Our good colleagues at Finance Feeds have informed us that Cyprus’ government regulator, CYSEC has decided to do away with risk-based approaches to leverage that is set out for Forex and CFD trading accounts at brokers registered with the regulator.

What does this mean? This means that traders using Cypriot brokers will most likely be subject to the same leverage requirements as those currently trading in Europe under the ESMA regime:

  •      30:1 for major currency pairs;
  •     20:1 for non-major currency pairs, gold and major indices;
  •     10:1 for commodities other than gold and non-major equity indices;
  •     5:1 for individual equities and other reference values;
  •     2:1 for cryptocurrencies.

The exact timing of such changes to trading conditions is still unknown but it presents a big question on the commercial viability of Cypriot registered brokers and traders who wish to employ a higher amount of leverage in their trading.

At the end of the day these changes will also accelerate debates on whether it makes sense to take a brokerage business offshore in order to maintain business as usual or focus on a core target market in a heavily regulated jurisdiction.