The Cypriot financial watchdog has issued a €1 million fine against Itrade Global (Cy) Limited, an operator of several forex/CFDs brands, for multiple violations of Cyprus’ market laws allegedly committed by its tied agent in Spain. The Cyprus Securities and Exchange Commission (CySEC ) disclosed the fine on Thursday, noting that it reached the decision earlier on April 3.

CySEC Picks Hole in CIF's 2020 Activities

Itrade Global, a Cyprus Investment Firm (CIF), was licensed in 2016 by CySEC and operates three approved forex/CFDs brands: TradeFW, InvestFW and TradedWell. However, the regulator said it found several violations of its law following its 2020 inspection into the activities of the company’s intermediary in Spain. The investigation was aided by the Spanish National Securities Market Commission (CNMV).

According to CySEC, Itrade Global through the tied agent failed to take appropriate measures to identify and prevent or manage a conflict of interests, did not act fairly, honestly and professionally when providing investment services to clients, and did not ensure that all information addressed to clients was fair, clear and not misleading.

Furthermore, CySEC alleges that the brokerage operator through the intermediary failed to ensure that natural persons providing information about financial instruments, investment services or ancillary services to clients on its behalf possessed the necessary knowledge and competence to fulfil their roles under the Investment Services and Activities and Regulated Markets Law of 2017.

In addition, the CIF through the intermediary failed to demand appropriate information about clients’ knowledge and experience so as to determine whether the product or service they were to be offered was appropriate for them. On top of this, the company failed to warn clients after they completed an appropriateness test, that the product or service they were about to be offered was not appropriate for them.

CySEC Alleges More Failures

Moreover, CySEC alleges that Itrade Global failed to put in place adequate policies and procedures sufficient to ensure compliance with its obligations under the country's markets law. Also, the company failed in its duty of ensuring that relevant risks to identified target markets of its end clients were assessed and that the intended distribution strategy was consistent with the said market.

Further, the CIF failed to keep records of telephone conversations of services it provided and the transactions or activities performed under them.

Commenting on the case, George Theocharides, CySEC’s Chairman, urged CIFs to ensure full compliance with their regulatory obligations. Moreover, the CySEC boss emphasized the need for CIFs to strengthen their compliance functions and reevaluate the competence of their staff, especially those engaged in sales and marketing duties.

“CySEC takes any misconduct by supervised entities seriously and is determined to bring non-compliant operations to a halt in order to enhance investor protection and the responsible growth of the investment sector,” the CySEC Chairman added.

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