a physical office in Cyprus, signifying a tangible presence and commitment to the local market. - Fund Segregation
Client funds must be held in segregated accounts, separate from the broker’s operational funds. This practice protects client assets and prevents their use for covering the broker’s liabilities. - Investor Compensation Fund (ICF) Contribution
Licensed brokers are required to contribute to the ICF, which offers protection to retail clients by compensating them in the event of a broker’s insolvency. This fund enhances investor confidence in the financial system. - Compliance and Reporting
Brokers must establish robust compliance frameworks, including appointing compliance officers, conducting regular internal audits, and submitting periodic reports to CySEC. These practices ensure ongoing adherence to regulatory standards.
Taxes on Forex Trading Profits
In Cyprus, the taxation of forex trading profits varies based on the trader’s status and the nature of their activities.
- Individual Traders
For individual traders, profits from forex trading are generally subject to personal income tax. Cyprus employs a progressive tax system, with rates up to 35% for income exceeding €100,000. Notably, individuals do not pay capital gains tax on trading profits, making Cyprus attractive for part-time traders. - Corporate Entities
Forex trading conducted through a corporate entity is subject to corporate income tax. Cyprus offers a competitive corporate tax rate of 12.5%. However, forex gains or losses are tax-neutral unless the company is actively trading in currencies and related derivatives, in which case such gains are taxable. - Non-Domiciled Individuals
Cyprus provides a “non-domiciled” (non-dom) regime offering tax exemptions on foreign-sourced income, including dividends and interest. However, profits from forex trading within Cyprus are typically considered local income and may not benefit from non-dom exemptions. - Capital Gains Tax
Capital gains tax in Cyprus is primarily levied on gains from the disposal of immovable property located within the country. Forex trading profits are generally exempt from capital gains tax but are subject to income tax as outlined above.
Choosing a Reliable Forex Broker in Cyprus
Selecting a trustworthy forex broker is crucial for traders in Cyprus to ensure a secure and transparent trading experience. Here are key factors to consider:
- Regulatory Compliance
Ensure the broker is authorized by the Cyprus Securities and Exchange Commission (CySEC). You can verify a broker’s license by visiting CySEC’s official register and searching for the broker’s name or license number. - Client Fund Segregation
Reputable brokers maintain segregated accounts for client funds, keeping them separate from the company’s operational funds. This practice safeguards your capital in case of the broker’s financial instability - Negative Balance Protection
This feature ensures that traders cannot lose more than their initial investment, providing a safety net during volatile market conditions. Many CySEC-regulated brokers offer negative balance protection as part of their client services. - Transparent Fee Structure
A reliable broker will have a clear and transparent fee structure, detailing all trading costs, including spreads, commissions, and any additional fees. This transparency allows traders to make informed decisions without hidden surprises. - Robust Trading Platform
The quality of the trading platform is essential. Look for brokers that offer stable, user-friendly platforms with advanced charting tools, real-time data, and efficient trade execution. - Customer Support
Responsive and knowledgeable customer support is vital. Assess the availability and quality of support services, including the channels offered (e.g., live chat, phone, email) and the languages supported. - Educational Resources
Top-tier brokers provide educational materials such as webinars, tutorials, and market analysis to help traders improve their skills and stay informed about market developments. - Reputation and Reviews
Research the broker’s reputation by reading reviews from other traders and consulting reputable forex broker comparison websites. This can provide insights into the broker’s reliability and the quality of services offered.
FAQs
How can I verify if a Forex broker is regulated by CySEC?
To verify a broker’s regulatory status, visit the official CySEC website and access their registry of licensed firms. You can search for the broker by name or license number to confirm their authorization.
What are the tax implications of Forex trading profits in Cyprus?
Profits from Forex trading in Cyprus are generally subject to taxation. For individual traders, profits are added to taxable income and taxed according to personal income tax rates. Corporate entities engaged in Forex trading are subject to corporate tax rates. It’s advisable to consult with a tax professional to understand your specific tax obligations.
Are there any investor protection mechanisms in place for Forex traders in Cyprus?
Yes, CySEC-regulated brokers are required to adhere to investor protection measures, including maintaining segregated client accounts, providing negative balance protection, and being members of the Investor Compensation Fund (ICF), which compensates clients in case of broker insolvency.
Can non-residents open Forex trading accounts with CySEC-regulated brokers?
Yes, many CySEC-regulated brokers accept clients from various countries. However, it’s essential to check with the individual broker regarding account opening procedures and any jurisdictional restrictions.
What are the benefits of choosing a CySEC-regulated broker?
Choosing a CySEC-regulated broker offers several advantages, including adherence to European Union financial regulations, investor protection mechanisms, transparency, and a well-established regulatory framework that promotes fair trading practices.
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