This week is expo week and it’s where we all get to go to Cyprus, drink some beers, and talk about life.
Since starting this site in 2022, back in the halcyon days of CFDs Weekly, I would say the general perception is that Cyprus has become steadily less relevant from a licensing point of view.
This view is borne out by the below.
| License / Jurisdiction | Active Firms |
|---|---|
| Mauritius Securities dealers | 514 |
| Cyprus CIFs | 229 |
| Seychelles Securities dealers | 219 |
| Cat 5 UAE CFD providers | 58 |
As you can see, Cyprus has kind of fallen behind its peers. Those numbers also make things look better than they are.
The figures for Mauritius, Cyprus and the Seychelles are gross, meaning they include all firms regulated with licenses that CFD providers hold.
In Mauritius and the Seychelles the number of non-CFD provider license holders seems much lower compared to Cyprus, where you have a lot of small wealth managers.
You can see this by going through the approved domain operators in CySEC’s database. Doing this leaves you with ~130 companies that are active in the CFD trading space.
That includes removing firms that are listed as giving their license back or whose sites do not work.
But the more important point is what I have put in the B2B only or the Live (No/Low Traffic) categories in the picture above.
Firms who are listed as B2B Only – there are 22 of them – are companies that offer retail services elsewhere but only use CySEC for onboarding pro customers or B2B clients.
For example, FXGT, IronFX, RoboForex and Lirunex have all switched off retail clients in their Cypriot entities.
The largest category, firms that are Live (No/Low Traffic), is also important.
Companies in this category are active with their CIF but seem to have no meaningful activity on their CySEC-approved websites or have little to no EU traffic to them.
For example, FX Globe and Oqtima have EU sites that get close to no monthly traffic. SimilarWeb shows FX Globe’s EU site only had 3,000 visits in May and all of the traffic was from Brazil and India.
This would suggest the broker is doing minimal business – if any – via their CySEC entity.
Another option is companies holding a license but not fully using it for passporting. For example, Fusion Markets holds a CySEC license but barely seems to use it across Europe. Axi also lets Spanish and Italian customers onboard offshore.
A good piece of evidence for what is happening comes from iForex. The Israeli broker has a CySEC license but noted in its IPO prospectus that less than 5% of its revenues flow through it.
The remaining 95% is going through its BVI entity.
The result of all of this is that only 27 firms actually seem to use their CySEC license in a meaningful way.
You could say that firms never generated all their money from one place but it kind of misses the point.
Prior to 2018, there were only 24 securities dealer licenses ever issued in Mauritius. Now there are more than 500 active firms.
In effect, leverage caps didn’t do that much as firms just continued operating as before, but now all their money goes offshore, rather than through a CySEC entity.
The result is that only a very small number of firms actually use their CySEC entity for active marketing.
It’s similar with other players, even if they make use of their CySEC license. For example, XM runs its main label brand and Trading.com entity in the EU.
But the amount of money it generates from that activity is a small fraction of its overall group revenue.
My guess is that people continue to hold on to a CySEC license for brand, payments, and potentially moving funds back to Cyprus by trading with a related party. Otherwise I don’t really get what the point is.
Generally no one seems happy with how things have progressed. For example, an executive at one provider that does use their license properly noted the regulator seems intent on harassing them and causing problems for them, even though they’re one of an increasingly small number of providers to actually use the license in a meaningful way.
Another broker owner I spoke to back in February admitted that his holding of the license was almost emotional rather than rational at this point.
Recently the chairman of the regulator said that CySEC is not there to create jobs. This may be true. However, there is a kind of weird circular logic in saying you are there to manage an industry, even though the rules in place are killing it.
Fortunately I don’t think it will change things too much as there is now so much human capital in Cyprus that it will be hard to stop it from being a hub for CFD trading. But it’s hard to see it as a positive thing that so many firms basically don’t need to hold their license there anymore.
