CySEC Reports ‘Material Deficit’ in AFX Markets’ Client Funds

The Cyprus Securities and Exchange Commission (CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term) today announced it would shortly conclude its formal investigation into the alleged violations of its regulations concerning AFX Capital Markets Ltd, the Cypriot arm of AFX Markets Ltd.

According to the notice, the regulator also continues to assess the client's money position as part of their ongoing investigation. Although the process remains in the early stages, the initial view suggests that there is likely to be a material deficit in the Client Money Client Money Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Read this Term.

“At this stage, no decisive conclusion can be reached with regards to the size of this deficit which is subject to CySEC’s ongoing investigation,” it further explains.

Of note, special administrators of AFX’s UK arm disclosed to the regulator the company was in terrible financial difficulty and that it had a heavy shortfall in client money of more than £7.0 million.

AFX has been ordered by regulators in Cyprus and the UK to cease any activities that would involve releasing client money and securing its books and records for future inspection.

The watchdogs previously identified AFX’s lack of necessary safeguard procedures to protect client assets and raised concerns about its ability to hold sufficient funds in its coffers to settle obligations.

The CySEC also reminded that the CIF license held by AFX Capital Markets is still suspended. This suspension also applies to AFX-owned subsidiary STO, which uses the same authorization (DI87-05).

Regulatory woes on all fronts

The process involves the CySEC inviting clients to the claims portal for them to enter the necessary details and state their complaints against AFX. Specifically, AFX clients can submit their complaints through the respective websites without a unique reference number (URN).

AFX’s collapse was also expected as it had problems earlier with its UK operations. In August, the British watchdog confirmed the appointment of special administrators at the AFX Markets, which was ordered to cease its trading activities after the FCA found serious problems in its operations.

A month earlier, the CySEC has temporarily suspended AFX Capital Markets Ltd, which was also fined by the Cypriot regulator in 2017 after they broke another law regarding misleading information.

AFX Group is the second-largest European subsidiary of AFX Markets, and according to reports it submitted to the FCA, some 1200 client accounts that hold assets worth £7.5 million were transferred to close-only mode.