30 May 2019



On the 30th May 2019 The Cyprus Securities and Exchange Commission (CySEC”) issued a consultation paper on the imposition of National Permeant Measures in Relation to the Marketing, Distribution and Sale of Contracts for Differences “CFDs” in line with the European Securities and Markets Authority’s (‘ESMA’) temporary intervention measures – which are due to lapse in July 2019.

New Measures

The measures which are subject of CySEC’s consultation, include:

Furthermore, CySEC proposes that a risk-based approach governing leverage restrictions on CFDs to proportionately address the risks arising from leverage. Further, CySEC is proposing to introduce stricter leverage limits for retail clients falling within the ‘grey area’ of the target market, and affording slightly higher leverage limits for retail clients falling within the upper tier of the positive target market.

Proposed Leverage Limits

Retail clients falling within the “grey” target market (neither negative nor positive) will have extra protective measures via increased leverage limits:

Retail clients falling within the positive target market will be subject to the same leverage limit as under ESMA’s measures, except for the case of CFDs on crypto assets:

Retail clients falling within the upper tier of positive target market, subject to the satisfaction of customer due diligence and client suitability tests, will be able to access higher-yield trading strategies under slightly increased leverage limits:

In determining the suitability of CFD products during the customer due diligence process, each retail client must be categorised by the Cyprus Investment Firm either ‘positive’ or ‘negative.’ Retail clients who fall in the ‘grey’ area of target market (fit neither within the positive target market nor within the negative target market) could be vulnerable to being offered leverage that exceeds their knowledge, financial position and risk appetite, therefore will be imposed with stricter leverage rules.

CySEC have however included a proposed minimum criteria that a retail client would need to fall within in order to qualify for the upper tier of positive target market by falling within at least one of the following criteria

  1. The gross annual income of the client, is no less than €40,000; and/or,
  2. The net liquid[1] assets of the client are at least €200,000; (net liquid assets meaning liquid assets – current labilities) and,
  3. The client has carried out transactions, in significant size, in relation to CFDs at an average frequency of 10 per quarter over the previous four quarters.


There will be a requirement for the Cyprus Investment Firms to collect supporting evidence from the retail clients in order to reasonably confirm their trading experience and unless the specific retail client explicitly requests such evaluation and meets the respective criteria.


In light of the abovementioned new proposals, CySEC have further specified that organisations may submit their comments/opinions regarding the consolation paper to CySEC on or before 14th June 2019.


For more information please contact


Andrea Stefani


Head of Financial Services and Capital Markets


[1] Liquid Assets are assets that: a) are readily convertible to cash within one month; and b) have not been invested in speculative positions.

Liquid assets that are acceptable under CySEC Consultation Paper include cash and readily realisable investments. Depending of their liquidity readily realizable investments may include for instance: a) a unit in a regulated collective investment scheme; b) a government or public security denominated in the currency of the country of its issuer; c) any other security which is:

(i) admitted to official listing on an exchange in an EEA State; or
(ii) regularly traded on or under the rules of such an exchange; or
(iii) regularly traded on or under the rules of a third country exchange;