CySEC announces delisting of five firms from Investor Compensation Fund

Maria Nikolova

The firms are delisted because they have lost their Cypriot authorization.

The Cyprus Securities and Exchange Commission (CySEC) today announces that five firms have been delisted from the Investor Compensation Fund. The reason for the delisting is that these firms have lost their Cypriot licenses.

The deleted members are:

  • 1. AMFF Ltd
  • 2. Fidelisco Capital Markets
  • 3. GS Sharestocks Ltd
  • 4. PCM Advisers Ltd
  • 5. UCP Asset Management Ltd

Let’s recall that the first two firms on the list – AMFF Ltd and Fidelisco Capital Markets, have voluntary withdrawn their CIF licenses. The regulator notes that the loss of Fund membership does not mean the loss of covered clients’ rights to indemnification in respect of investment operations carried out before the loss of membership.

In November 2019, CySEC announced that 11 firms were delisted as members of the Investor Compensation Fund.

In March 2019, CySEC unveiled changes to the legal framework governing the operation of the ICF. The reforms envisage calculating members’ annual ICF contributions using a risk-based approach, which takes into account the reliability of statements of eligible funds and financial instruments, the amount of clients’ eligible funds and financial instruments of a respective member and the timing of the payment of the annual contribution.

Under the changes, any provisions in relation to limiting or refunding the contributions of the members that are paid to the ICF pursuant to the New ICF Directive will be removed.

ICF members are required to keep an independently audited and client-segregated minimum cash buffer of 3‰ (3 per 1,000) of their clients’ eligible funds and financial instruments.

The changes envisage no limiting of potential extraordinary contributions by an ICF member in the event of an adverse scenario which requires the ICF to fund compensation due to investors, should the necessary requirements be met.

The new rules apply the discretion provided for in Directive 97/9/EC on the levels of investor compensation such that the maximum limit of compensation coverage equals €20,000 or 90% of the covered investor’s claim, whichever is lower.

The obligation to participate in the ICF applies to all entities providing investment services and ancillary custody services irrespective of whether clients’ funds and financial instruments are held. This means that participation in the ICF is compulsory for Cyprus Investment Firms (CIFs) too.

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