Difference between CySEC and FCA

There are dozens of financial regulators all over the world, but the most common ones seem to be CySEC and FCA. Because of this, many traders get the question of what’s the difference between these two regulators and why do brokers opt for either one or the other.

In this article, we’d like to detail the difference between these regulators. Things such as the difference between prices of getting them, the perks that brokers can get with them and the markets that they can cover with either one.

So, without further ado, let’s look into the difference between CySEC and FCA.

Available markets

The main difference between CySEC and FCA became more evident when Brexit actually went through. The markets that the Financial Conduct Authority (FCA) will have to be narrowed down to quite a few. In order for the regulator to continue operating at the rate it operates now, it will have to form some kind of partnerships with various other European Union countries so that the laws and guidelines are at least a little bit similar.

For example, ESMA which is the financial regulator of the entire European Union, will not have any authority over the FCA once the UK leaves the EU. Because of this, several agreements on guidelines will have to be made. If not, then the FCA will only cover places like the UK and maybe, just maybe, markets outside of the EU as well.

As of right now though, CySEC seems to be covering a bit more markets than the FCA, but in the grand scheme of things, there’s no big difference.

Segregated accounts

Segregated accounts are a feature of all exceptional regulated forex brokers all over the world. However, it’s sometimes a commodity not all can truly achieve due to difficulties in dealing with various banks.

The Cyprus Securities and Exchange Commission does not require its licensed companies to have segregated accounts, but the FCA regulated brokers do require it.

So, what is a segregated account? Well, imagine when you deposit some funds with a brokerage, where do you think those funds go? To the broker’s bank account right?

Well, under the FCA law, the broker is tasked with opening a separate account for the customer, so as to not have any access to them. CySEC regulated Forex brokers are necessarily required to have such a policy implemented, it’s a bit more based on their own decision.

But why is such a thing important? Well, if the company gets hacked or goes bankrupt, the customers will not only have the regulator’s support in retrieving their funds but the bank’s support as well. This creates a more transparent and safe environment for the customers in general.

The process of getting the license

The process of getting an FCA Forex license is completely different from getting a CySEC license. The first difference is, of course, the price. CySEC is much cheaper simply because Cyprus is much cheaper, in both real estate as well as labor. Labor is one of the few things that both regulators are similar. All regulated brokerages are required to have local staff one way or another. And considering how an office full of staff could cost two times less than one in the UK, it’s understandable why some new brokers prefer to go with CySEC.

But, eventually, as every company grows they become much more capable of acquiring an FCA license which has become something similar to a status symbol.

Bonus offers and promotions

Both CySEC and FCA have different policies about bonus offers and promotions.

Under the ESMA regulations in the past, both of them were forced to somehow restrict it, but now, since the market has become a lot more free they’re starting to allow all companies to offer at least some kind of promotions.

The main difference is in the size of the bonus. CySEC brokers tend to give out smaller bonuses due to financial restraints, but the fact is that smaller bonuses are much more popular.

FCA bonuses tend to be much larger, but not as popular with local traders as almost all of them are already experienced, and those who are beginners tend to not want that much given to them, as reaching withdrawal requirements is much harder.

Withdrawals speed

And finally, the biggest difference between FCA and CySEC regulated brokers is the speed at which they can process withdrawal requests. With FCA licensed companies, it’s prohibited to inhibit the withdrawal process, meaning that the broker can’t block it or delay the withdrawal, it needs to be processed immediately.

With CySEC licensed brokers though, they have the freedom of keeping the request is pending for as long as they want, sometimes even months.