The Cyprus Securities and Exchange Commission has today announced that it will hand out a small fine of €5,000 to DC Digital Processing 2 Ltd, a firm related to one of its Cypriot Investment Firms (CIFs), Novox Capital Ltd.
The tiny administrative penalty was related to a historical matter pertaining to the website optionbit.com belonging to a tied agent of the CIF license holder Novox Capital Ltd-which had to do with optionbit.com not yet being fully authorized to advertise its services within the republic of Cyprus, as per its website that CySEC referenced a snapshot from November 29, 2013 until December 2013.
Under the Novox Capital’s license, Optionbit.com offers a binary options service across several products and platforms, and has just received its authorization earlier in February of this year.
Basically, during that time, and as can be seen by cached versions of the site still available online (historical snapshots), the firm advertised its services yet hasn’t yet been regulated as the binary options industry has still been evolving in terms of regulatory applicability – yet nonetheless under the effect of applicable law (in Cyprus) as per CySEC, and with DC Digital Processing 2 Ltd listed as its owner (in the about us section from said snapshot excerpted from the end of 2012).
In February, Novox Capital Ltd was granted a CIF license by SySEC as an investment firm representing TRADOLOGIC, a brokerage technology provider specializing in binary options trading solutions to various of its white-label clients and brands.
Fine Related to 2012 Website Content Prior to Authorization
Forex Trading Disruptor Sees Growth Thanks to Offshore Regulated StatusGo to article >>
Forex Magnates has written about the trend of binary options brokers flocking to Cyprus for regulatory status in wake of a stream of unregulated providers that have been the subject of numerous regulatory warnings from other jurisdictions.
By becoming an established license holder in a given jurisdiction, like Cyprus, firms are able to help instill clients with the confidence normally associated with regulated companies – as opposed to when compared to an unregulated firm under far less supervisory mandates, if any.
The CySEC fine announced today was decided upon by the regulator on January 13th, 2014, before it had approved Optionbit under the CIF licenses of Novox Capital, and was on the absolute lower end of the spectrum in terms of how much the fine could have been under the applicable law pertaining to the regulation that CySEC cited in its announcement.
Size of Fine Indicative of Severity, or Lack Thereof
More specifically, the maximum administrative penalty for violations under Article 4, Article 141 of the Cypriot Law is capped at €350,000, and the €5,000 handed out in the announcement today shows that while the regulator thought the violation was serious enough to merit a fine, it took into consideration the efforts the company made to rectify its compliance with the relevant rules – as a mitigating factor.
Therefore, it seems that any firm that CySEC finds to be in breach of this article (4) of its applicable rules can expect at least a 5,000 EUR fine in the absolute best case scenario – unless dismissed/or settled some other way, and with the higher end of the spectrum being some 70 times larger.