CySEC Tightens CFD Rules for Retail Clients, Limiting Leverage on Certain Contracts
The Cyprus Securities and Exchange Commission has issued an amending directive restricting the marketing, distribution, and sale of contracts for difference to retail clients. The update revises the existing rules on CFDs to retail investors.
Under the amendment, a 10% notional value cap has been introduced for CFDs on certain previously unlisted commodities and stock indices, limiting the leverage retail investors can take. The directive takes effect from its publication in the Official Gazette of the Republic.
Cyprus Regulator Revises CFD Investor Limits
Dr George Theocharides, Chair at CySEC
CySEC said the measure aims to strengthen investor protection by limiting exposure to high-risk CFD products. The amended directive and the original framework from 2019 will now operate together, covering the period from 2019 to 2025.
It seems CySEC is trying to limit regulatory arbitrage by tightening rules, positioning itself as a stricter regulator in line with more restrictive EU jurisdictions.
CySEC Updates Oversight, Sanctions, and Capital Requirements for Brokers
CySEC continues to strengthen oversight of the financial sector. Chairman Dr. George Theoharides highlighted the commission’s focus on investor protection, market stability, and responsible growth, noting rising regulatory demands, digital transformation, and upcoming MiCA and DORA regulations. CySEC supervises over 830 entities and has a 2025 budget of €17.5 million for staff and technology.
CySEC has also introduced a framework to enforce EU and UN sanctions more effectively across all regulated firms, including CFD brokers. The framework establishes procedures for identifying breaches and created the National Sanctions Implementation Unit under the Finance Ministry. Firms must enhance controls, monitor transactions, and report suspicious activity.
From early 2025, CySEC will implement new European Banking Authority guidelines for FX and CFD brokers operating as Cyprus Investment Firms. The rules clarify the group capital test under the Investment Firms Regulation, covering capital adequacy, risk management, and governance. Low-risk firms may apply for reduced capital requirements, while CySEC retains authority to revoke permissions if conditions change.