Why do so many Forex Brokers love Cyprus?

[Dorty Focker]

Selecting the best forex broker is probably the most significant decisions an investor can make. A good broker that offers fast execution, reliable fills, and tight spreads can be an incredibly valuable asset to any trader. On the other hand, brokers that offer continuous requotes, bad fills, and wide spreads can seriously impede a trader's overall performance in the fx market.

Over the past several years, a number of forex brokers have set up shop in Cyprus. In an industry rife with deceptive activity and scam artists, the emergence of Cyprus as a dominant jurisdiction for so many fx brokers has caused some concern among the forex community. While Cyprus fx firms used to be a cause for concern in the forex community, Cyprus has cleaned up its act and clamped down on unregulated forex operations.

Why Cyprus?

There is an old saying that says, "The tax man's job is to get as deep into your pockets as possible, and your job is to keep him out as much as possible." All prudent companies do what they can to legally reduce their tax exposure, and this is the primary reason companies love doing business in Cyprus. Cyprus has incredibly low corporate tax rates, which are very attractive for fx brokers.

Furthermore, the regulatory requirements in Cyprus are much more flexible than in the United States. This has caused many highly regarded firms to headquarter their business in Cyprus instead of the United States.

Cyprus Regulation

The Cyprus Securities and Exchange Commission (CySEC) is the regulatory body which governs financial activity in Cyprus, and companies that act as foreign exchange brokers are required to maintain certain capital requirements and obtain licensure from the CySEC.

Markets in Financial Instruments Directive (MiFID)

MiFID is the European Union's legislation which provides a regulatory structure outlining how financial service markets are to operate in the EU. The MiFID covers the 27 states of the EU plus Liechtenstein, Norway and Iceland. Financial firms covered by MiFID are essentially authorized and regulated by their “home state” which have agreed to abide by MiFID guidelines.

Don't be deceived by a fx broker which lists MiFID as a regulatory qualification on their website. MiFID is not a regulatory authority. MiFID is a directive. In Cyprus, a foreign exchange firm must be registered with CySEC and be MiFID compliant.

Be sure that your Cyprus fx broker of choice is fully registered, MiFID compliant, and in good standing with the CySEC.

 

[petrelsea70]

dear thnx for sharing your knowledge with us,after reading this i improve my trading skills and about broker,before i don not know much about broker ,i gave deep information and explain it well for us,i will use this information next time about the broker hire issue

 

[kasual]

its really good article and can be sure can enrich my knowledge about forex. actually I also wonder why many forex broker choose become regulated in cyprus than other country like UK or US. previously I assume that the cost being regulated very low than other country but after read the article above, I found more logical reason.

 

[budado]

I guess its because of the Cyrus lack of restrictions in term of financial dealings. Lets face it. right now the world has tough anti-money laundering law and the more and more countries are trying to pass this law. But its seems Cyrus does not want to pass this law and that's what make financier want to open business in Cyrus. Because their money is safe from US Federal government eyes.

 

[Andy]

Cyrus is tax haven country so most business based on Cyrus. You cannot image how much the brokers can save each year thank to tax laws of Cyrus.

 

[LindaL]

I know one serious broker from Cyprus, he is a businessman with huge income.

 

[riddick09]

I guess its because of the Cyrus lack of restrictions in term of financial dealings. Lets face it. right now the world has tough anti-money laundering law and the more and more countries are trying to pass this law. But its seems Cyrus does not want to pass this law and that's what make financier want to open business in Cyrus. Because their money is safe from US Federal government eyes.

Its Cyprus. I'm not sure clearly how the government will be in good hands with low tax rates in their country. As I know this country is also small. And somehow, I know someone who wanted to be in Cyprus because of so good for living. Yes, I will also be good with those brokers as we expect that many brokers will come here.

 

[kalpeshmkm]

Thanks for this information with us i like the things about to choosing a broker which is in Cyprus i am happy about that like you so many knowledge sharers are available on this Forum so we can know about such hidden things so thank you very much to sharing your knowledge.

 

[rexway]

Well that is really correct cyrus is tax free nation I do believe that that is the reason why so many business are base there and broker prefer there rather than any other thing.

 

[ProTrader]

Well that is really correct cyrus is tax free nation I do believe that that is the reason why so many business are base there and broker prefer there rather than any other thing.

The tax is really slow and small compare with other countries but it's not free.

The brokers still need to pay tax for their activity but I think there must have something behind the scene with cyrus so that traders hesitate to join Cyrus based brokers! Maybe it's regulation of Cyrus!

 

[freddymyers]

Thanks for such important information.

 

[budado]

I don't think many love cyprus its just that the law in their are so lenient that they can open a site in their without any problem getting raid or getting accused of violation any law and since this country as far as I know is also neutral in term of international law. Other countries can't file any cases to a company that is located in cyprus.

 

[riddick09]

It only means that it is favorable for them to have business. And that's what really this country wanted because the better for the investors the better for their economy. Its like marketing strategy to attract many investors so they will have many business and jobs.

 

[zebrut]

I am not so knowledgeable about this thread but I can say that maybe it is possible in the country is where a forex investment went very well, so a lot of forex brokers born out of the country because the country has rules and laws that are not too difficult so freely can make the company without worrying about any allegations of fraud.

 

[rexway]

I dont think that fraud issue should come in here what I know is that in forex trading you control how things happen to you and its like cyprus is less in terms of law and rules which govern forex market

 

[naninov]

useful information... but i think just like other business, maybe some retail brokers prefer cyprus because they want to target small traders which mostly need fastest deposit and withdrawal process using e-wallet to enter forex market and got no limitation on leverage... commonly known that e-wallet better than other because it support annonimity, easy and it fast process. so, i feel fine with cyprus broker to trade with

 

[Rcypher]

Thank you for that wonderful insight. This goes to the idea that it pays to know what's going on in the country where your broker is located and the rules there about broker regulations. I have limited knowledge about Cyprus' broker regulatory requirements but I just read a news this morning mentioning that Cyprus is also crippled by a difficult debt like Greece, but i believe Greece is the worst at the moment. I wonder if their requirements or how loosely they set rules about broker regulation has anything to do/contribute with their public debt.
As for me, I'm trading with HY Markets and it's regulated by the FSA in UK and happy with it.

 

[Ghost]

Cyrus is tax haven country so most business based on Cyrus. You cannot image how much the brokers can save each year thank to tax laws of Cyrus.

I think this answers the puzzling question of why many Forex Brokers choose to base in Cyprus. Being based in Cyprus allows for brokers to offer more competitive services and give more bonuses to prospective traders, without having to worry for huge taxes that are characteristic of other EU member countries and the US. I still do not know how they manage to do that and remain healthy in the EU, but i am guessing that they have sparse population.

 

[KickBackFX]

MetaQuotes is also based in Cyprus maybe that's a +.
The standard corporate tax rate of 10% (0% for shipping companies, 4.25% for maritime management companies) is the lowest in the European Union, and the lowest “non-offshore jurisdiction corporate tax rate” in the world.

 

[budado]

Its really not because they love Cyprus. Its just because of its location I guess. Its a member of europe and yet its laws are not that strict as most european countries and as far as I know cyprus also uses euro as currencies so its easy for countries in euro to invest in Cyprus.