Obtaining brokerage license in Cyprus

Registration of the company

• The Cyprus Investment Firm (CIF) must be registered in accordance with the Investment Services and Activities and Regulated Market Law, L. 144 (I) 2007. Such a company must have an authorization and a license from the Cyprus Securities and Exchange Commission (CySec) .

  Cyprus Investment Company (CIF) is a Cypriot organization specializing in providing investment services and carrying out investment activities. Legislation of Cyprus includes, in part, the activity of brokers and dealers on the securities market, trust management of portfolio investments, investment consulting, etc. to this category.

  This activity is regulated by the relevant legislation and is controlled by the Cyprus Securities and Exchange Commission (Commission, CySec). Banking and insurance activities, as well as the activity of investment funds, do not belong to this category and are regulated by other laws. "Cyprus investment firm" can be referred to as the analogue of such Russian concept as "professional participant of the securities market".

  At the same time, the first concept is particularly wider than the second one: thus, Cyprus investment firms can conduct the activity of a forex dealer, while this activity is not allowed for professional participants in Russia.

  Cyprus investment firms are regulated by the Investment Services and Activities Law and the Regulated Markets Act of 2007 (as amended in 2009), which replaced the older legislation dated 2002.

  According to the foregoing law, "investment services" and "investment activities" in relation to "financial instruments" fall within its scope. The meaning of the above terms is deciphered in separate annexes to the Law (Third Appendix, Parts I and III).

  The Law refers the following to the "financial instruments" (formulations and wording are shortened):

  • transferable securities;
  • instruments of the monetary market;
  • stakes/parts/shares in collective investment enterprises;
  • options, futures, swaps, forwards and other derivatives contracts in respect of securities, currency, interest rates, etc., which can be executed by actual delivery or cash payment;
  • derivatives with respect to exchange commodities, presupposing the execution by monetary payments;
  • derivative contracts with respect to exchange commodities that presuppose the performance by actual delivery, if they are traded in a regulated market;
  • derivatives with respect to exchange commodities, which presuppose the performance by actual delivery, having a non-commercial nature and possessing the characteristics of derivative financial instruments;
  • derivative instruments for the transfer of credit risk;
  • financial contracts for (price) difference; Opening such a kind of company is quite a complicated process that can take 4 months for its registration. You will need to produce a passport and a invoice or a receipt on the payment for utilities as confirmation of your residence address for registration of the company.

Opening a bank account

• The next stage is opening of a bank account. Opening of the account is necessary for contributing the authorized capital of your company. After registration of the company, it will be necessary to open account with the bank, on which the company's authorized capital must be transferred.

  When the capital will already be stored on the account, it is necessary to obtain a statement confirming the availability of the paid share capital on the account. This statement is included in the package of documents for obtaining license. After that, the entire package of documents can be filed with the CySEC.

  In this paragraph, we ask you to pat your attention to the requirement of your company's capital, since this sum must be deposited on the account without the right to withdraw.

  Minimum amount of the authorized capital is € 125,000 (as an agent broker), and € 725,000 (as the originator or creator of the market).

  In order to work as a financial broker, you need to pay the authorized capital in the amount of € 125,000. The authorized capital must be constantly present on the account in the bank.

  When the CySec finishes considering the application for license, the applicant will need to provide the document from the Cypriot bank, which will confirm placement of the deposit for the indicated amount. This deposit will be frozen for the duration of the license.

Submission of a package of documents for a license in the CySEC

• Initially, the application for license is submitted to the CySEC. Following the application, it is necessary to provide the following documents: organizational structure of the company, business plan, manual on internal procedures and procedures on combating money laundering in order these documents can meet the requirements of the CySEC.

  In general, the following documents will be required for filing:

  • business plan;
  • financial forecast for three years;
  • operating manual;
  • AML, manual on risk management and compliance manual;
  • questionnaire for each shareholder and director;
  • certificate on the absence of criminal records and statements on the lack of bankruptcy for each shareholder and employee.

  Moreover, it is necessary to designate a number of employees and agree upon their candidatures with the regulator regarding their reputation and competence for holding respective positions to meet the requirements of the CySEC for license:

  • 4 directors, including the managing director, two executive and two non-executive directors, 3 of whom must be residents of Cyprus;
  • The Risk Manager and Compliance Specialist;
  • Internal auditors (residents of Cyprus);
  • External auditors;
  • Legal advisers.

  The CySEC has requirements for the management of the company:

  Management of the Investment Company must be carried out by the Board of Directors, which must include four persons with excellent reputation and relevant work experience. At least two of them must be residents of Cyprus.

  Obligatory requirement is also the organizational structure of the company.

  Investment company that has a Forex license must meet the following requirements:

  • To have adequate procedures and the Company's policies;
  • To maintain effective and administrative procedures to protect clients from possible conflicts of interest;
  • To have a department to manage risks in order to minimize operational risks;
  • To have administrative and accounting procedures, mechanism for internal control;
  • To properly take into account all financial transactions;
  • To apply the client identification procedure;
  • To keep the client’s information safe.

  The applicant company's share capital is subject to full payment on the last stage of submitting application for obtaining license of the Cyprus investment company. The amount of the capital, as discussed earlier, depends on what services the company plans to provide.

Obtaining a license

• CySec must make a decision within six months from the date of application. If you are interested in obtaining a forex license in Cyprus, contact the lawyers of Law & Trust International. Our experts will provide you with qualified advice and legal support for the entire procedure for obtaining a license. Reaching out to the specialists of the Law & Trust International company, you will receive quality services at the best prices!