The Board of the Cyprus Securities Exchange Commission (CySEC) announced on Tuesday the initiation of the compensation payment process to the clients of Maxigrid Ltd under the Investors Compensation Fund (ICF).
Though the decision was taken on 28 March, it was announced publicly quite recently.
Maxigrid operates multiple forex and contracts for differences (CFDs) trading brands: Dualix and AGM Markets. It ran the operations from its Cypriot base after receiving a Cyprus Investment Firm (CIF) license in 2011.
However, the license of Maxigrid was withdrawn by the Cypriot regulator last February. The broker violated multiple mandatory compliance rules that led to the cancellation of its license.
Even before, the license of the broker was suspended for violations.
The latest CySEC announcement pointed out that the broker is “unable to meet its obligations arising out of investors' claims and has no early prospect of being able to do so.” This led to the initiation of the compensation process under the ICF.
The Compensation Fund
Similar to other European financial market regulators, CySEC provides protection to the individual investor’s deposits under the ICF scheme. The compensation scheme provides protection of up to €20,000, which provides protection in case the financial services company becomes bankrupt or is unable to return customer deposits due to financial constraints.
The process of the clients' claims is not clear as of yet since the ICF will now have to initiate its proceedings.
Meanwhile, the brands of Maxigrid have stopped their services.
“Maxigrid Limited’s license is suspended. The Company is adopting a set of improvements [that] are required by its regulator,” a notice on Dualix states. “Please note that the Company, for a period of one month, will not provide/carry out investment services/activities and/or enter into any business transaction with any person nor will it accept any new clients.”
