For the First Time: Consob Orders a Broker to Get out of Italy
- Hoch Capital Ltd was ordered to cease marketing to Italian investors due to claims of breaching local and EU regulations
Consob, the Italian securities regulator, today ordered Hoch Capital Ltd, CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term licensed Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term & CFD broker, to cease operations in the country. The watchdog said the ban was necessary to protect Italian investors after the Limassol-based broker repeated its violations despite the measures adopted by its original regulator (CySec).
The regulator further stated that it is the first time in which it exercises its authority to ban a firm from marketing its products to the Italian traders.
According to the regulator, Hoch Capital Ltd also continued to break laws even after Consob sent several complaints to the Cyprus Securities and Exchange Commission about its misconduct. The claims refer to non-compliant practices made by the brand's operator, including promoting the contracts for difference (CFDs) to non-professional investors.
The company has also violated the EU directive that mandates negative account protection, ensuring that customers can’t lose more than their trading stake. Further, the Consob accuses Hoch Capital staff of exercising pressures on their clients to deposit more funds, though the current rules forbid bonuses and other incentives that may have encouraged overtrading in recent years.
“The complaints refer, among other things, to circumstances such as the total loss of the invested capital, the classification of the investor as a professional client in the absence of the requisites and the exercise of pressure by the personnel of the company to carry out additional deposits,” said Consob.
Settlement with CySEC
Hoch Capital is now barred from providing investment services in Italy. The decision also prevents the Cypriot intermediary from soliciting customers or to continue their current relations with Italian clients. The company will, therefore, have to close the accounts of its Italian traders.
The financial watchdog clarified that it made the latest decision under the article 7-quarter, paragraph 4 of the Consolidated Law on Finance (TUF), as well as article 86 of Mifid2. This legislation allows CONSOB to order investment firms and brokers operating in the country from another EU member state, through the EU passporting regime, to cease their operations after informing the competent authority of the member state.
Immediate actions
"Following the CONSOB’s resolution, the Company undertook immediate actions as it was required by the said resolution and will cooperate in full with the Italian regulator by taking all the relevant measures to fix the current situation," the broker commented exclusively to Finance Magnates.
"It is important to state that Consob resolution is a precautionary measure regarding the Company`s activity in Italy and that the Company’s authorisation for cross-border/passporting of its activities to Italy was not withdrawn."
The prohibition applied by CONSOB will be in force until no evidence is obtained from CySEC and the Company to demonstrate the final overcoming of the critical points complained by Italian customers."
Hoch Capital reached a settlement with the Cyprus regulator in March 2019, paying €200,000 for alleged violations of the Investment Services and Activities and Regulated Markets Law.
Earlier in June, the Commissione Nazionale per la Società e la Borsa (Consob) decided to follow in the footsteps of ESMA, banning the sale of binary options to retail customers and also extended its restriction against promoting risky products to retail investors.
Consob, the Italian securities regulator, today ordered Hoch Capital Ltd, CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term licensed Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term & CFD broker, to cease operations in the country. The watchdog said the ban was necessary to protect Italian investors after the Limassol-based broker repeated its violations despite the measures adopted by its original regulator (CySec).
The regulator further stated that it is the first time in which it exercises its authority to ban a firm from marketing its products to the Italian traders.
According to the regulator, Hoch Capital Ltd also continued to break laws even after Consob sent several complaints to the Cyprus Securities and Exchange Commission about its misconduct. The claims refer to non-compliant practices made by the brand's operator, including promoting the contracts for difference (CFDs) to non-professional investors.
The company has also violated the EU directive that mandates negative account protection, ensuring that customers can’t lose more than their trading stake. Further, the Consob accuses Hoch Capital staff of exercising pressures on their clients to deposit more funds, though the current rules forbid bonuses and other incentives that may have encouraged overtrading in recent years.
“The complaints refer, among other things, to circumstances such as the total loss of the invested capital, the classification of the investor as a professional client in the absence of the requisites and the exercise of pressure by the personnel of the company to carry out additional deposits,” said Consob.
Settlement with CySEC
Hoch Capital is now barred from providing investment services in Italy. The decision also prevents the Cypriot intermediary from soliciting customers or to continue their current relations with Italian clients. The company will, therefore, have to close the accounts of its Italian traders.
The financial watchdog clarified that it made the latest decision under the article 7-quarter, paragraph 4 of the Consolidated Law on Finance (TUF), as well as article 86 of Mifid2. This legislation allows CONSOB to order investment firms and brokers operating in the country from another EU member state, through the EU passporting regime, to cease their operations after informing the competent authority of the member state.
Immediate actions
"Following the CONSOB’s resolution, the Company undertook immediate actions as it was required by the said resolution and will cooperate in full with the Italian regulator by taking all the relevant measures to fix the current situation," the broker commented exclusively to Finance Magnates.
"It is important to state that Consob resolution is a precautionary measure regarding the Company`s activity in Italy and that the Company’s authorisation for cross-border/passporting of its activities to Italy was not withdrawn."
The prohibition applied by CONSOB will be in force until no evidence is obtained from CySEC and the Company to demonstrate the final overcoming of the critical points complained by Italian customers."
Hoch Capital reached a settlement with the Cyprus regulator in March 2019, paying €200,000 for alleged violations of the Investment Services and Activities and Regulated Markets Law.
Earlier in June, the Commissione Nazionale per la Società e la Borsa (Consob) decided to follow in the footsteps of ESMA, banning the sale of binary options to retail customers and also extended its restriction against promoting risky products to retail investors.