CySEC rescinds requirement for Cyprus forex brokers to approve all foreign operations

Marks a major victory for Cyprus forex brokers.

LEAPRATE EXCLUSIVE….. BREAKING FOREX NEWS…. Great news heading into the weekend for Cyprus forex brokers. LeapRate has learned that Cyprus’ financial regulator CySEC has fully revered its previous, controversial position which required Cyprus forex brokers to provide very onerous disclosure regarding their operations in non-EU countries. In a quite remarkable and rapid about-face, CySEC formally rescinded its two previous circulars on the subject.

What happened exactly? On July 26, CySEC issued a circular requiring licensed Cyprus forex brokers to provide a list of all countries in which they do business, and for each individual country to either show a local license, or to receive a formal you-don’t-need-a-license-to-operate here type of  permission letter from the local financial regulator.

That task seemed both difficult if not impossible to do — forex brokers typically do business with clients in more than 100 countries — and very expensive. The Cyprus forex brokers, led by the Association of Cyprus International Investment Firms (or ACIIF, headed by Dr. Stelios Platis of Limassol-based forex consultancy MAP S.Platis) set upon heavy lobbying of CySEC. CySEC relented somewhat issuing a second circular on August 2, which a) delayed the implementation of the plan from August to November, and b) watered down the requirement to receive just a legal opinion in each country, instead of an actual ‘permission’ letter from a local regulator.

Still expensive and time consuming, but a lot less difficult / impossible. If not for the change of heart at CySEC, many Cyprus brokers would likely have had to abandon clients in many countries around the world.

Today, following further lobbying efforts led by Dr. Platis, CySEC formally removed even those requirements, and instead issued a new circular basically reiterating that Cyprus investment firms must abide by the laws of all countries in which they take clients and operate.

The four week soap opera shows us i) the value of having a good relationship with the regulator, ii) the value of a strong industry association and spokesperson such as Dr. Platis, and iii) that someone at CySEC was indeed listening, and that they were both intelligent and brave enough to admit they made a mistake. 

We’ll keep tabs on the situation, but we assume it is done for now.

To see the CySEC circular cancelling the initial circulars click here (pdf, English).

The original CySEC circulars can be downloaded here (July 26) and here (Aug 2).

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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