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CYPRUS INVESTMENT FIRMS: FOREX

Foreign exchange trading (FOREX) is an innovative type of business that brings together buyers and sellers from all over the world regardless of time and place. In other words, sellers and buyers conduct foreign exchange transactions immediately. Cyprus is considered to be an attractive location for the FOREX market. The attractive regulatory and taxation schemes together with the low operation cost and high quality financial, accounting and legal services motivate international FOREX firms to install their business activities in Cyprus. In addition, the Cyprus legislation is harmonised with EU Directives as Cyprus is a full member of the European Union. Precisely, as an EU member-state, Cyprus is fully harmonised with the EU Market in Financial Instrument Directive.

Nevertheless, it should be underlined that a FOREX firm needs to be authorised by the Cyprus Securities and Exchange Commission (CySEC) in order to be able to launch its business activities and offer its services in Cyprus. FOREX firms belong to the category of Cyprus Investment Firms. As a result, FOREX firms must comply with the regulations of Law 144(I)/2007. For more information about the operation of Cyprus Investment Firms read the articles REGULATION OF INVESTMENT SERVICES IN CYPRUS and BASIC REQUIREMENTS TO SET UP A CYPRUS INVESTMENT FIRM.

Application Procedure:

A primary requirement is that the Applicant must be a Cyprus Company, with particularly drafted Memorandum and Articles of Association. In addition, the Company must be headquartered in Cyprus.

Criteria for granting a license:

  1. Submit all corporate documents, such as incorporation certificate, certificate of directors/ secretary, shareholders, Memorandum and Articles of Associations, etc., together with the Cyprus Investment Firm Application Form (Form 144-03-01).
  2. Submit a three-year business plan, internal procedures manual and, anti-money laundering and know your clients (KYC) procedures.
  3. CySEC will decide within six months after the reception of the application and supporting documents.

Main Requirements:

  • The Memorandum of the Company must state clearly the nature of its business activities.
  • The Applicant must fulfill the minimum capital requirements. For more information about minimum capital requirements read our article BASIC REQUIREMENTS TO SET UP A CYPRUS INVESTMENT FIRM.
  • At least one director is a permanent resident of the Republic of Cyprus and fits CySEC’s criteria, i.e. directors must be individuals of good reputation and sufficiently experienced.
  • The company needs to have an office in Cyprus.
  • The company is obliged to develop internal control mechanisms, procedures and policies.
  • CySEC must be satisfied that the company has internal procedures in order to avoid a potential conflict of interest with its clients.

I.            Application fee[1]According to the provisions of Part I of Directive DI144-2007-04 of 2011 and Directive DI144-2007-04A of 2012, the Applicant must pay the relevant fee.

The payable charge is 3.000 euros increased by:

  1. 1.000 euros per investment service of paragraph 1, 5 and 7 of Part I, Annex III of the Law;
  2. 1.500 euros per investment service of paragraph 2 and 4 of Part I, Annex III of the Law;
  3. 2.000 euros per investment service/activity of paragraph 3 and 6 of Part I, Annex III of the Law;
  4. 10.000 euros for the investment activity 8 of Part I, Annex III, of the Law;
  5. 500 euros per ancillary service of Part II of Annex III of the Law;

II.            Reporting and Compliance Requirements:
Finally, it should be pointed out that investment firms licensed by CySEC have an ongoing reporting duty to CySEC. Furthermore, they are obliged to comply with Anti-Money Laundering regulations and develop “Know Your Client” procedures.

Our services:
Setting up a FOREX firm in Cyprus requires a professional legal support. The lawyers of Michael Chambers & Co. LLC are able to assist you with all the necessary legal and administrative procedures. If you wish to speak to one of our lawyers, then please contact us: info@chambers.law

 


[1] Directive DI144-2007-04 and DI144-2007-04(A) of 2012: