CySEC, the Cyprus Securities and Exchange Commission, is a popular regulator that regulates many prominent forex and CFD brokers. In this article, we are going to take a look at the benefit and drawbacks that this brings. This article will help you decide if a CySEC-regulated broker is the right option for you and your trading needs.
Table of Contents
Let us start by taking a look at what CySEC is. CySEC regulates more forex brokers than any other regulatory body in the world. This is due to the fact that they have created a regulation that is good for both the trader and the broker.
CySEC is the financial regulatory agency of Cyprus. Cyprus is a part of the European Union, and any broker licensed by CySEC is therefore allowed to offer trading in the entire European Union. CySEC must ensure that all their regulations, processes and operations comply with MiFID. MiFID is a law designed to harmonise the financial law within the EU. MIFID is also the regulation that makes it possible for CySEC-regulated brokers to operate within the entire EU.
CySEC has a long row of responsibilities ranging from preventing money laundering to licensing brokerage firms operating in the CFD, stock and forex markets. CySEC previously regulated binary options trading, but binary options have since been banned in the EU: CySEC is required to monitor all brokerages operating under a CySEC license to make sure that the broker complies with all rules and regulations. CySEC is also required to monitor the markets and enact new regulations if required to protect traders or due to changing market conditions.
CySEC was formed by the Cyprus Securities and Exchange Commission Law of 2001. Cyprus became a member of the European Union in 2004. As a result, all the brokers that were regulated by CySEC gained access to the European Union. CySEC has occasionally been forced to change its regulation due to changing European law.
CySEC has become a popular regulator for a reason. Below we will list some of the most important that CySEC offer traders.
CySEC has received some criticism over the years. Some of these criticisms have been well founded, while other criticisms have blamed CySEC for events that are the responsibility of the traders, not the responsibility of the regulator. Below we will focus on justified criticisms.
CySEC is one of the leading regulators in the FOREX and CFD trading industry, but they are far from perfect. Many good brokers are licensed by CySEC, but there are also all too many poor brokers that are allowed to operate for longer than they should have been allowed to operate. The fact that a broker is regulated by CySEC is not enough for you to trust that broker unconditionally. You should research a CySEC broker, just like any other broker, before you decide to open up an account. Reading about the broker on different trading sites is the best thing you can do to make sure that you choose an honest broker.
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