The Mediterranean island of Cyprus continues to dominate its presence as a preferred destination for financial services firms looking to get set up under an established regulatory authority which gives further access to EU member states. Despite volumes falling through the roof and overall market sentiment bleak, the low tax EU nation has scored a double in 2012 as it regulates and approves six more firms, this complements its regulation of six firms in August.
Loucas Haviaras, Tax Advisor at Haviaras & Philippou L.L.C. a Cyprus based law firm sees no change in Cyprus maintaining its title as a financial hub for the region, he says “Cyprus definitely holds its position as a financial hub from FX and CIF firms. The reason being, that we are a country member of the EU with low taxation and outstanding services. We shouldn’t expect a drop of interests since the recession is global and therefore if it will affect Cyprus it will affect it only as much as other countries of the European Union.”
Costas Constantinides, Director of 360 Consulting, an FX regulatory consulting firm, adds “Cyprus still maintains its position, as well as grows its size, as an internationally recognized main hub for FX, CFD as well as Binary Options business establishments”.
He continues with the main factors that keep Cyprus ahead of other jurisdictions, “the aforesaid is based on long-standing advantages, as well as newly arising ones, in relation to the jurisdiction of Cyprus in EU: Credibility of the Regulator (Cysec), Straight forward and respectable licensee requirements, Local abundance of high quality business services, Attractive tax regime and others”.
Cyprus joined the EU in 2004 and as a EU member state falls under MIFID, for a lengthy period it was regarded as an offshre centre with considerable low tax. The country worked on developing its infrastructure, telecommunications and input many reforms over the last decade to ensure it is regarded as a financial hub, situated on the cross roads of europe, middle east and north africa an ideal location for neighbouring firms to set up and do business.
Dr. Stelios Platis, Managing Director of MAP S.Platis a financial services law and consulting firm says “being essentially the ‘cross-road’ between the Middle East and EU, Cyprus remains extremely attractive for EU Brokers who wish to provide the necessary gateway from/to the ME and from/to the EU”.
Announcement: The Board of the Cyprus Securities and Exchange Commission, announces that, during its meetings between August 2012 – October 2012, decided, pursuant to sections 6(6) and 22 of the Investment Services and Activities and Regulated Markets Law of 2007, as in force, to grant to the following companies a Cyprus Investment Firm authorisation:
- Grow Wealth Assets Ltd
- Solidus Securities Cyprus Ltd
- Exness (Cy) Ltd
- CF Invest Ltd
- Sama Brokers Ltd
- Fidelisco Capital Markets Ltd
It is noted that the above companies before their activation and not later than 12 months from the date of granting a CIF authorization, must establish and implement all the measures committed before the Commission, in order to comply with the requirements of the Law.
The Cypriot regulators journey has had its highs and lows, at one point Cyprus was regarded as an open door for firms who were looking to misuse its local procedures (or lack of), however the regulators have worked extensively hard over the last four years along with brokers and compliance consulting firms to ensure that they are in line with the high standard other European regulators operate under e.g. client money rules, capital adequacy, KYC and AML and overall corporate governance.
Dr. Stelios adds “CySEC’s learning curve has been steep. After joining the EU and seeing the advantages that MiFID and other European financial rules could give Cyprus, CySEC was quick in adjusting the local regulatory framework as well as their procedures. Thus, today being licensed by CySEC means that an FX Broker automatically has the necessary credibility of complying fully with the EU regulatory framework set for investors’ protection.”
Angelos Paphitis, Managing Director of A. G. Paphitis & Co LLC says “more and more companies do come to Cyprus in order to transfer their headquarters because of Cyprus’ tax system mainly and also because of the low-cost on legal fees. For example, we have been inquiring to register an FX firm (an STP broker) in Poland and even though the paid up share capital needed for the company is less than Cyprus (Cyprus STP companies require a paid up share capital of Euro 200k whereas in Poland it is Euro 125k), the professional fees for such service varies at the range of Euro 150,000 in Poland, whereas the same fees in Cyprus varies at the range of Euro 25,000”.
Cyprus was the first EU regulator to authorise firms operating in the binary sector, binaries are thought to be the next big thing for online financial traders.