Putting Cyprus on the Global Financial Map
David Zruia, Group CEO at Plus500, explains why Cyprus is considered a unique business platform that offers reassurance to investors, while also noting the great potential he sees in developing the country’s R&D and fintech sectors.
What were the reasons behind your decision to invest in Cyprus through Plus500CY?
There are many reasons why Plus500 decided to start operations in Cyprus in October 2014. These include the favourable business culture on the island, the high calibre of the people that it is able to employ, the country’s advanced technical infrastructure and the excellent reputation of the local regulator, CySEC. As an EU and eurozone member, Cyprus offers a transparent legal system, a stable political system and access to European markets. Together, these factors have put Cyprus on the European and global financial map. Through CySEC, the island has a well-regulated industry, which further enhances the reputation of its Financial Services landscape, reassures investors using its services, and renders Cyprus a unique business platform and investment destination. Cyprus has demonstrated time and time again that, even after difficult events in its history, it has the determination and the ability to bounce back. The resilience of the Cypriot people and its state bodies and institutions, such as the Ministry of Finance and CySEC, have sustained and boosted the country’s financial services sector. This is why so many investors and multinational companies continue to choose Cyprus as the place to either set up or expand their global operations.
What are the challenges you faced when starting the procedure for a new company in Cyprus in 2014? How have things changed since then?
Plus500CY was established in 2014 as the Plus500 Group’s Cyprus-based regulated subsidiary, within the framework of the Group’s aim to further expand our European presence. The Group already maintained our subsidiary in the UK, licensed and regulated by the FCA, and was therefore familiar with the MiFID requirements for the operation of an investment firm. At the time when Plus500CY was being established, the financial services sector in Cyprus was already at an advanced and sophisticated level, with a competitive business environment that rendered the country a hub for international investors. Cyprus was, therefore, already in a position to offer foreign investors the necessary infrastructure for the successful setting up of an investment firm. In addition, the procedure for obtaining a licence from CySEC was well organised and transparent. Since the establishment of our operations in Cyprus, we have observed CySEC’s ongoing evolution in exercising an active and effective supervisory role for the financial services industry.
When setting up the Cyprus office, Plus500 paid particular attention to recruiting the right candidates for each position, sourcing experienced and well-qualified staff who also displayed the necessary work ethic and integrity, so that they could ultimately become part of the Plus500 family. In terms of the changes we have observed since the establishment of Plus500CY, the most noteworthy would be the changes to the regulatory framework that have come into force since the adoption of MiFID II, which significantly boosted client protection but also gave ESMA its intervention powers. Furthermore, we are observing that, although MiFID II aims to establish a level playing field across the EU, some national regulators are deviating from this approach by introducing their own different requirements. This has created a need for firms to closely monitor developments and updates at the national level in the countries where they operate, in addition to monitoring the developments from CySEC and at the European level.
The online trading industry in Cyprus has grown significantly in recent years. Do you expect this rising trend to continue or do you see any restraining factors?
The financial services industry is currently facing radical changes on multiple fronts, including the expansion of innovative technologies, as well as regulatory updates that have influenced and continue to shape the landscape of the sector. The development of a regulatory framework that upholds client protection is a core aspect of facing the challenge to restore the trust of online investors and it requires a high level of commitment from firms. At the same time, future growth and longevity requires investing in innovation in the areas of technology, marketing and the diversification of the product portfolio. Plus500 is in a strong position to adapt successfully to the challenges on all these fronts.
The Group’s Parent company, Plus500 Ltd, is listed on the London Stock Exchange and in 2018 joined the UK FTSE 250 index of leading mid-cap listed companies. As a public company, Plus500 has a deep commitment to the principles of transparency, accountability and good governance that form the pillars of our regulatory compliance programme. Plus500 maintains the necessary infrastructure in terms of technology, human resources and partnerships to respond effectively to evolving regulatory demands. Plus500 was founded on the pillars of technology and innovation and we have emerged as a global multi-asset fintech group, supported in particular by further investment in our market-leading proprietary technology platform and the continued execution of targeted acquisitions. In 2021, Plus500 established a new R&D centre in Tel Aviv, as part of our plans to invest approximately $50 million over the next three years to boost our R&D capabilities. We are investing in targeted marketing technology initiatives, as well as in artificial intelligence and big data projects, to further drive customer acquisition and retention. Furthermore, we have achieved great milestones in the diversification of our portfolio with the acquisition of Cunningham, a regulated Futures Commission Merchant, and CTS, a technology trading platform provider in the US, to broaden our product portfolio into futures and options on futures. In Europe, we launched ‘Plus500 Invest’, our new share dealing platform, across a wide range of financial instruments. Both projects will help us grow and expand our overall business in the near future.
What is the overall perception of Cyprus by Israeli businessmen and investors in terms of doing business in the country?
Cyprus offers a business-friendly environment, with a transparent and reliable legal system, qualified and experienced human resources, consultants and legal advisors. Furthermore, Cyprus’ geographical and cultural proximity to Israel is an added advantage in terms of convenience.
In which areas do you believe Cyprus needs to improve in order to attract more investors from Israel, either through headquartering or relocation of companies?
Cyprus is an established international business hub that has been attracting international investors for decades. As a regulated financial services firm that invests heavily in regulatory compliance, Plus500CY would like to keep seeing well-organised initiatives to clamp down on unregulated firms that are aggressively targeting unsuspecting investors. In order for such an effort to be successful, regulators and law enforcement agencies need to adopt new approaches, utilising available digital monitoring and detection tools.
How would you compare the financial services and tech landscape in Cyprus to that in Israel?
Israel has evolved into an established innovation centre for fintech, due in large part to its expertise in technology such as big data analytics, artificial intelligence and blockchain. Israel has a tradition of entrepreneurship, as witnessed by the large number of startups compared to the relatively small size of its market. Cyprus is also a small country with a great potential for developing its R&D and fintech sectors.