Cyprus investment firm licence.

What you get

How the firm obtains the licence

1. Scoping and proposal. The investment services, the capital class (agency, agency holding client money, or dealing on own account), the CySEC fee with each ancillary service and the Investor Compensation Fund contribution per service are confirmed in writing before filing.
2. Application pack. The programme of operations, the information Chapter II of Part II of the Law requires, the client money arrangements and the board fitness files so the six-month statutory period runs from a complete application.
3. Banking and liquidity. Segregated client money accounts, the operating and settlement accounts and the liquidity provider or prime-of-prime onboarding are arranged through the firm’s relationships before the decision, so the banking evidence sits in the application.
4. Regulator engagement. CySEC’s questions on substance in Cyprus, the trading model, liquidity and the flows of client money are answered through one process with the evidence assembled, until CySEC decides within the six-month statutory period.

Key people, banking and technology

You will need two directors running the business from a head office in Cyprus, a board assessed for fitness, and compliance, risk, internal audit and AML officers.

One engagement and one timetable, from scoping to launch. Speak to an expert about the people, the banking and the technology for this licence.

Who needs the licence

Any person providing investment services or performing investment activities as a regular occupation or business in Cyprus, or across the EU from Cyprus, must first hold a CIF authorisation from CySEC under the Investment Services and Activities and Regulated Markets Law of 2017. Forex and CFD brokers are the largest group of applicants: an agency or straight-through broker holds reception and transmission and execution permissions; a market maker adds dealing on own account. A CIF may not carry on business outside its licensed services unless the activity is ancillary or CySEC approves it. Cyprus is the EU base most often chosen by brokers serving European retail and professional clients, with an English-speaking regulator and a fee directive that prices each permission.

Capital classes under the Investment Firms Directive

Market-making forex and CFD brokers that deal on own account need €750,000; agency-only brokers that hold client money need €150,000.

What CySEC requires

• Legal form and location. A company with its head office in the Republic of Cyprus, entered on CySEC’s register of CIFs and notified to ESMA on authorisation.
• Directors and governance. At least two persons who meet the fitness requirements effectively direct the business. Board members are of good repute with adequate knowledge, skills, experience and time; the board as a whole understands the activities and main risks; a diversity policy applies; directorship limits apply to significant CIFs; and CySEC is notified of every change in composition.
• Capital. Initial capital under Article 9 of the Investment Firms Directive at the level matching the services sought, having regard to the nature of the service; CySEC does not authorise a firm without it.
• Client money. Segregation of client funds and financial instruments and no use of client funds for the firm’s own account, under section 17 of the Law and CySEC’s client asset protection directive, with the banking arrangements evidenced in the application.
• Investor Compensation Fund. Membership before authorisation, with the initial contribution per investment service paid before the service is provided; CySEC verifies compliance with the investor compensation directive at authorisation.
• Control functions. Compliance, risk management and internal audit functions and an anti-money laundering compliance officer, under the Law and CySEC’s directives.
• Application pack. The application with a programme of operations setting out the types of activities and the organisational structure, and the information required by Chapter II of Part II of the Law; CySEC must be fully satisfied on every requirement of the Law, its directives and the MiFID II delegated acts before granting.

Capital

CySEC grants authorisation only where the applicant holds sufficient initial capital under Article 9 of the Prudential Supervision of Investment Firms Law for the services sought.

Timing

Figures published by the regulator are quoted as published and converted to months. The realistic timeline is the firm’s own, for a complete, well-prepared application.

Fees and costs

Passporting and scope

A CIF provides services throughout the EU and EEA on a cross-border basis under Article 34 of MiFID II and through branches under Article 35, on notification to CySEC. Branch and tied-agent notifications carry a CySEC fee of €3,000. CySEC enters each CIF on its register and notifies ESMA. The authorisation does not cover the UK; groups serving both markets hold an FCA authorisation and a CIF authorisation, and the firm obtains both.

Why applications are delayed

The Law sets out what CySEC looks for before granting. It must be fully satisfied that the applicant meets the Law, CySEC’s directives and the MiFID II delegated acts; the six-month period runs only from a complete application. It looks for board members of good repute with adequate knowledge, skills, experience and time, and for initial capital at the level the services require. In the firm’s experience the three causes of delay are the same as in every EU regime: incomplete submissions, insufficient substance in Cyprus, and business plans whose trading model, liquidity arrangements and flows of client money are not clear.

Banking and liquidity

A CIF needs segregated client money accounts with credit institutions, an operating account and settlement accounts in the currencies it serves, and liquidity provider or prime-of-prime relationships before it trades. Banks and liquidity providers review the licence scope, the client money arrangements and the financial crime framework before onboarding. The firm arranges each through institutions that serve regulated brokers in Cyprus and across the EU, in parallel with the application, so the firm trades on authorisation. See banking and payment processing.

Questions firms ask

References

1. Investment Services and Activities and Regulated Markets Law of 2017, Law 87(I)/2017
2. Law 87(I)/2017, section 7: authorisation procedure
3. CySEC Directive ΟΔ87-03 on fees and subscriptions
4. CySEC Directive ΟΔ87-07 on the Investor Compensation Fund
5. Directive (EU) 2019/2034, Article 9: initial capital
6. Directive 2014/65/EU (MiFID II), consolidated

This guide is general information for firms considering authorisation and is reviewed against the regulator’s published requirements. It is not legal advice; requirements and fees change, and the regulator’s current publications take precedence.