iOption Cans CySec License Following Demise Of Firm Just Weeks After Registration

Cypriot regulator CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term has today announced that Scorpid Trading Ltd, which is the parent company behind the domains www.ioptioneu.com and www.easyinvest.eu, has renounced its authorization, and as a result, its regulatory standing with CySec is no longer in force as of today's date.

According to the regulator, the company informed CySec that it has settled all its obligations arising from the investment services provided via the domains www.ioptoneu.com and www.easyinvest.eu or/and activities that are terminated.

Whilst the reasons provided to CySec for terminating the license are indeed two acceptable circumstances as far as withdrawing a regulatory license is concerned, it can often be difficult to substantiate whether obligations have indeed been ratified.

Indeed, CySec granted iOption its CIF license in October, just a few weeks before the company closed its doors resulting in the immediate redundancy of its staff, which amounted to between 60 to 70 employees.

In order to investigate the surrounding circumstances of this apparently unorthodox exit from the market so soon after gaining a license, Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates spoke a Cypriot law firm which provides consultancy services to FX and binary options companies in Cyprus, along with assisting with establishing CySec licensing for newly established companies in the FX and binary options industry.

A senior lawyer from the firm explained to Forex Magnates that, "As far as I know, Scorpid voluntarily returned its CySEC license end of the year due to the fact that the company could not proceed with its business brand (iOption) for all the reasons you know and again as far as I know it has not gone bankrupt and its clients are getting paid. As far as IBs and affiliates, I have no idea."

He continued by reiterating the responsibilities which a firm must adhere to when withdrawing its license in that, "In every event, it is part of the license withdrawal process under CySEC for external auditors to confirm that the company has no obligations pending, before giving an all-clear to the shareholders."

The lawyer concluded that, "What you need to bear in mind here is that there is a huge difference between EU licensed and non-EU-licensed entities. EU-licensed entities cannot run from their obligations, and also have minimum capital which covers these, as long as the relevant contracts protect clients and affiliates for the claimed amount."

Whilst this is certainly correct in relation to the legal obligation of firms operating under CySec regulatory supervision, iOption, as with a great number of OTC retail binary options companies, was regulated by CySec and therefore bound by European law under MiFID, however it conducted the majority of its operations in Israel, which according to mainstream Israeli financial portal Calcalist, closed down and made its staff redundant in November.

Lawyer Indicates Possible Outstanding Commitments

Conversely, Advocate Tal Ron, Chairman of Tal Ron, Drihem & Company explained to Forex Magnates that "

"Many ex-employees of iOption have been distributed between several leading Binary Option companies, where 4 of those brands are clients of Advocate Tal Itzhak Ron of Tal Ron, Drihem and Co. Law Firm.""These particular companies/brands are operating binary options call centers in Limassol, Cyprus and in two cities in Israel, being Ramat Gan and Tel Aviv, and have absorbed 80% of ex-iOption employees" continued Mr. Ron.

He further explained that "these are all junior or senior employees (not partners or senior managers of the collapsed company), who joined those start-up and existing binary options brands as marketing, sales and retention personnel."

"Some of those ex-employees are acting against the former employee in legal proceedings to claim their losses. Other clients and IB’s who lost money are negotiating to receive part of the owed sums."

Advocate Moshe Ben Basat, Head of Civil and Commercial Law at Tal Ron, Drihem and Co. Law Firm, explained that "due to the fact that these funds are not guaranteed in any way, there is a limit of the effectiveness of these type of proceedings, where a company has lack of funds to pay its creditors. However, with respect to Israeli ex-employees, the government national insurance may reimburse the employees for certain sums."

Indeed, capital adequacy requirements are stipulated by CySec, which in monetary terms equate to 730,000 euros net capital in accordance with the minimum required under MiFID rulings, however, a very popular modus operandi among companies based in Cyprus which was uncovered during the Cypriot banking crisis in March last year, is that the majority of the firms keep their funds, whether operating capital or net capital required by the regulator, outside Cyprus in bank accounts which are located in other jurisdictions, thus drawing into question the means by which the European authorities can go about recovering any outstanding obligations to clients or employees if funds are not held in an area over which CySec has any regulatory presence.

The Cypriot financial watchdog issued a further statement which slightly confuses the matter. They state in an official notification that: "iOption Global Group 2012 Ltd under its website: (https://www.ioption.com)" has never been regulated by the commission.