CySEC strikes again – Warnings to Two Retail FX Firms

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CySEC suspends another CIF license
CySEC suspends another CIF license

The Cypriot regulator CySEC has issued two new warnings informing investors that two specific companies are not authorized or regulated by the Cyprus Securities and Exchange Commission and are therefore not permitted to provide investment and ancillary services in the Republic of Cyprus, according to the provisions of relevant legislation in force in the country.

The two firms, named in two separate warnings issued by CySEC on 14 March 2014 are specifically SiliconValley Markets Ltd, which operates through the site http://test.stone-markets.com and the entity which operates via the internet domain http://fxttcm.co.uk.

CySEC once again urges potential investors in both these warnings, to consult the list of authorized entities which are allowed to provide investment services in its jurisdiction prior to conducting any sort of business with any investment institution.

On another front, CySEC sent out a circular to the CIFs under its jurisdiction on 13 March 2014, informing them about a warning to investors that has been issued by the European Securities Markets Authority (ESMA) in relation to the risks of investing in complex products.

According to CySEC, ESMA is concerned due to the fact that retail investors have access to complex products, which they may not fully understand, with the possibility of losing money that they cannot afford to lose.

The CySEC circular points out that further to the aforementioned warning, ESMA has also issued an opinion to the National Competent Authorities, such as CySEC, in order to remind them about the relevant MiFID provisions (EU Directive 2004/39/EC) governing selling practices (conduct of business rules).

According to ESMA, when carrying out their supervisory duties, the National Competent Authorities should monitor that “firms observe the practices described in this opinion when selling complex products on both an advised and non-advised basis.”

CySEC addressed the circular to its regulated CIFs, in order to inform them of its decision to follow ESMA’s opinion in this regard, especially when reviewing the compliance of CIFs with their obligations emanating by section 36 of the Investment Services and Activities and Regulated Markets Law.

As a consequence, CIFs are encouraged by CySEC to observe the practices described in this opinion when selling complex products on both an advised and non-advised basis.

Because ESMA includes in its definition of complex products “contracts for difference (CFDs); binary options; turbos; exchangeable bonds; callable bonds; puttable bonds; convertible bonds; perpetual bonds; subordinated bonds; warrants; certificates; derivatives relating to underlying securities, currencies, interest rates, yields, or commodities; credit linked notes; and asset-backed securities,” binaryoptionswire will review the said ESMA opinion more closely and report further on it and its repercussions soon.

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