The Cyprus Securities and Exchange Commission (CySEC ) announced that Otkritie Capital Cyprus Ltd was disbarred from its lifeboat scheme today. However, the clients of Otkritie are still entitled to benefit from the Investor Compensation Fund (ICF), which serves to protect the claims of covered clients and provide them with compensation in case a member could not meet its financial obligations.
Otkritie Capital offers brokerage services spanning across equity, derivatives, fixed income, foreign exchange and commodities. Founded in 2002, the company was formerly known as Otkritie Securities Limited and rebranded to Otkritie Capital International Limited in June 2014. The firm is headquartered in London with additional offices in Moscow, Limassol and New York.
Following other FX brokers’ decisions to renounce their authorisation in Cyprus, Otkritie said goodbye to its CySEC approval almost a month ago. The surrender of its license was entirely voluntary based on the company’s decision and does not arise as a result of any regulatory action taken by CySEC.
No Need to Panic
The island’s top watchdog further explains to the public that: “It should be noted that losing membership of the fund does not mean a loss covered clients’ rights to compensation for investing that took place until the loss of membership. Any outstanding debts owed by members to the fund, continue to exist until they are paid, irrespective of their deletion.”
Controlled by Otkritie FC Bank, one of Russia’s largest full-service commercial banks, the brokerage firm decided last summer to wind down the operations of its retail brokerage service in Cyprus.
Its Russian brokerage arm operates a network of regional offices located in more than fifty Russian cities and is part of a massive financial services group offering a range of banking, investment, pension plan and life insurance solutions.
Under the Cypriot regulatory framework, the company must return all outstanding balances to its clients and handle all of their complaints. In addition, Otkritie Capital Cyprus must provide a confirmation from its external auditor that it does not have any pending obligations and must include details of each of the company’s clients, according to the same CySEC announcement.
The regulator often kickstarts the compensation payment procedure after it revokes the authorization of a company that is not expected to pay back its obligations in the near future.
