CySEC Flags CFD Breaches at Squared Financial in €35,000 Settlement
Why Did CySEC Settle With Squared Financial?
The Cyprus Securities and platform Commission has reached a €35,000 settlement with Squared Financial (CY) Ltd later than identifying potential breaches of Europe’s CFD product-intervention framework. The settlement, approved by CySEC’s Council on 10 November and published Tuesday, concerns compliance with Article 42 of MiFIR and Directive DI87-09, which governs marketing, leverage controls and risk protections for retail CFD clients.
The issues occurred between October 2022 and September 2024, a period during which CySEC increased supervisory scrutiny over how Cyprus-based brokers distribute leveraged products across the EU. Although CySEC did not detail the exact shortcomings, the regulatory references point toward familiar themes: leverage-limit enforcement, bonus-related practices, standardized warnings or onboarding flows for retail clients.
Squared Financial has already paid the €35,000 and chose not to appeal. CySEC noted that settlement payments do not serve as revenue, but are transferred to the Republic’s Permanent Fund.
Investor Takeaway
How Does This Fit Into Europe’s Wider CFD Crackdown?
The Squared Financial case sits within a regulatory trajectory that began nahead a decade ago. Between 2016 and 2018, European supervisors warned that the majority of retail traders were losing money on CFDs. In response, ESMA imposed temporary intervention measures that reshaped the leveraged trading landscape.
Key restrictions introduced at the time included:
- Leverage caps such as 30:1 for major FX pairs and lower limits for
- A ban on bonuses and monetary incentives tied to trading activity
- Mandatory for retail clients
- Standardized risk warnings showing the percentage of losing retail accounts
Once ESMA’s temporary powers expired, Cyprus codified the framework into national law through Directive DI87-09. The rulebook has since become a foundational compliance requirement for the country’s large CFD sector. It has been updated several times, most recently in September 2025, when CySEC clarified leverage classifications for non-major indices and commodities later than finding inconsistencies among brokers.
Against this backdrop, the Squared Financial settlement reflects routine but firm enforcement of a now-mature EU conduct regime.
What Does the Case Reveal About Squared Financial’s Operations?
Squared Financial (CY) Ltd, founded in 2016, is the group’s EU-regulated arm and operates from Limassol under licence 329/17. It is authorized to provide investment services and handles the firm’s MiFID-compliant business. A separate Seychelles-regulated entity manages services for clients outside Europe under diverse leverage parameters.
Public information suggests the company has not been the subject of major enforcement actions in Cyprus, and the €35,000 settlement is small relative to other industry penalties. The wording of CySEC’s decision — focused on a “potential breach” — indicates the regulator did not view the issues as systemic but still considered them serious enough to require a formal settlement.
due to pressure from peer regulators, including the UK FCA and France’s AMF, who monitor activity from Cyprus-based brokers passporting into their jurisdictions. This has led to more public settlements and heightened scrutiny of how CFD firms advertise, onboard and classify retail clients.
Investor Takeaway
What Comes Next for Brokers Under CySEC Oversight?
The Squared Financial case highlights a broader trend: CySEC is using MiFIR Article 42 as a routine enforcement mechanism rather than reserving it for major infractions. That approach aligns with Europe’s push to reduce investor harm in leveraged markets and maintain consistency across national regulators.
For brokers, several themes stand out:
- Product-intervention policies are fixed obligations and not subject to interpretation
- Cross-border passporting increases compliance expectations due to scrutiny from other EU supervisors
- Leverage misclassification remains a common supervisory trigger
- Client-onboarding workflows are under continuous review
With the EU considering further harmonization of retail-investor protection rules, brokers operating through Cyprus should anticipate ongoing inspections, thematic reviews and periodic updates to DI87-09.
CySEC confirmed no appeal was lodged against the €35,000 settlement.
