CySEC has picked this Friday to release a plethora of regulatory announcements which the board of the commission has deliberated and taken decisions on during the past two months.
A number of companies have been fined by the regulator, with the operator of binary options broker EZ Trader, WGM Services receiving the biggest penalty – €340,000. Another firm behind several binary options brands like Interactive Option, HelloBrokers and MTXPlus have been slapped with €300,000.
The company behind forex brokers FXGM, GTCM and Depaho has been fined €233,000, while Reliantco, the parent company behind UFX Markets, was issued a €123,000 fine by CySEC.
In a statement to Finance Magnates the Managing Director of UFX, Dennis De Jong said, “Although the fine that was imposed on us by CySEC was the lowest of all the fines imposed, we think that CySEC has based its observations on subjective interpretations of the law. We are therefore reviewing the possibility of appealing to the Supreme Court of the Republic of Cyprus”.
The announcement made by the CySEC highlights the ongoing issues that have plagued the Cyprus-based brokerage industry, where for years a number of firms have been conducting abusive practices towards its clients before this day would come to fruition.
The credibility of the regulator is further undermined as in order to avoid the focus and attention to particular companies, CySEC has chosen to announce the multitude of fines in a single day, regardless of the time taken by the watchdog’s board to determine violations of the law.
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CySEC Official Position
On its part, the Cyprus Securities and Exchange Commission detailed: “The fines against the CIFs were imposed following the conclusion of onsite inspections by the Supervising Authority, in relation to weaknesses detected in the compliance of the companies in question with their legal obligations.”
“These weaknesses concern, among other issues, the companies’ obligations for the protection of client funds, their risk detection and management procedures, issues of outsourcing of their services, their professional conduct in the provision of services to clients or potential clients, as well as the provision of investment services solely for which they have been licensed,” the statement continues.
Commenting on the matter, the Chairman of CySEC, Demetra Kalogerou, said, “The ultimate goal of onsite checks conducted by the Cyprus Securities and Exchange Commission (CySEC) is to ensure investor protection and the fair functioning of the securities market as a whole, through the improvement in Cyprus Investment Firms’ (CIFs) compliance with the necessary laws.”
“CIFs must operate at all times within the legal framework of the securities market and have a responsibility to their investor-clients. Where these duties are breached, as we have seen with these firms, the CySEC will impose fines as provided for by the Law. The CySEC will indicate to CIFs to take corrective measures within a set framework, otherwise additional measures will be taken such as the imposition of new fines, the suspension and/or even the withdrawal of their licenses,” Mrs Kalogerou concluded.
The regulator detailed that the decision to impose the fines in question were taken within the framework of a broad review of business practice reviews which will continue into 2016. The CySEC places emphasis on medium to high risk CIFs (Cyprus Investment Firms).
The statement by CySEC concludes: “In addition to imposing these fines, CySEC has also indicated to the five CIFs in question the need to take corrective measures in order to improve their internal processes and practices, aiming to fully comply with their legal obligations. The CIFs, regardless of whether a fine was imposed or have reached a compromise agreement, are obliged to comply with this within two months, at which point CySEC will re-examine the firm’s compliance. Supervisory inspections and checks by CySEC will continue in general, and enforcement actions, including fines, will take place where violations of the legislation are detected.
As Finance Magnates reported, in the first and most eagerly awaited company announcement for clients, CySEC has settled with IronFX Global Ltd for a payment of €335,000.