# European Forex Licence: MiFID II, Capital and Passporting

> A European forex licence is a MiFID II investment firm authorisation from one EU regulator, such as CySEC, which can then be passported across the EU. Initial capital is EUR 75,000, 150,000 or 750,000 by activity, with EUR 750,000 for dealing on own account. CySEC charges EUR 7,000 to apply. Retail CFD leverage is capped at 30:1 on major pairs. Most simulated prop firms hold none; ask a lawyer.

- Source: https://pipvalley.com/guides/european-forex-license
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-12

**Short answer:** A European forex licence is a MiFID II investment firm authorisation from one EU regulator, such as CySEC, which can then be passported across the EU. Initial capital is EUR 75,000, 150,000 or 750,000 by activity, with EUR 750,000 for dealing on own account. CySEC charges EUR 7,000 to apply. Retail CFD leverage is capped at 30:1 on major pairs. Most simulated prop firms hold none; ask a lawyer.

There is no single "European forex licence". A broker offering forex and CFDs to EU clients is an investment firm under MiFID II (Directive 2014/65/EU), authorised by the regulator of the member state where it is based. That authorisation can then be passported to other member states. This guide explains how it works, what it costs in capital and fees, and what EU rules mean for a prop firm, with sources checked on 12 October 2026.

> This guide explains how things generally work and what we have seen running prop firms. It isn't legal, tax or financial advice, and it doesn't create a lawyer–client relationship. Rules differ by country and change often, so speak to a qualified lawyer (and a tax adviser) in the jurisdiction concerned before you act.

## How does passporting work?

MiFID II Article 34 says a firm authorised and supervised in one member state "may freely provide investment services and/or perform investment activities" in others, "provided that such services and activities are covered by its authorisation", and that host states "shall not impose any additional requirements". The firm notifies its home regulator of the member state and a programme of operations. Article 35 adds the right to set up a branch or use a tied agent.

Passporting is why so many retail brokers chose Cyprus: one CySEC authorisation, then notifications for each country. Host-state marketing and consumer rules still apply, and the UK has been outside the passport system since Brexit, so UK clients need FCA authorisation; see our [United Kingdom page](/jurisdictions/united-kingdom).

## How much capital does an EU forex broker need?

The Investment Firms Directive (EU) 2019/2034, Article 9, sets initial capital by the services a firm provides. The services are numbered in Annex I of MiFID II.

- Capital is a floor, not a budget: own-funds requirements under the IFR can be higher.
- Bulgaria's Markets in Financial Instruments Act sets the same three tiers and gives its regulator six months to rule on a complete application.

**EU investment firm initial capital (Directive (EU) 2019/2034, Article 9; checked 12 October 2026)**

| Initial capital | Applies to | Typical forex or CFD broker |
|---|---|---|
| EUR 750,000 | Dealing on own account; underwriting or placing on a firm commitment basis | Market maker (B-book) or matched-principal broker (MiFID II treats matched principal as acting as principal) |
| EUR 150,000 | All other firms, including those holding client money | Agency broker that holds client money |
| EUR 75,000 | Reception and transmission, execution, portfolio management, advice and placing, where the firm may not hold client money or securities | Introducing or advisory firm without client money |

## What does a CySEC licence cost in fees?

CySEC's fee directive DI87-03 (unofficial English consolidation to March 2020) sets an application fee of EUR 7,000 for investment services 1–7, plus EUR 500 per ancillary service. Annual fees have a fixed part of EUR 5,000 to EUR 10,000 depending on the firm type, a turnover-based part above EUR 500,000, and a further fixed EUR 3,000 for firms providing services in CFDs, with a cap of EUR 150,000. CySEC's fees page lists an April 2023 amendment published only in Greek, so confirm current figures with CySEC or a Cypriot lawyer.

Time is the bigger cost. Salvus Funds estimated in March 2026 that a CySEC investment firm takes 12 to 16 months. For Cyprus company formation and tax, see our [Cyprus page](/jurisdictions/cyprus); for a side-by-side with offshore options, our [forex licence cost comparison](/guides/forex-license-cost).

## What retail CFD rules apply across the EU?

ESMA's 2018 measures capped retail leverage at "30:1 for major currency pairs; 20:1 for non-major currency pairs, gold and major indices; 10:1 for commodities other than gold and non-major equity indices; 5:1 for individual equities and other reference values; 2:1 for cryptocurrencies", with a 50% margin close-out, negative balance protection, limits on incentives and a standardised risk warning showing the provider's percentage of losing retail accounts. ESMA's own measures expired on 31 July 2019, but national regulators adopted them permanently; CySEC's version was confirmed in an ESMA opinion of September 2019.

Those rules shape a broker's website: the risk warning with the firm's own percentage, leverage by instrument, and limits on incentives for retail clients. Our [how forex brokers make money](/guides/how-do-forex-brokers-make-money) guide shows a broker's published loss percentage.

## Does a prop firm need a European licence?

Most evaluation prop firms do not hold one, because they sell simulated evaluations rather than investment services to clients. CySEC's chair said in July 2024 that prop firms would eventually face "a robust regulatory framework", and in June 2026 that ESMA "is not currently engaged in any substantive discussions regarding retail prop trading". ESMA's news releases from July to October 2026 contained nothing on prop trading when we read them.

That can change with the model. A firm that executes real client trades, holds client money, or markets in a way a regulator treats as promoting CFDs needs advice in each member state where it sells. Groups that want an EU brokerage arm sometimes take a stake in an existing licensed firm, as The5ers' founders did in Cyprus; see [forex broker licence for sale](/guides/forex-broker-license-for-sale). Start with [do prop firms need a licence](/guides/do-prop-firms-need-a-license) and the [forex launch page](/start-a-prop-firm/forex).

## How do you check a European broker's licence?

On the home regulator's register first: CySEC lists Cypriot investment firms and their cross-border notifications. ESMA runs a registers portal for EU-level data. A credible broker's website names the entity, its licence number and regulator, and links to the register; an evaluation brand in the same group should say plainly that it is a separate, unlicensed business selling simulated evaluations. PipValley builds that structure into every multi-entity site, from $3,500; see our [regulated prop firms](/guides/regulated-prop-firms) guide for the wording.

## Questions

### How much does a European forex licence cost?

Capital is the main cost: EUR 75,000, 150,000 or 750,000 by activity, with EUR 750,000 for dealing on own account. CySEC's application fee is EUR 7,000, plus annual fees from EUR 5,000 and EUR 3,000 extra for CFD providers. Staff, lawyers and audits cost more.

### Which EU country is best for a forex licence?

Cyprus is the most used for retail forex and CFD brokers because CySEC has a long track record with them. Other member states use the same MiFID II framework and capital tiers. Choose with a lawyer based on your clients, staff and timeline.

### Can one EU licence cover all of Europe?

It can cover the EU and EEA through passporting under MiFID II Articles 34 and 35, after notifying your home regulator. It does not cover the UK, which needs FCA authorisation, and local marketing rules still apply.

### How long does a CySEC licence take?

Salvus Funds estimated 12 to 16 months in March 2026. Bulgaria's law gives its regulator six months to rule on a complete application. Preparation, hiring and banking add time.

### Do EU prop firms need a MiFID licence?

Not for a purely simulated evaluation model as far as published regulator statements go, as of October 2026. ESMA is not discussing retail prop trading, per CySEC's chair. Real client trading or CFD promotion changes that; ask a lawyer in each market.

## Sources

- [EUR-Lex: Directive 2014/65/EU (MiFID II)](https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0065)
- [EUR-Lex: Directive (EU) 2019/2034 (Investment Firms Directive)](https://eur-lex.europa.eu/eli/dir/2019/2034/oj/eng)
- [ESMA: ESMA adopts final product intervention measures on CFDs and binary options (1 Jun 2018)](https://www.esma.europa.eu/press-news/esma-news/esma-adopts-final-product-intervention-measures-cfds-and-binary-options)
- [ESMA Opinion ESMA35-43-1982 on CySEC's CFD product intervention (27 Sep 2019)](https://www.esma.europa.eu/sites/default/files/library/esma-35-43-1982-_esma_opinion_under_article_432_mifir_cy_cfd.pdf)
- [CySEC: Directive DI87-03 on fees (unofficial consolidation to 26 Mar 2020)](https://www.cysec.gov.cy/CMSPages/GetFile.aspx?guid=80ccefe0-a712-401c-a857-6edbb3421a7e)
- [CySEC: Investment firms fees](https://www.cysec.gov.cy/en-GB/entities/fees/Investment-Firms-Fees/)
- [Salvus Funds: Establishing a CySEC investment firm in Cyprus in 2026 (12 Mar 2026)](https://salvusfunds.com/2026/03/12/establishing-a-cysec-investment-firm-in-cyprus-in-2026-2/)
- [Bulgaria FSC: Markets in Financial Instruments Act, English text (posted 7 Jul 2026)](https://www.fsc.bg/wp-content/uploads/2026/07/zpfi_sg_25_2026.pdf)
- [Finance Magnates: Prop trading will fall under robust regulation at some point, CySEC chair (Jul 2024)](https://www.financemagnates.com/executives/exclusive-prop-trading-will-fall-under-robust-regulation-at-some-point-cysec-chair/)
- [Finance Magnates: Prop trading slips down Paris' agenda as the US steps up (26 Jun 2026)](https://www.financemagnates.com/forex/prop-trading-slips-down-paris-agenda-as-the-us-steps-up/)
- [ESMA: News listing (read 12 Oct 2026)](https://www.esma.europa.eu/press-news/esma-news)
- [ESMA: Registers portal](https://registers.esma.europa.eu/publication/)
- [Finance Magnates: The5ers founders' CFD broker unit receives a Seychelles licence (Jun 2026)](https://www.financemagnates.com/forex/the5ers-founders-cfd-broker-unit-receives-a-seychelles-licence)