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CySEC Crosses Three Brokers off the Investor Compensation Fund

by Damian Chmiel
  • Companies had previously surrendered their CIF licenses.
  • The clients still have the opportunity to apply for potential compensation.
CySEC
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The Cyprus Securities and Exchange Commission, CySEC , has withdrawn the Investor Compensation Fund (ICF) membership from three ex-Cyprus Investment Firms (CIFs), including Inveza Capital Ltd, F1Markets Ltd and FF Simple and Smart Trades Investment Services Ltd.

CySEC Withdraws Investors' Compensation Fund Membership of Three Companies

According to CySEC's press release published on Monday, the Investors Compensation Fund has removed three businesses providing services to retail investors from its list of members. Earlier, the CIF licenses of all three companies were withdrawn.

Inveza Capital has decided to 'expressly renounce' its license in December 2022, CySEC officially announced over a month ago. A few days earlier, it reported a similar decision by F1Markets Ltd and FF Simple and Smart Trades Investment Services Ltd.

"The loss of ICF membership status does not mean loss of rights of covered clients to receive compensation in relation to investment operations carried out until the loss of membership status if the conditions for compensation are fulfilled pursuant to the Directive, nor does it obstruct the initiation of the compensation procedure for covered clients," CySEC commented in the written statement.

Inveza, which provided investment services through its website inveza.com, has been a CySEC-regulated entity since 2013. Previously, it operated under the names NFX Capital Cy Ltd and Vinst Capital Limited. Meanwhile, FF Simple and Smart Trades Investment Services controlled at least two brands, Toro Invest and TradoCenter, offering margin trading to retail and professional clients.

F1Markets and Controversial Conduct

On top of that, F1Markets operated several different brokerage brands, including Investous, 24CM and EuroPrime. However, the activities of this particular broker were not without controversy. Its services were flagged multiple times for compliance lapses, and the company has faced enforcement actions.

In August last year, F1Markets settled with the Cypriot regulator, paying €150,000 for multiple potential breaches of local regulations, following a regulatory assessment of the company's compliance efforts to meet the terms of its partial suspension and other corrective actions taken between June 2019 and July 2020.

CySEC Reviews 2022

The Cypriot financial market watchdog has summarized the previous year and announced that it had supervised 837 regulated entities at the end of 2022. Furthermore, the regulatory body disclosed that it will extend its supervisory scope to include crowdfunding service providers and personal pension products.

The number of regulated firms grew by 3.9% compared to 806 in 2021. Moreover, CySEC has around 100 new license applications under consideration, marking a 12% increase from 2019 figures before the outbreak of Covid-19.

The report stated that in 2022, CySEC granted licenses to 86 entities across different supervised categories. However, the regulatory body rejected six applications for CIFs licenses, while an additional 15 applications were withdrawn, comprising both CIF and collective investment license applications.

CySEC's Supervision Department carried out various reviews, including 359 remote, thematic, and on-site inspections on CIFs in 2022. During this period, the department monitored compliance with the reporting transaction and derivatives contracts regulations.

Moreover, CySEC bets on education to improve investors' understanding of market risks and increase their confidence in making independent investment decisions. A recent study conducted by CySEC found that a significant number of investors (33%) depend on financial influencers' (finfluencers) recommendations to make their investment decisions. Furthermore, the survey revealed that 26% of investors in Cyprus had invested more than they could afford to lose.

The Cyprus Securities and Exchange Commission, CySEC , has withdrawn the Investor Compensation Fund (ICF) membership from three ex-Cyprus Investment Firms (CIFs), including Inveza Capital Ltd, F1Markets Ltd and FF Simple and Smart Trades Investment Services Ltd.

CySEC Withdraws Investors' Compensation Fund Membership of Three Companies

According to CySEC's press release published on Monday, the Investors Compensation Fund has removed three businesses providing services to retail investors from its list of members. Earlier, the CIF licenses of all three companies were withdrawn.

Inveza Capital has decided to 'expressly renounce' its license in December 2022, CySEC officially announced over a month ago. A few days earlier, it reported a similar decision by F1Markets Ltd and FF Simple and Smart Trades Investment Services Ltd.

"The loss of ICF membership status does not mean loss of rights of covered clients to receive compensation in relation to investment operations carried out until the loss of membership status if the conditions for compensation are fulfilled pursuant to the Directive, nor does it obstruct the initiation of the compensation procedure for covered clients," CySEC commented in the written statement.

Inveza, which provided investment services through its website inveza.com, has been a CySEC-regulated entity since 2013. Previously, it operated under the names NFX Capital Cy Ltd and Vinst Capital Limited. Meanwhile, FF Simple and Smart Trades Investment Services controlled at least two brands, Toro Invest and TradoCenter, offering margin trading to retail and professional clients.

F1Markets and Controversial Conduct

On top of that, F1Markets operated several different brokerage brands, including Investous, 24CM and EuroPrime. However, the activities of this particular broker were not without controversy. Its services were flagged multiple times for compliance lapses, and the company has faced enforcement actions.

In August last year, F1Markets settled with the Cypriot regulator, paying €150,000 for multiple potential breaches of local regulations, following a regulatory assessment of the company's compliance efforts to meet the terms of its partial suspension and other corrective actions taken between June 2019 and July 2020.

CySEC Reviews 2022

The Cypriot financial market watchdog has summarized the previous year and announced that it had supervised 837 regulated entities at the end of 2022. Furthermore, the regulatory body disclosed that it will extend its supervisory scope to include crowdfunding service providers and personal pension products.

The number of regulated firms grew by 3.9% compared to 806 in 2021. Moreover, CySEC has around 100 new license applications under consideration, marking a 12% increase from 2019 figures before the outbreak of Covid-19.

The report stated that in 2022, CySEC granted licenses to 86 entities across different supervised categories. However, the regulatory body rejected six applications for CIFs licenses, while an additional 15 applications were withdrawn, comprising both CIF and collective investment license applications.

CySEC's Supervision Department carried out various reviews, including 359 remote, thematic, and on-site inspections on CIFs in 2022. During this period, the department monitored compliance with the reporting transaction and derivatives contracts regulations.

Moreover, CySEC bets on education to improve investors' understanding of market risks and increase their confidence in making independent investment decisions. A recent study conducted by CySEC found that a significant number of investors (33%) depend on financial influencers' (finfluencers) recommendations to make their investment decisions. Furthermore, the survey revealed that 26% of investors in Cyprus had invested more than they could afford to lose.

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