Cyprus is the largest home base in Europe for investment firms providing cross-border services to retail clients, according to a new report by the European Securities and Markets Authority (ESMA).

The report, published this week and covering activity in 2024, examines the cross-border provision of investment services across the European Union and the European Economic Area. ESMA identified 370 investment firms and credit institutions that provided services to more than 50 retail clients in at least one host country, serving a total of 10.5 million cross-border retail clients. This represents a 32% increase compared with 2023.

Among all EU and EEA jurisdictions, Cyprus hosted the highest number of firms active in cross-border retail services. According to ESMA data, 79 Cyprus-based firms operated across borders in 2024, accounting for 21% of all such firms in Europe. Luxembourg followed with 55 firms, while Germany ranked third with 47.

Cyprus’ position is even more pronounced in terms of client numbers. Firms domiciled in Cyprus reported serving approximately 3.6 million retail clients outside their domestic market in 2024, representing around 34% of all cross-border retail clients in the EU and EEA. This figure increased from roughly 3.4 million clients in 2023.

Alongside Lithuania, Germany and Ireland, Cyprus formed part of a small group of jurisdictions accounting for about 86% of all cross-border retail clients in Europe.

The geographic reach of Cyprus-based firms is also notably wide. ESMA found that, on average, investment firms provided services in 17.5 other EU or EEA countries. At least one Cyprus-based firm reported offering services to retail clients in every other EU and EEA member state, making Cyprus the only jurisdiction where this was observed.

While Cyprus serves as a major “home” country for investment firms, the largest destination markets for cross-border retail clients remain Europe’s biggest economies. Germany was the single largest host market by client volume, followed by France, Spain and Italy. Together, these four countries accounted for more than half of all incoming cross-border retail clients in 2024.

The expansion of cross-border activity has been accompanied by a rise in complaints. Across the EU and EEA, complaints related to cross-border services increased by 46% year-on-year to 10,968 in 2024. Firms based in Cyprus accounted for 1,103 of those complaints, or around 10% of the total, placing Cyprus behind Germany, Lithuania and Ireland in absolute complaint numbers.

However, ESMA notes that the increase in complaints broadly mirrors the growth in the number of retail clients. When measured relative to the expanding client base, the complaint rate rose more moderately, from 94 to 104 complaints per 100,000 retail clients, an increase of approximately 9.6%. The authority also cautions that complaint data is not fully comparable across jurisdictions, as the definition of a complaint is broad and applied differently by firms.

For Cyprus-based firms, complaints were spread across several categories, including administrative and customer service issues, fees and charges, withdrawals, and market-related concerns. A sizeable “other” category was also recorded, covering issues such as copy trading practices or potential greenwashing-related complaints.