FX and CFD brokers

Authorisation

A firm offering CFDs or rolling spot forex requires authorisation as an investment firm. The permissions required, the initial capital and the scope of the application depend principally on the execution model: whether the firm deals on its own account as a market maker, or passes client orders to liquidity providers.

Retail CFD rules

Firms offering CFDs to retail clients are subject to national product intervention measures in the EU and to equivalent rules in the UK. The principal requirements are as follows.

• Leverage limits

  Maximum leverage set by the class of underlying, from major currency pairs to crypto-assets.

• Margin close-out and negative balance protection

  Positions are closed out when margin falls to a prescribed level, and a retail client's losses are limited to the funds in the account.

• Risk warnings and incentives

  A standardised risk warning, including the proportion of retail accounts that lose money, and a prohibition on monetary and non-monetary benefits.

In February 2026 ESMA stated that perpetual futures offering leveraged exposure to crypto-assets are likely to fall within these measures. In the UK, the sale of cryptoasset derivatives to retail clients is prohibited.

What the regulator assesses

• Execution model and risk management

  The execution model, hedging policy and exposure limits, liquidity providers, and the controls over pricing and slippage.

• Client money

  Segregation of client funds, reconciliations, and the banks and payment service providers used for deposits and withdrawals.

• Appropriateness and product governance

  The appropriateness assessment, the target market and the distribution strategy for complex products.

• Marketing and introducers

  Oversight of marketing communications, affiliates and introducing brokers, and the arrangements for serving clients in other member states.

• Capital

  Initial capital and own funds under the prudential regime, supported by financial projections that reconcile to the capital calculation.

Jurisdictions

Cyprus is an established EU jurisdiction for FX and CFD brokers, and a CySEC licence can be passported across the EU and the EEA. We also act on applications to the MFSA in Malta, the CNMV in Spain and the Hellenic Capital Market Commission in Greece, and to the FCA in the UK.

The acquisition of an existing licensed broker requires the regulator's prior approval. See change of control.