The Cyprus Securities and Exchange Commission (CySEC) announced on Friday the withdrawal of the Investors Compensation Fund (ICF) membership of two companies, Hoch Capital Ltd and ED&F MAN Capital Markets CEEMA Ltd.
Hoch Capital operates multiple forex and CFD brokerage brands like itrader and tradeATF, but the other one is a dormant entity of global institutional brokerage brand ED&F MAN Capital Markets.
Under the ICF scheme, the Cypriot regulator protects the deposits of each client of regulated financial services companies, including brokers, up to €20,000.
The memberships of the two companies were revoked following the withdrawal of their Cyprus Investment Firm (CIF) licenses. Hoch Capital’s license was withdrawn after the company voluntarily decided to renounce it.
A Controversial Broker
However, Hoch Capital faced multiple allegations of non-compliance with mandatory regulatory requirements. It settled with CySEC in December 2020, paying a fine of €260,000, for multiple possible compliance violations, including conflicts of interest and information provided to clients.
Also, CySEC briefly suspended the license of Hoch Capital and a few other brokerage operators in June 2020 as they were caught up in promoting their products in the United Kingdom.
The withdrawal of ICF membership is a standard procedure after the withdrawal of the CIF license. In addition, the Cypriot watchdog withdrew the membership of Daweda Exchange, London Capital Group (Cyprus), and Felicitas Management Investment Services in March.
“The loss of ICF membership status does not mean loss of rights of covered clients to receive compensation in relation to investment operations carried out until the loss of membership status, if the conditions for compensation are fulfilled pursuant to the Directive, nor does it obstruct the initiation of the compensation procedure for covered clients,” the Cypriot regulator clarified.
Meanwhile, CySEC initiated the compensation process under the ICF scheme for the clients of Maxigrid as it is “unable to meet its obligations arising out of investors' claims.”
