Differences between CySEC and FCA Regulation

Brokers in the financial industry play a crucial role in connecting investors with various financial markets. They act as intermediaries between the investors and the market, facilitating transactions and providing advisory services. Due to the sensitive nature of the financial industry, brokers are subject to regulations by various authorities to ensure fair trading practices and protect the interests of investors. Two of the most prominent regulatory bodies in the industry are the Cyprus Securities and Exchange Commission (CySEC) and the Financial Conduct Authority (FCA). In this article, we will explore the differences between the CySEC and FCA regulations.

Regulatory Authority Overview

The CySEC is the regulatory authority responsible for overseeing the financial markets in Cyprus. It was established in 2001 and operates as an independent public supervisory authority. The CySEC is responsible for regulating and supervising investment services firms, trading platforms, and other entities involved in financial markets’ activities. The regulatory authority’s primary objective is to ensure that the financial markets in Cyprus operate fairly and transparently.

On the other hand, the FCA is a regulatory authority responsible for regulating financial markets in the United Kingdom. The FCA was established in 2013 and operates as an independent body. The authority is responsible for regulating and supervising financial institutions such as banks, insurance companies, investment firms, and other market participants. The FCA’s primary objective is to ensure that the financial markets in the UK operate with integrity and to protect consumers from financial harm.

Differences between CySEC and FCA

Regulatory Requirements

The regulatory requirements for brokers under the CySEC and FCA are similar in many respects. Both authorities require brokers to adhere to strict guidelines for obtaining and maintaining their licenses. Brokers must demonstrate their financial stability, submit to regular audits, and maintain proper risk management practices. Additionally, both authorities require brokers to provide their clients with detailed information about their trading practices and the risks associated with trading.

One key difference between the CySEC and FCA regulations is the level of leverage available to traders. The CySEC permits brokers to offer leverage up to 1:30 for retail traders, while the FCA limits leverage to 1:30 for major currency pairs and 1:20 for other currency pairs. This means that traders under the CySEC can take larger positions in the market compared to those under the FCA.

Client Fund Protection

Client fund protection is a critical aspect of broker regulation, as it ensures that investors’ funds are safe from misappropriation or misuse. Both the CySEC and FCA require brokers to maintain clients’ funds in segregated accounts separate from the broker’s operating funds. However, the level of protection offered by the two authorities differs.

Under the CySEC, clients are covered by the Investor Compensation Fund (ICF), which provides up to €20,000 in compensation in the event of a broker’s insolvency. On the other hand, the FCA operates the Financial Services Compensation Scheme (FSCS), which provides up to £85,000 in compensation per person per institution in the event of a broker’s insolvency.

Bonus Offers and Promotions

Both CySEC and FCA are pretty much different about regulating bonus offers and promotions. In the past, both regulators were forced to somehow restrict bonus offers and promotions under the ESMA regulations.

But ever since the market has become a lot more flexible than ever, they’re starting to grow more lenient and allow companies to offer at least some kind of promotions.

The main difference is in the size of the bonus. FCA bonuses usually tend to be higher. Despite that, the bonus offers are somewhat accepted by lukewarm responses, as traders tend to pass the offers when they know that the withdrawal requirements are creating unnecessary difficulties.

Also, almost all of the seasoned traders are already experienced and don’t really need those bonuses. CySEC brokers tend to give out smaller bonuses due to financial restraints. But somehow, these smaller bonuses are much more popular in the market.

Withdrawal Speed

Lastly, the difference between FCA and CySEC regulated brokers is the speed at which brokers are required to process withdrawal requests. With FCA licensed companies, the broker is prohibited from inhibiting the withdrawal process. This means that brokers can’t block or any withdrawal as it needs to be processed immediately. With CySEC licensed brokers though, brokers have more freedom of keeping withdrawal requests as long as they want, sometimes evening them for months.


​Traders should choose a broker regulated by a reputable regulatory authority and ensure that they understand the broker’s trading practices and the risks associated with trading.

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