CySECCyprus Securities and Exchange Commission

What CySEC is

CySEC is the securities regulator of Cyprus and one of the most active national supervisors in the EU for retail brokerage. It administers Cyprus's implementation of MiFID II and supervises Cyprus Investment Firms (CIFs). For retail traders in the EEA, the practical significance of CySEC is that it is the regulator behind the largest number of EU-facing CFD brands.

Who and what it regulates

CySEC authorises and supervises CIFs offering investment services including dealing in CFDs, and these firms can passport services across the EEA under MiFID. That passporting right is the reason a Cyprus-authorised firm can legally serve clients in Germany, France, Italy and elsewhere without a separate local licence.

Client money and segregation

CIFs must hold client funds in segregated accounts at approved credit institutions, separate from the firm's own assets. There are rules about how often segregation must be reconciled and restrictions on the use of client money. The regime is materially similar in structure to FCA and ASIC segregation requirements, though the supervisory intensity behind it is different.

Capital requirements

MiFID II minimum capital requirements apply, with higher thresholds for firms dealing on own account or holding client money. The base level is set by EU regulation and CySEC reports on compliance. CIFs that grow materially above the minimum face additional requirements under the prudential framework.

Compensation scheme (ICF)

Cyprus operates an Investor Compensation Fund for clients of failed CIFs. The compensation limit is published in EU legislation and is updated periodically — at the time of writing it sits at €20,000 per eligible claimant. The ICF covers the inability to return client funds, not trading losses. For retail traders, the practical implication is that a failed CySEC-authorised broker is not a total loss up to the ICF limit, but the limit is modest.

Leverage and product rules

CySEC implements ESMA's product intervention measures for retail CFDs: leverage caps of 30:1 on major FX, lower on more volatile assets, negative balance protection, leverage by risk, and restrictions on inducements. These caps apply to retail clients across the EEA through passporting, regardless of which national regulator authorised the firm.

How to verify a licence

Search CySEC's register for the firm's CIF authorisation. Confirm the licence covers the activity you intend to use. Cross-check the firm name against what the broker tells you. A CySEC-authorised firm offering services in the UK or Germany through passporting should be verifiable on both the CySEC register and the destination regulator's register.

The honest caveat

CySEC authorisation is a legitimate and meaningful layer of protection, and the ICF provides a real floor against firm failure. It is not, however, at the same level of supervisory intensity as the FCA — partly because of scale and partly because the same passporting regime has historically attracted firms looking for the lightest credible European authorisation. Verify on the register, understand the ICF limit, and treat CySEC as a real but middle-tier protection.