Regulatory authorities across the globe have been increasingly involved in ensuring that the FX industry is stringently regulated, and in doing so, often imposing very large financial penalties on transgressors.
Cyprus, being a region synonymous with a very large number of retail FX and binary options companies, has today dealt a mild €15,000 administrative penalty to binary options brand Zoompartners for operating in the jurisdiction without the appropriate licensing from CySec, as detailed in an announcement by the regulatory authority today.
A Fraction Of The Maximum Fine
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According to the announcement today by CySec, the company infringed Article 4 (1) of the Investment Services and Activities and Regulated Markets Law of 2007 by providing binary options contracts within the jurisdiction without a license, which was brought to the attention of the regulator by the nature of the company’s zoomtrader.com website on October 12, 2012.
CySec stipulates that the maximum financial penalty for violating this particular law is €350,000, however due to the “mitigating circumstances” that the company was acknowledged by CySec as “having taken measures to terminate these activities,” more than a degree of leniency has been extended to the company, with a final figure of €15,000 having been handed down.
Some retail forex companies which were issued with CySec licenses very recently have since demonstrated their wish to set aside greater net capital, and be regulated by the UK’s Financial Conduct Authority instead, which administers much higher penalties for transgressing its rules, and stricter, more bureaucratic client protection measures.
Perhaps the encouraging factor is that market participants in the retail FX industry are concerned with demonstrating credibility and reliable backing toward their clients, as well as from a commercial perspective, ability to obtain business-related services such as segregated bank accounts, in which to contain client funds being more accessible with licenses from other jurisdictions such as the UK or Australia, regardless of the considerably higher cost.