Retail leverage on EURUSD is capped at 30:1 under both regimes. Negative balance protection is mandatory under both. Trading bonuses are banned under both. If you are comparing the UK's Financial Conduct Authority with the Cyprus Securities and Exchange Commission on the product a client sees, you will find almost nothing to separate them. The separation happens everywhere else: in the market you are allowed to address, in the capital that has to sit idle, and in what an audit costs you every year for the life of the firm.
Same origin, different maintenance
Both rulebooks grew out of MiFID II. Cyprus implements it as an EU member state, and the UK onshored the whole body of it at the end of the transition period before starting to edit it. That shared parentage is why the conduct requirements rhyme: best execution obligations, client categorisation, product intervention on contracts for difference, appropriateness testing for complex instruments. A compliance manual written for one is recognisable to a reviewer at the other.
Where they part company is direction of travel. CySEC firms inherit every new EU file automatically, and the queue is long. UK firms follow the FCA's own consultation cycle instead. Neither path is lighter. They just demand attention at different moments, which matters if your compliance function is one person and an external consultant rather than a department.
Passporting is the real decision
A Cyprus Investment Firm can notify into the other EEA states and sell across the bloc on a single authorisation. That is the reason so many retail brokers picked Cyprus in the first place, and it survives intact. One application, one supervisor, twenty-nine markets addressable on paper.
The FCA licence lost that in 2021. A UK firm wanting German or Italian clients now needs a separate EEA entity or a local permission, which means a second capital pot, a second board and a second set of returns. What the FCA licence buys instead is the UK retail market, which is large, English-speaking and comfortable with CFD products, plus a supervisory brand that banks and payment providers recognise without a call. Anyone who has tried to open a corporate account for a newly licensed broker knows how much that recognition is worth.
The temptation, at this point, is to run EEA marketing from a UK entity and call every inbound client reverse solicitation. That works when the client genuinely arrives unprompted. It does not survive a Meta ad set targeted at Milan.
Reverse solicitation is a narrow exemption, not a distribution strategy. If you advertise into a market, you are soliciting in that market, and the local regulator will read your ad library the same way you would.
What it costs before revenue
Capital is set by the permission you ask for rather than by the flag. A firm that deals on own account, which is what any quote-driven broker is doing when it fills a client internally, sits in the top band. A matched-principal or agency model sits lower. The gap between those bands is large enough that it should shape the business model rather than follow it. We wrote more about the wider bill in broker licence costs compared.
| Dimension | FCA (United Kingdom) | CySEC (Cyprus) |
|---|---|---|
| Market reach | UK retail and professional | EEA via passporting notification |
| Substance expected | UK-resident senior managers, real UK office | Local directors, physical Cyprus office and staff |
| Individual accountability | Senior Managers and Certification Regime | Named executives and control functions |
| Compensation scheme | FSCS, up to £85,000 per eligible claim | Investor Compensation Fund, up to €20,000 |
| Retail leverage cap on majors | 30:1 | 30:1 |
Timelines are the other cost, and they are rarely quoted honestly. Neither regulator starts the clock until the file is complete, and a file is not complete because you submitted it. Expect months of back and forth on the business plan, the risk model, the outsourcing arrangements and the identity of the people running the firm. Budget salaries for that entire period.
What a client actually receives
Both regimes require client money to be held apart from the firm's own funds, reconciled daily, and placed with credit institutions the firm has assessed. The mechanics matter more than the label, and we set them out in client fund segregation. Both require the firm to publish execution quality information and to be able to show why a fill was reasonable, which is the practical meaning of best execution.
The compensation schemes differ in size, and that difference is visible to any client who reads the small print. The FSCS limit is materially higher than the Cypriot fund's. For a client depositing four figures it changes nothing. For a firm chasing larger accounts it changes the sales conversation, and you should expect competitors to raise it.
How to choose without romance
Draw the client map first. If the answer is Germany, Spain, Poland and the Nordics, Cyprus is the cheaper route to all of them and the argument is close to over. If the answer is the UK, the FCA route is the only honest one, because the alternatives all involve pretending you are not marketing where you are marketing.
Then be candid about the operating burden. Transaction reporting, annual audits, capital adequacy returns, complaints handling and periodic reviews of every outsourced function run whether you have fifty clients or five thousand. Firms underestimate this consistently, then discover that the reporting they promised depends on data their systems never captured. It is worth checking early that your CRM and back office can produce the records a supervisor will ask for, which is one of the reasons our Broker CRM keeps an immutable audit trail on every client action.
And treat the licence as a floor, not a finish line. Both authorities publish public registers, both take enforcement action, and both expect a firm to keep proving it deserves the permission it holds. If you want the fuller picture of either regime on its own terms, start with the FCA licence explained and the CySEC licence explained.
"People pick a regulator the way they pick a car badge. Pick it the way you pick a warehouse: where are your customers, and what does it cost to stand there every month."
— Roman Onta, Executive Director, SINGUARD
Key Takeaways
- On the retail product itself the two regimes are close: 30:1 majors, negative balance protection, no bonuses.
- CySEC still passports across the EEA on one authorisation; the FCA licence buys the UK market and easier banking.
- Capital follows the permission you request, so decide whether you deal on own account before you decide on a jurisdiction.
- Reverse solicitation collapses the moment you advertise into a market you are not licensed to address.
Frequently Asked Questions
Is an FCA licence better than a CySEC licence?
Neither is better in the abstract. The FCA licence gives you the UK retail market and a brand that opens banking doors. The CySEC licence gives you EEA passporting from one application. The right choice depends on where your clients live and how much capital and time you can commit before revenue starts.
Can a CySEC broker still take UK clients after Brexit?
Not by passporting. UK access for an EEA firm now depends on a UK permission, a UK entity, or the narrow reverse solicitation route where the client approaches the firm entirely on their own initiative. Firms that rely on reverse solicitation while running UK advertising are taking a clear regulatory risk.
Do the FCA and CySEC apply the same leverage limits?
The limits are closely aligned in practice. Both regimes cap retail leverage at 30:1 on major currency pairs with lower caps on other asset classes, require negative balance protection for retail clients, and ban the trading bonuses that were common before 2018. Professional client status changes what a firm may offer, but the client has to qualify for it.