Forex License

Ccmalta Default

Following recent changes in EU directives and regulations, non-EU regulated forex companies can no longer operate in the EU and/ or the euro as a currency. As a result, Maltese and Cypriot forex license has experienced a boom which has transformed the two jurisdictions in top notch domiciles for the incorporation and organisation of Forex companies.

Malta's Forex License Industry

Forex service providers, who are in pursuance of an attractive jurisdiction  and a to work within an well-reputed regulatory regime, consider Malta to be an interesting option. With its accessible regulator, competitive cost and business friendly environment,  Malta  has secured a golden reputation of being an excellent European hub for financial services. Thus, a number of different market players in the field of foreign exchange, ranging from specialist software providers interested in using Malta as a base of operations, to forex specialised asset managers and forex trading platform seeking their way of entry in the EU market were attracted to Malta’s shores.

Malta Forex License Law & Regulation in Malta & the EU

In the light of the increasing regulatory attention which is being given to the forex industry, the European Securities and Markets Authority (ESMA) is continuously urging retail forex investors to ensure that they only enter into transactions with authorised services providers. 

The Investment Service Act is the main legislative framework act which regulates forex. Within this act, one will also find implemented the provisions of the Markets in Financial Instruments Directive (MiFID)

Forex License under the Investment Services Act

Foreign exchange acquired or held for investment purposes is a requires a forex license and authorization of the MFSA. A Maltese Forex license takes one of 3 shapes to suit the needs of different investors:

  • Category 1 is for forex companies providing investment advice or receiving and transmitting orders in relation to forex
  • Category 2 is for forex traders acting as riskless principles who are involved in the execution of two matching trades
  • Category 3 is for when the forex business deals with its own account as a market maker

Malta Forex Passporting

Having a Forex License does not automatically  grant one a passport to other EU member states under the MiFID, but attaining a forex license includes the automatic use of directives, CFDs, futures, options, swaps in relation to securities, currencies, interest rates or yields and/or the provision of a MiFID ancillary service, which may be eligible for passport rights.

Our Malta Forex Advisory Practice

ChetcutiCauchi’s services can usually be divided into set-up and licensing related services and post-licensing regulatory compliance.

Pre-licensing

Our firm provides assistance to coordinate meetings with the MFSA in the pre-licensing stage to discuss the proposed forex activity in Malta and assists in the drafting and completion of documentation required for licensing purposes such as forex business plans and the completion of other documents required.

Our lawyers can provide specialised assistance so that one may choose the most appropriate and tax-efficient legal structure as per the envisaged nature, scope and extent of the proposed activity, and also give assistance in choosing collaborators, external service providers, and bank and payment solutions.

Post licensing and Compliance

Once a license is obtained, investment service providers are required to comply on an on-going basis with the post-licensing requirements established under the relevant EU directives which have been transposed Maltese law. Comprehensive compliance advisory services are provided by our firm in order to ensures that all compliance matters are seen to, including the preparation of all regulatory returns, the drafting of policies and reports and the handling of statutory notification requirements. Advice is also provided with regards to between various license conditions which may be imposed by regulator, amongst other matters.

Cyprus Forex License

With an advantageous tax regime, its EU member status, the implementation of the MiDIF in its local legislative framework and a sound regulatory regime, Cyprus has also positioned itself as one of the top European jurisdictions for the incorporation and operation of a Forex License. In order to conduct a forex trading activity in Cyprus, one needs a license and a real presence in Cyprus, including a locally-based director, as well as staff, premises, equipment, internal controls, compliance function and fit and proper management.

As per the regulations imposed by the Cyprus Securities and Exchange Commission (Cysec), forex trading services can only be offered by an authorised Cyprus Investment Firm (CIF). Thus, those wishing to provide forex trading or investment services need to apply for licensing as a CIF and a specified minimum capital requirement.

Generally, the application filed with Cysec comprises all corporate documents of the company (incorporation certificate, certificate of directors/secretary, shareholders, Memorandum & Articles, etc) coupled with a with the CIF application form, a  a three year business plan, and internal procedures manual as well as anti money laundering and know your client procedures. Typically, a response will be given within 6 months.

At post-licensing stage, CIFs are required to comply with ongoing reporting requirements to Cysec and Anti Money Laundering requirements, as well as a strict Know Your Client process.

Forex Advisory Lawyers

Being a Malta-Cyprus based firm, Chetcuti Cauchi has a wealth of expertise when dealing with local regulatory processes in both jurisdictions and provides comprehensive licensing and compliance services, thus providing an all-inclusive and holistic service in Malta and Cyprus.

Our Financial Service Advisory group enjoys a latitude of industry expertise, enabling our advisors to provide an array of services ranging from licensing and compliance, corporate and personal tax, accounting and project management of the whole setting up for the client.  Our professionals active members in this field of expertise. They are members of respected professional associations including the Malta Institute of Taxation, the Council of the Institute of Financial Services Practictioners (IFSP), various investment services subcommittees such institute, the Society for Trusts & Estate Practitioners, the Malta Institute of Accountants and the Chamber of Advocates. 

 



Contact Us
Key Contacts

Ms Soulla Dionysiou

Partner, Cyprus

+357 2203 0262

Mr Charles Savva

Managing Partner, Cyprus

+357 2203 0262

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