Vote of Confidence for Cyprus Investment Environment


Foreign investors continue to show their confidence in Cyprus as the applications which keep pouring in before the Cyprus Securities and Exchange Commission at an increasing rate indicate. In fact, the number of licensed, and thus regulated, Cyprus Investment Firms (CIFs) has recorded a rapid increase during the recent years from 50 licensed CIFs in the year 2005, to 167 CIFs currently, while there are also another 33 applications currently pending before CySEC for examination.

CySEC is also implementing various measures in order to reinforce its supervision, which include the increase in the checks and inspections of CIFs, including on-site checks. Moreover, as previously reported on, the Commission is also currently working to develop an integrated Risk Based Supervision Framework, which is expected to come into full force by 2015, in order to assist CySEC to detect and identify the entities whose operations carry the greater risks and focus its supervisory efforts on those entities.

It is true that Cyprus, following large year’s events with the almost collapse of its banking system, the haircut of deposits and the need to resort to the Troika of international lenders in order to sign a Memorandum of Understanding and get access to international financial assistance, was faced with enormous challenges and its reputation as an international business and services center was hanging in the balance. More than a year on, the island has already garnered positive assessments from its lenders in a fifth post-bailout review concluded on July 25 2014, since as indicated in an IMF report on the matter: “Cyprus has come a long way in addressing the crisis. The financial sector has been stabilised, substantial fiscal consolidation has been implemented, and sweeping structural reforms are underway.”

However, the international lenders of Cyprus also point out that: “The cost of the crisis has been large, and painful but necessary measures have imposed an unavoidable cost on the population. Looking forward, significant challenges remain, and they will not be resolved overnight. The authorities will need to stay focused on and committed to adopting the necessary policies to advance their adjustment programme in order to pave the way for sustainable growth.”

This is perhaps why some establish firms, especially in the retail forex industry, have begun moves to either relocate from Cyprus, such as the recent example of Liquid Markets announcing its relocation to London under FCA supervision, or to at least obtain FCA licenses, despite the increased cost involved, and set up additional offices in London, in order to shield themselves from any negative connotations or stain in their credibility or reputation stemming from the fact that they were licensed in a jurisdiction which had made headlines for such negative reasons.

It is true that most investors place enormous importance on trading via brokers who are regulated and licensed by strict authorities, which are able to provide the necessary guarantees when it comes to the transparency of the operations of the investment firms under their supervision and also to the safety of the investors’ funds.