Cyprus financial market regulator withdraws ICF membership from three brokers
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The Cyprus Securities and Exchange Commission has withdrawn the Investor Compensation Fund (ICF) membership from three Cyprus Investment Firms (CIFs) that are no longer operational. The CIF licenses for the three CIFs had already been withdrawn.
CySEC withdraws ICF membership for three brokers
The brokers affected are Inveza Capital Ltd, F1Markets Ltd, and FF Simple and Smart Trades Investment Services Ltd. The three companies offered financial services that targeted retail investors. The three renounced their CIF licenses.
According to the CySEC, “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.” The regulator also said that the move did not affect the commencement of the compensation procedure for the affected clients.
Of the three affected firms, Inveza has a large presence in the financial industry. CySEC has regulated the broker since 2013. The other two firms, FF Simple and Smart Trades Investment Services offered margin trading to retail and professional traders.
The operations of F1Markets, which also operated under different brands, were not without controversy. The company conflicted with regulators who flagged several instances of non-compliance. The firm was also facing multiple enforcement actions.
In August 2022, F1Markets paid a €150,000 settlement with the CySEC for failing to comply with the local regulatory framework. The fine was imposed after the company’s compliance efforts failed to meet regulatory standards. The firm was also slapped with a partial suspension and faced multiple corrective actions between June 2019 and July 2020.
CySEC supervised 837 regulated entities in 2022
The CySEC also shared a report about its operations during the previous year. The report showed that the regulator supervised 837 regulated entities in 2022. In the report, the CySEC said it would broaden its supervisory abilities to crowdfunding service providers and personal pension products.
The number of firms regulated by the regulator also increased by 3.9% in 2022, with around 100 new license applications under consideration. The number of license applications increased by 12% compared to before the COVID outbreak in 2019.
According to the report, the CySEC issued 86 licenses in multiple supervised divisions. However, it rejected six applications for CIF licenses. 15 firms that had filed applications withdrew them during the year.
During the year, the CySEC also conducted multiple reviews for CIFs. During the review period, the CySEC’s Supervision Department monitored the compliance level with reporting transactions and the regulations around derivatives contracts.
The CySEC is also urging investors to be interested in acquiring more knowledge about the markets to understand the market risks better and boost their confidence in making independent investment decisions.
The CySEC recently conducted a study showing that 33% of investors depended on financial influencers to make recommendations on their investment decisions. The study also showed that 26% of local investors were at risk if their investments failed to pay off.
