On 5 September 2025, the Cyprus Securities and Exchange Commission (CySEC) issued Regulatory Administrative Act (RAA) 270/2025, amending its National Product Intervention Measures (NPIMs) on Contracts for Difference (CFDs). The move reflects CySEC’s ongoing focus on investor protection, market stability, and alignment with EU supervisory standards.
- New CFD Leverage Restriction:
The amendment revises Annex I of Directive DI87-09 and introduces a 10% initial margin requirement (1:10 leverage) for CFDs where the underlying is:
- Any commodity, and
- Any stock index not expressly listed in the 1:20 leverage category (i.e. gold and major equity indices such as FTSE 100, DAX, S&P 500, etc.).
In practice, this ensures that all unlisted or exotic commodities and indices will now fall under the 1:10 leverage cap.
- Background (2019–2025 Framework):
Since 2019, CySEC has imposed permanent limits on CFD leverage for retail clients, aligned with ESMA’s measures:
- 1:30 – Major FX pairs
- 1:20 – Non-major FX pairs, gold, and major indices
- 1:10 – Other commodities and non-major indices
- 1:5 – Individual equities and other reference values
- 1:2 – Cryptocurrencies
The new amendment closes gaps by ensuring that any product outside the 1:20 category now defaults to 1:10 leverage, reducing scope for regulatory arbitrage.
While commodities (other than gold) and non-major indices were already capped at 1:10, there was scope for interpretation regarding new or unlisted products.
- Wider Regulatory Developments
Alongside the CFD amendment, CySEC continues to expand its supervisory agenda:
- Sanctions enforcement: A new framework strengthens compliance with EU and UN sanctions, including the creation of the National Sanctions Implementation Unit under the Ministry of Finance. Regulated firms must enhance monitoring, reporting, and internal controls.
- Capital adequacy: From early 2025, CySEC will apply EBA guidelines on the group capital test under the Investment Firms Regulation (IFR), clarifying requirements on capital, risk management, and governance. Low-risk firms may apply for reduced capital requirements, though CySEC retains the right to revoke permissions if conditions change.
- Forward-looking priorities: CySEC has signalled its focus on digital transformation, enforcement of upcoming MiCA (crypto-assets) and DORA (digital resilience) frameworks, and improving supervisory capacity. For 2025, its budget of €17.5 million will fund increased staffing and technology investments.
- What Investment Firms Shall Do
- CFD brokers: Adjust margin settings, review product catalogues, and update client agreements, risk warnings, and marketing communications to reflect the new leverage rules.
- All regulated firms: Ensure sanctions compliance frameworks are up to date and prepare for capital adequacy changes under the EBA guidelines.
- Compliance teams: Reinforce monitoring and staff training to align with CySEC’s stricter supervisory approach.
Although the amendment does not overhaul leverage rules, it represents a tightening of scope. By closing definitional gaps, CySEC has made clear that any retail CFD product not explicitly listed under higher categories will be restricted to 1:10 leverage.
This move signals CySEC’s intent to limit regulatory arbitrage and reinforce its reputation as a regulator aligned with the EU’s strictest investor protection standards.
How We Can Help
If your firm requires assistance in reviewing product offerings, updating margin settings, or aligning compliance documentation with the new directive, please contact our team of experts.
FiveComply can support you in navigating CySEC’s evolving regulatory framework.