Many of the critics of CySEC had maintained on many occasions that the regulator had been too relaxed and lenient in its approach to the investment services firms in its jurisdiction, leading to a somewhat uncontrollable and unjustified boom in their numbers. The same critics and many other industry stakeholders have thus welcomed the fact that in the past few months CySEC has issued several circulars and decisions through which it is setting out much stricter rules for the firms under its supervision and that it appears resolved and determined to implement a much more effective and proactive kind of supervision and regulation from now on.
Many have argued that the very positive spillover effect deriving from this chance of stance from CySEC will be a consolidation in the market, with those firms and brokers who are unwilling or unable to abide by stricter rules being thrown out and only the big and serious players who mean business and behave and operate correctly being able to survive.
It appears that this narrative may well prove truthful, especially if we take into account another two decisions that have recently been announced by CySEC. The first concerns the suspension of the authorisation of the Cyprus Investment Firm ‘UBFS Invest powered by Moneychoice Brokers Ltd’, with number 239/14, because according to the relevant CySEC announcement, there are suspicions for alleged violations by the said CIF of:
- section 28(1) of the Law, for, as it appears, the non compliance by the Company with the requirement for authorisation referred to in section 18(2)(j) of the Law (protection of clients’ funds),
- section 67(1) of the Law, as its own funds appear less from the sum of its capital requirements,
- Article 92(1) of the European Regulation as its total capital ratio appears less than the requirements of the Regulation.
The suspension gives the firm one month in order to comply with the regulator’s requirements, while until the suspension period is over, the broker is not allowed to perform any investment activities and must allow its clients to close all open positions and receive their funds and profits back. Moreover, it has to publish a notice on its website regarding the license suspension and cease advertising itself as a financial service provider within the one-month period.
The second decision that adds validity to the narrative explained above, is CySEC’s decision to extend further the suspension of the license of the Cyprus investment company Atlas Capital Financial Services, operating the forex brokerage ACFX. This is the third consecutive suspension imposed on this firm, since the first such decision by CySEC last April. And we are to believe the media reports that ACFX has already laid off most of its staff and that its once bustling headquarters in a landmark location in Limassol are now standing empty, then the license suspension may soon became a withdrawal and signal the exodus of yet another CIF from the map.