The Cyprus Securities and Exchange Commission (CySEC) has announced on Thursday that it has recalled the partial suspension of CIF licenses of two forex brokers – F1 Markets and Magnum FX (Cyprus).
The Cypriot regulator suspended the licenses of both the forex brokers, along with two others, at the beginning of this month for 30 days upon the request of its counterpart in the United Kingdom.
The Financial Conduct Authority (FCA) flagged these brokers for operating in the country without any authorization and ordered them not to take new clients in the country and must terminate relations with the existing clients.
The UK watchdog also alleged that neither of these firms provided customers with sufficient information as to the nature of CFDs products, while some were pressured into making highly leveraged-bets in CFDs referenced cryptocurrencies, forex, shares, and indices.
The Participants in Forex Trading and their Role in the MarketGo to article >>
Complying with regulatory needs after a blow
For the two brokers, the CySEC had withdrawn the suspension within 15 days, but for the other two – Hoch Capital and Rodeler – it did not update anything, meaning the license suspension might remain for the whole month.
According to CySEC, both the greenlighted brokers have stopped accepting and onboarding new clients; have stopped all marketing and promotion of its services; and assigned to its internal auditor the assessment of its compliance with Article 9 of the Directive 87-05 and the submission of weekly reports to the CySEC.
Both the brokers also assured that they will put in escrow with internal auditors, which will be utilized to resolve existing open client complaints and intend to make changes in its organizational structure and more specifically, to replace members of their management.
The original license suspension detailed that if any of the four brokers failed to take the proposed measures, they might face additional measures including fines or even withdrawal of their licenses.
Earlier this week, another three Cyprus-based brokers decided to terminate their UK operations, but it was not clear whether these companies gave up passporting rights voluntarily or underpressure of the CySEC.