Some material changes for the retail foreign exchange trading industry have been maturing for some time. As European authorities are preparing to post the final rules with which all regulated retail brokers will need to comply with, some companies are already looking for an exit.
Sources with knowledge of the matter shared with Finance Magnates that dozens of companies which are regulated by the Cyprus Securities and Exchange Commission (CySEC) are looking to sell their business. While some of them might simply be looking if they can get a good price for their client book, others are committed to exiting the market.
The news comes as a couple of brokers recently voluntarily renounced their licenses for operation. Invest.com which acquired a CySEC license after merging with anyoption and HiWayFX and AJF last year both decided to close their doors.
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The brokerage market in Cyprus has been growing for years and with the operational strategy of most of the firms heavily relying on marketing, the new ESMA rules are likely to make the business much more capital intensive.
As the new regulatory framework kicks in, the heavyweights of the industry with large coffers will be aggressive to capture market share from their peers in the forex and CFDs trading industry. The companies have been facing a difficult choice in light of the new EU-wide regulatory framework: either go unregulated or heavily invest in the brand to retain competitiveness.
Some brokers, like true-STP provider JFD Brokers went as far as executing large M&A deals, yet others are apparently looking to exit the market.
The sources to which Finance Magnates spoke elaborated that at about two dozen CIF licenses are up for sale. The inevitable consolidation in the market is starting and more successful companies on the island have already taken steps to attract the best talent to their ranks.