Cypriot financial authorities are tightening their grip on a large part of the trading industry that has set up base on the island. According to several sources who talked with Finance Magnates, the Cyprus Securities and Exchange Commission (CySEC) is now demanding a full list of all call centers worldwide from its licensed brokers (CIFs).
Many international financial firms have operations located around the world in order to gain from the varitey of local advantages. A typical firm can have its headquarters in Cyprus, a Chinese call center in Shenzhen, a media department in Israel and conduct software development in Eastern Europe, or any such other combination.
This would allow a hypothetical firm to enjoy access to different markets with the best manpower and tools available globally. However, in a regulator’s eye this international spread can be a cause for alarm, as it places different aspects of the business in different jurisdictions, leading some functions to exist outside of its watchful eye.
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To date, CySEC has not specified why they require information regarding the call centers of locally licensed brokers. It could thus be logically assumed that in the future they will want brokers to make call centers either a tied agency or a wholly owned subsidiary. In this way, the licensed firms will bear full responsibility for the actions of the sales teams around the world and will not be able to use “regulatory arbitrage” to their advantage.
Cyprus has long been considered an international forex and binary options hub, with one of the reasons being that it has a supportive legal and regulatory environment. In more recent times however, CySEC has been trying to shed its image of being an “easy” regulator, issuing higher fines on license violators and cooperating with foreign regulators against brokers operating from Cyprus.
Speaking to Finance Magnates a CySEC spokesperson said, “Indeed the CySEC is in the process of issuing a circular with which the CIFs will be asked to inform the CySEC of their marketing structures (including call centres). This circular, the general aim of which is to enhance transparency and supervision, will be circulated very soon through the CySEC’s website.”