Class 3 License

The Cyprus Securities and Exchange Commission (CySEC) is the financial regulator and supervisor of investment firms, brokers, funds and fund managers, as well as administrative service providers, situated in Cyprus. Cyprus being an EU member state, CySEC financial regulations and operations comply with the European MiFID financial harmonization law.

Class 3: investment firm license

(a) AUM (Assets Under Management) measured in accordance with Article 17 is less than EUR 1,2 billion;

(b) COH (Client Orders Handled) measured in accordance with Article 20 is less than either: - EUR 100 million/day for cash trades; or - EUR 1 billion/day for derivatives;

(c) ASA (Assets safeguarded and administered) measured in accordance with Article 19 is zero;

(d) CMH (Client Money Held) measured in accordance with Article 18 is zero;

(e) DTF (Daily Trading Flow) measured in accordance with Article 33 is zero;

(f) NPR (Net Position Risk) or CMG (Clearing Margin Given) measured in accordance with Articles 22 and 23 is zero;

(g) TCD (Trading Counterparty Default) measured in accordance with Article 26 is zero;

(h) The on‐and off‐balance‐sheet total of the investment firm is less than EUR 100 million;

(i) The total annual gross revenue from investment services and activities of the investment firm is less than EUR 30 million, calculated as an average on the basis of the annual figures from the two‐year period immediately preceding the given financial year. Investment firms under class 3 will be subject to the new IFR/IFD regime but with certain exceptions.

The following experienced personnel, who must be approved by CySEC as persons having the reputation and knowledge to hold their respective positions, must be in place:

• Four directors, including a managing director; (two directors need to be executive and two non-executives; three of them must be Cyprus residents)
• Head of each department (dealing, sales, back office, dealing on own account, etc.)
• Money laundering, risk manager and compliance officer;
• Accountant;
• Internal Auditors;
• External Auditors;
• External Legal Consultants.

• EU Regulation - A CIF licensed by CySEC falls under the EU Regulations. As such, it receives a license valid across the EU.

• EU Single Passport - A CIF licensed by CySEC can offer investment services, establish representative offices or establish a fully operational branches in any desired city or country within the EU, without any additional requirements from the host EU member state, whilst being supervised by CySEC directly. If you therefore intent to operate in, say, Germany, you may do so easily by being regulated in Cyprus and through registering your license in Germany.

• Low Capital Requirements - Investment Firms are required to maintain between EUR 75,000 to EUR 750,000 as minimum capital requirement depending to the type of investment services which the firm intents to offer, and whether the firm will be holding clients' funds.

• Low Operating and Licensing Costs - Compared to other EU member states, Cyprus offers one of the most competitive operating and licensing cost packages for Investment Firms.  Further, professional fees in Cyprus can be 30% - 40% lower than in other member states such us UK, Ireland, Germany etc.

• Favorable Tax Regime - Cyprus offers one of the lowest corporate tax regimes in the EU, and an impressive range of Treaties for the Avoidance of Double Tax Payment, with 60 countries.  The tax advantages to brokers, FX and Binary Option firms:
• Corporate income tax is only 12,5% on net profits (having deducted all expenses, salaries, directors' fees etc.)
• Profits from disposal of securities are tax free
• No tax on payment of dividends to non-Cyprus residents

• Favorable Business Environment - Due to Cyprus' location, its long banking and business history (Cyprus has been in the offshore banking sector since early 1970's), its' British legal system, and its' experienced financial system, Cyprus offers extremely efficient banking, accounting, legal financial professionals and highly skilled and multi-lingual labor available at rates that are generally lower than those of industrialized countries. Specialized recruitment services for FX employees.

• Freedom from Exchange Controls - Profits, interest and dividends, capital gains and any gains arising from disposal of shares in such investments can be freely remitted overseas without any limitation.

• Advanced Telecommunications - Cyprus has invested heavily in the telecommunications sector and it is included today among the most developed countries in the world in this respect.

• Global Market Credibility & Penetration - Cyprus provides a solid basis for a mutual recognition regime between EU Member States and third countries, securing a robust and comprehensive framework to ensure high levels of investor protection.

• Low On-Going Expense Level - Cyprus offers a mature professional services sector at a very low expense levels (fees) for financial, audit, legal and other professional services compared to other EU states (estimated to be at 35%- 40% lowers than Western EU rates).

The experienced professionals of our FS Advisory Team assist our clients on the following:

• Consulting on investment services to be included in the application as well as on the design of the investment firm structure;
• Registration of specially drafted Memorandum of Association for a Cyprus Investment company;
• Completion of the Application Form and check-lists to be submitted to the regulator;
• Preparation and drafting of the required Internal Operations Manual according to CySEC and MiFID regulations;
• Assistance on the preparation and drafting of the Business Plan and the Financial Projections
• Preparation of the Applicant’s Money Laundering Manual;
• Assistance in the preparation of the company shareholder, director and senior management Questionnaires;
• Follow-up during the process of assessment by the regulator;
• Assistance on recruitment of executive and non executive directors, senior management and other members of the Company's departments;
• Assistance on appointment of outsourced Compliance Officers, Accountant(s), Internal & External Auditors;
• External legal consultancy on an on-going basis;
• Immigration matters and work permit applications for foreign employees