CySEC Updates CFD Restrictions to Enhance Retail Investor Protection

The Cyprus Securities and Exchange Commission (CySEC) has tightened its framework on contracts for difference (CFDs), introducing new restrictions that add to the measures already in place since 2019.

New Cap on Certain CFDs

The amendment introduces a 10% notional value cap on leverage for CFDs tied to specific commodities and stock indices that were not previously included under the rules. This effectively reduces the exposure that retail investors can take on these high-risk products. The directive is now in force following its publication in Cyprus Official Gazette.

According to CySEC, the move is intended to curb excessive risk-taking and strengthen safeguards for retail clients. The changes will operate alongside the 2019 framework, with the combined measures applying through 2025.

Investor Protection and Market Oversight

CySEC‘s Chairman, Dr. George Theocharides—who also chairs ESMA’s Risk Standing Committee—emphasized that the commissions focus remains on protecting investors and ensuring market stability. He noted that regulators are facing increasing demands driven by digital transformation and new European rules, such as MiCA for crypto assets and DORA for digital resilience.

CySEC currently supervises more than 830 entities. To meet its supervisory goals, the authority has earmarked a €17.5 million budget for 2025, aimed at boosting staff resources and investing in technology.

Sanctions and Compliance Requirements

The regulator has also strengthened its role in enforcing EU and UN sanctions. A new framework obliges regulated firms, including CFD brokers, to adopt stricter monitoring and reporting systems. Oversight will be supported by the National Sanctions Implementation Unit established under the Finance Ministry.

Capital Rules for Investment Firms

From early 2025, new European Banking Authority (EBA) guidelines will apply to Cyprus Investment Firms that provide FX and CFD services. These rules clarify how capital adequacy and governance requirements should be assessed under the Investment Firms Regulation. Firms deemed lower risk may qualify for lighter capital obligations, but CySEC retains authority to tighten or revoke permissions if circumstances change.

Closing Perspective

The latest amendments show CySEC positioning itself among the EUs stricter regulators by closing potential loopholes in CFD trading rules. With tighter leverage limits, enhanced sanctions oversight, and updated capital requirements, the regulator aims to reduce systemic risks while ensuring the retail market operates on safer and more transparent terms.