Consob, the Italian securities regulator, today ordered 24Option (operating via CySEC licensed Rodeler Limited) to cease operations in the country.
According to a statement on the watchdog’s website, the company is not allowed to solicit or take on new clients from Italy anymore, while relations with the existing clients must be terminated, and they must be allowed to close their positions and withdraw their funds.
Finance Magnates reached out to 24Option for additional comment, but the company was not available at the time of publication.
The clampdown includes the following internet domains related to the company:
Capitalise Appoints William Klippel as its Head of SalesGo to article >>
24Option was banned for not being able to comply with specific regulations. The ban was noteworthy as it was the second instance of a Cyprus-based company being denied access to the Italian market.
The company has also violated the EU directive that mandates negative account protection, ensuring that customers can’t lose more than their trading stake.
24Option is now barred from providing investment services in Italy. The decision also prevents the Cypriot intermediary from soliciting customers or continuing its current relations with Italian clients.
The financial watchdog clarified that it made the latest decision under the article 7-quarter, paragraph 4 of the Consolidated Law on Finance (TUF), as well as article 86 of Mifid2. This legislation allows CONSOB to order investment firms and brokers operating in the country from another EU member state, through the EU passporting regime, to cease their operations after informing the competent authority of the member state.
The Consob statement further reads:
“The prohibition was justified by several complaints forwarded, even recently, to Consob by Italian investors, describing serious irregularities made by the Cypriot intermediary. The complaints forwarded by the investors include, among other things, activities related to Contracts for Difference (Cfd), financial instruments on which Consob – in compliance with similar measures already adopted by ESMA, the European Authority on financial markets – already intervened on last 20 June 2019, restricting the marketing of Cfd in Italy to retail investors in compliance with the product intervention’s rules.”
Founded in 2009, 24Option had been one of the leading and longest-running binary options brokers until it has switched gear in 2018 and focused their offerings completely on the CFDs and Forex markets. Although it decided to leave such a product behind, certain countries have altered trading communities against 24Option’s operations.
The French regulator banned traders from trading with 24Option in August 2016, after the AMF determined the company was providing binary options services to French clients. The watchdog, however, waived the prohibition after 24option had taken measures to remedy the situation, namely marketing only trading products allowed in France.
CONSOB has been amongst the most vigilant and strict regulators in Europe when it comes to dealing with leveraged trading. Earlier this month, it has put a blanket ban in place against activities of Hoch Capital Ltd, also a CySEC licensed Forex & CFD broker.