The Chairwoman of the Cyprus Securities and Exchange Commission (CySEC), Demetra Kalogerou has shared with Cypriot newspaper Cyprus Mail that the ban of 24option in France has been over a marketing message that is two sentences long. The Autorité des Marchés Financiers (AMF) has classified the advertising practices of the binary options brokerage as sufficient ground to ban the firm from operating on the French market.
The CySEC has been on numerous occasions issuing circulars to advise firms about marketing messages that are not in adherence with the rules and regulations. Back in January the Cypriot regulator has fined 24option €156,000, but the French authorities have decided to take their own penalizing measures.
Kalogerou highlighted in her interview that the French ban of the binary options brokerage is the first case when a Cyprus-based company is denied access to any of the European markets. She told the Cyprus Mail, “This decision was made over two sentences of promotional text on the company’s French website, which were deemed misleading, plus a single complaint out of some 10,000 clients.”
CySEC Should Get Worried
We are not aware what is the number of complaints in France that are related to single brokerages, however according to the AMF Ombudsman service report from 2015 a total of 194 complaints were registered against companies that are regulated by CySEC. The chairwoman of the CySEC should be rather worried that 85 per cent of complaints registered with the AMF ombudsman are associated with Cypriot firms.
It’s a challenging field that requires a lot of monitoring and oversight
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The message by French authorities has been very clear – and if the CySEC doesn’t do enough to strictly supervise its regulated entities other European markets could follow suit and eventually render the Cypriot license irrelevant.
CySEC is regulating 230 companies according to the interview. Mrs Kalogerou should rather focus on the effectiveness of the watchdog’s policing efforts. Calling Cyprus a “forex hub” is easy now, but this status can just as easily be dispelled as the license passporting rules for the European market are holding the key to this status.
Commenting on the matter, a CySEC spokesperson said, “Following the launch of the Supervisory Action Plan in mid-2015 into those forex and binary options trading firms identified as posing a high-to-medium risk to the investor, where material non-compliance has been found following close supervision and on-site inspection, over €2 million in fines and 11 license suspensions or outright withdrawals have been issued.”
“CySEC’s message to both firms and investors is clear: those regulated firms looking to cheat the law have no place in Cyprus,” the spokesperson elaborated.
With a number of other regulatory destinations such as Estonia and Bulgaria making ground in recent months, CySEC has to step up its game in order to maintain its status.
Mrs Kalogerou did conclude the interview with Cyprus Mail by elaborating on the forex and binary options industry’s regulatory status, “It’s a challenging field that requires a lot of monitoring and oversight.”