Dealing on own account: what a CySEC market-maker CIF costs

Cyprus law grants no numbered CIF licences. Section 6(1) of Law 87(I)/2017 says the authorisation specifies which investment services and activities it covers, and those come from the First Annex. The stale search-result taxonomy of "CIF 1", "CIF 2" or "Class 1/2/3 licences" conflates two things: the scope of the licence, a list of Annex items, and the prudential class, an IFR/IFD category that governs capital. They are not the same, and neither creates a named licence tier.

Dealing on own account is Part I, item 3 of that Annex. Execution-only firms carry items 1 and 2 - reception and transmission of orders, and execution of orders on behalf of clients. Item 3 is different in kind: the firm trades against its own capital. Section 2 defines a market maker as a person who holds himself out on a continuous basis as willing to deal on own account against his own capital at prices he sets. Add item 3 and the firm can be a market maker; it needs no separate market-maker authorisation.

Initial capital tracks the licence scope. Section 16 of Law 87(I)/2017 points to Article 9 of Law 165(I)/2021, the Cypriot transposition of the Investment Firms Directive, which mirrors IFD Article 9. A firm authorised to deal on own account, or to underwrite or place on a firm-commitment basis, needs EUR 750,000. A firm limited to reception and transmission, execution, portfolio management, advice or placing without firm commitment, and not permitted to hold client money or securities, needs EUR 75,000. Most other firms sit at EUR 150,000.

Two myths cluster around this number. The first is EUR 730,000 - a pre-IFD figure from the old CRD regime that competitor pages still print; the current instrument chain gives EUR 750,000. The second is that the capital is "frozen" in a Cypriot bank account. It is not: initial capital is regulatory own funds - CET1, Additional Tier 1 and Tier 2 per IFR Article 9 - not a blocked deposit. Nor does the floor fall away: the permanent minimum requirement in IFR Article 14 keeps own funds at or above the initial-capital figure for the life of the firm.

Prudential class is separate from licence scope, and it is where dealing on own account bites again. The IFR and IFD split investment firms into Class 2, the standard regime, and Class 3, a lighter regime for firms that are small and non-interconnected. IFR Article 12 sets the Class 3 thresholds, and two of them are hard zeros in practice for a market maker: daily trading flow and net position risk. A firm dealing on own account runs both above zero by definition.

So a market-maker CIF is always Class 2. That matters because the Class 3 regime skips the K-factor capital calculation entirely, while Class 2 firms must carry it. The permission that makes the business a market maker is the same one that denies it the lighter treatment - no own-account dealer qualifies as small and non-interconnected.

Ongoing own funds are not a single number. Under the IFR, a Class 2 firm must hold, at all times, the highest of three amounts: the fixed-overheads requirement (one quarter of the preceding year's fixed overheads, IFR Article 13), the permanent minimum capital (at least the initial capital, IFR Article 14), and the K-factor requirement.

For a market maker the K-factor total is rarely the smallest: own-account dealing switches on the risk-to-market and risk-to-firm K-factors that an agency broker never touches. Three attach directly to the firm's own book.

The market-maker permission also sets the annual fee. Directive DI87-03, as re-tiered by DI87-03(E) in 2023, keys the fixed annual fee to the firm's initial-capital category under Article 9 of Law 165(I)/2021. The EUR 750,000 category - the market maker's - pays the top fixed fee. One caution: the English consolidation of DI87-03 stops at 2020 and still shows the old tiers; the 2023 re-tier that abolished the EUR 5,000 bottom band is Greek-only as of July 2026.

The application fee is smaller and flatter. A CIF authorisation covering any of services 1 to 7 of the First Annex - dealing on own account included - is a single lump sum of EUR 7,000, not a per-item stack; ancillary services are EUR 500 each and an algorithmic-trading permission adds EUR 2,000.

The recurring cost is the one to watch. Annual fees fall due within four months of the financial year end, and non-payment suspends the CIF authorisation under section 71(6)(c) of Law 87(I)/2017 until the arrears are cleared.

The perimeter is moving. Law 183(I)/2025, gazetted on 17 October 2025, transposes Article 1 of Directive (EU) 2024/790 - the MiFID II review - and rewrites the definition of a systematic internaliser. The old quantitative thresholds are gone; the new definition is qualitative and limited to equity instruments. A firm falls in when it deals on own account by executing client orders outside a trading venue on an organised, frequent and systematic basis.

For an equities market maker that also fills client orders in-house, that is a live question: systematic-internaliser status brings its own pre- and post-trade transparency and reporting duties on top of the CIF licence. Law 183(I)/2025 was Greek-only when this was written, so treat the boundary as direction of travel and verify the enacted text before relying on it. If the firm's own-account book is in CFDs rather than cash equities, the equity-only redefinition does not reach it, though the CySEC product-intervention directives on CFDs and binary options do.

For a buyer, the arithmetic is the point: one item on the First Annex carries a EUR 750,000 capital floor, permanent Class 2 status with live K-factors, and the top annual-fee tier for as long as the firm holds the licence. That is why an already-authorised, operating entity can be worth more than a fresh application. SKY7's Cyprus lot, a turnkey CySEC CIF for sale, carries the dealing-on-own-account permission today; the acquisition runs through the section 12 change-of-control gate set out in our CySEC CIF licence guide.