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.
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.