CySEC Writes Off a Handful of FX Brokers From Its Lifeboat Scheme

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 published a list of financial services providers that were disbarred from its lifeboat scheme. The clients of these brokers, however, 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 couldn’t meet its financial obligations.

The list includes some now-defunct FX brokers, including UBFS Invest, backed by broker Moneychoice Brokers Ltd., which saw its CIF license lapsed in 2016 after its own funds have fallen below the requisite capital requirements set by CySEC.

The primary financial services regulator in Cyprus has also delisted Spot Capital Markets Ltd, which was fined €50.000 in 2018, and Alfa-Forex, which earlier this year shut down its services to retail customers in Europe.

The updated register of delisted members include the following brands:

1. Argo Capital Management Cy Ltd
2. Centaur Financial Services Ltd
3. DFG Capital (Cyprus) Ltd
4. Globesco Capital Ltd
5. Kit Finance Brokers Ltd
6. Lykke Cyprus Ltd
7. NTFX Capital Ltd (ex. Alfa-Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Ltd)
8. Postscriptum Capital Ltd
9. S.L. Capital Services Ltd
10. Spot Capital Markets
11. UBFS Invest – Moneychoice Brokers Ltd

The Cysec 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.”

The regulator often initiates 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.

The next step, if any, will see the ICF inviting covered clients to make their claims against the company, designating the procedure for filing compensation applications and the deadline for their submission. Next, the fund publishes the details in at least two local newspapers, including the address at which investors may be informed about the progress of their applications.

The amount of the compensation payable to each client is calculated in accordance with the contractual terms governing his relationship with the faltering broker, but in general, the maximum amount doesn’t exceed €20.000.

Earlier this year, the CySEC has changed maximum compensation for valid claims to be either 90 percent of the cumulative covered claims or €20.000, whichever is lower. Therefore coverage = Min (90 percent Χ claimed amount, €20.000). This means that an investor who holds €50.000 with a CIF, which runs into trouble and is unable to pay, will get €20.000 from the ICF. However, if the claim is for €10.000, the coverage will be only 90 percent or €9.000, not 100 percent, as previously calculated.

The action comes nearly two years after the regulator released a set of proposals for changing how the lifeboat fund is paid for in April 2017.