The Cypriot financial regulatory body, the Cyprus Securities and Exchange Commission (CySEC), has fully witdrawn the Cypriot investmenty firm (CIF) license of binary options broker Trademarker, operating under the brands SkyFX and Capital Option, and has suspended for one month that of forex broker UBFS Invest powered by Moneychoice Brokers, the regulator said on Friday in two separate notices.
The regulator took the decision regarding Trademarkets on 25 April, 2016, while that regarding UBFS Invest was adopted on 23 May.
Trademarker has been warned
Trademarker’s CIF license withdrawal is not a big surprise, considering earlier this year the regulator suspended it twice.
According to one of the CySEC statements, Trademarker has failed to comply with the CySEC’s authorization conditions by violating the regulations concerning the organizational requirements and the persons who effectively direct the business of a CIF.
Trademarker has failed to ensure continuity and regularity in the execution of client’s orders due to its market maker’s voluntary license suspension. Initially, the CySEC suspended Trademarker’s CIF license in February this year and later extended the suspension a month later.
In addition, Trademarker has failed to comply with the CySEC’s authorization conditions by violating the regulations concerning the board of directors and senior management. The broker’s sole shareholder, Aviv Tal Mor, is not of sufficient good repute and is not suitable to ensure the sound and prudent management of the company. The entities he owns havr been appointed a liquidator by the Court of Israel due to his possible involvement in illegal acts relating to the financial sector. The Cypriot law states that “the persons who effectively direct the business of a CIF shall be of sufficiently good repute and sufficiently experienced as to ensure the sound and prudent management of the CIF”.
Trademarker has to cease providing investment and ancillary services within three months of the withdrawal data. It should also have to return immediately all client funds and solve all complaints prior to the expiration of the said period. The CySEC said it has called the broker to remove all information from its website stating that it is CySEC-regulated and instead to place a public announcement informing investors of the license withdrawal.
UBFS Invest comes out just with suspension… for now
Meanwhile, UBFS Invest’s CIF license has been suspended since it has allegedly been in violation for not complying at all times with the CySEC authorization conditions. For one thing, the broker’s own funds seem to appear less than the required amount. The CySEC regulatory framework envisions that “a CIF must have own funds, which are at all times more than or equal to the sum of its capital requirements.”
The regulator also said the broke has not been been adequately protecting client’s funds, but no details were provided.
Until the suspension period is over, the broker is not allowed to perform any investment activities and must allow its clients to close all open position and receive their funds and profits back. It has to publish a notice on its website regarding the license suspension and cease advertising itself as a financial service provider within the one-month period.
CySEC has no doubt been stricter
The CySEC has been very active in heavily tightening CIFs under its supervision. The regulator announced on Thursday that forex and binary options broker Pegase Capital has renounced its CIF license after nearly three months of license suspension, during which it was not allowed to provide services. The CySEC suspended its license on 29 February, 2016, and since then has been prolonging the period under which Pegase Capital could not be active. The company operates via several websited – www.interactiveoption.com, www.interactive-option.com, www.hellobrokers.com, www.mtxplus.com, www.pegasecapital.com.
Also this week, the CySEC extended for the second time the license suspension of Atlas Capital Financial Services, trading as ACFX. The suspension started on 7 April this year.
Meanwhile, in April the regulator permanently revoked the CIF license of forex broker Falcon Brokers, just a few months after it suspended it. The broker was guilty of violating the Cypriot regulation regarding operational requirements and client funds.
In addition, many Cyprus-regulated forex and binary brokers have been fined in the past few months. CommexFX, a forex trading service provider, had to pay €50,000 in February for submitting to the CySEC false documents regarding its bank account balances. Also in February, Mayzus Investment Company, trading as Mayzus, was required to pay administrative fines in the combined amount of €12,000 for breaching the laws for Prevention and Suppression of Money Laundering and Terrorist Financing. Many other forex and binary options brokers have been fined since the beginning of the year.
Despite being harsher on CIFs, the CySEC continues to be a popular choice among forex brokers willing to get authorized in Europe. Since the beginning of 2016, the Cypriot regulator has granted CIF license to Avus Capital, a forex brokerage doing business as Trading 212 and licensed in the UK and Bulgaria as well, G.S.E Golden Sky Europe Ltd., Spot Trading S.T. Ltd., Magic Compass Ltd., and Lydya Financial Ltd.
Financial service providers are not allowed to lawfully operate in Cyprus unless they hold a license by the CySEC or the relevant authorities in any other EU member state. A CySEC license, on its part, provides access to the rest of the EU market.
The Cypriot financial regulator provides two types of CIF licenses – limited and full. A limited license allows an entity to execute orders on behalf of clients, but not on its own account, while full license allows an entity to act on both its own behalf and that of clients.
We strongly advise you to only deal with regulated forex brokers, authorized by reputable regulatory bodies like CySec, FCA, and CFTC/NFA, among others.