The Cyprus Securities and Exchange Commission (CySEC) has started a procedure to compensate the clients of FxPulp, a brokerage whose license has been suspended since April 2015. The regulator has outlined that it will be shortly publishing details about the process of recovering deposits from the Investor Compensation Fund (ICF) in Cyprus.
The scheme which is designed to protect clients of Cyprus based brokers is activated due to the lack of progress with the company’s obligations towards its clients. According to the legislation governing Cyprus Investment Firms (CIFs), CySEC has to determine that a company is unable to meet its obligations before it activates the provision in the law that is tapping the ICF.
Despite the communication which the regulator has had with one of FxPulp’s shareholders, Mr Said Salem, the firm has been identified as unable to fulfill its obligations in the near future.
The decision on the case has been reached by the board of the Cypriot financial regulator on the 29th of September. The CySEC is not elaborating on what is the reason for this communique to be officially published almost two months after the decision has been taken.
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Eight months of waiting
In total CySEC has taken 8 months from the withdrawal of the license to the announcement that the ICF will be finally put to use to compensate clients of the company. The regulator will publish further information relevant to the clients of the company on its website and in three national newspapers.
With all due respect to the procedures which the regulator has to undertake, the last place where clients of the company will see this announcement is in national newspapers. Taking into account the meager amount of clients of any Cypriot brokerage who are hailing from Cyprus, this announcement is merely another postponement on the side of CySEC.
In the meantime, the clients of Alpari UK, have long been compensated from the U.K. Financial Services Compensation Scheme (FSC).
The publication by the regulator comes a day after it announced that the shareholders of FxPulp have been slapped with a €150,000 fine. The case regarding the operations of the brokerage has been passed on to the Cyprus Attorney General for it to assess whether a criminal proceeding is to follow up on the matter.
The endgame from this announcement by the regulator is that clients of FxPulp will need to await a further announcement from the regulator about how to claim their funds from the ICF.