CySEC delists iTrader parent from investor compensation fund (ICF)

abdelaziz Fathi

The Cyprus Securities and Exchange Commission (CySEC) announced that Hoch Capital Ltd (trading as iTrader and tradeATF) was disbarred from its lifeboat scheme today.

Fortunately, the clients of Hoch Capital 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 could not meet its financial obligations.

The island’s top watchdog further explains to the public that “in accordance with paragraph 6(3) of the Directive, 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, nor does it obstruct the initiation of the compensation procedure for covered clients.”

Earlier in April, CySEC had withdrawn the license of Hoch Capital, nearly two years after the Cypriot broker suspended its operations and renounced the CIF authorization.

Hoch Capital was among a handful of Cypriot brokers that the UK’s FCA suspended their passporting rights. At the time, the British watchdog also barred the UK counterparts of Maxigrid Limited (trading as Dualix & AGM Markets), Magnum FX (Cyprus) Ltd (trading as ET Finance), Rodeler Ltd (trading as 24option) and F1Markets Ltd (trading as Investous, StrattonMarkets and Europrime).

Hoch Capital was also hit by a €260.000 CySEC fine, which wrapped up a long-running regulatory spat that culminated in the company’s decision in July 2020 to renounce its Cyprus Investment Firm license. At the time, CySEC explained that the settlement resolves allegations of non-compliance with several articles that cover multiple regulatory requirements, including conflicts of interest and information provided to clients.

Earlier in 2020, the Italian regulator also flagged a broker-dealer platform operated by Hoch Capital. According to Consob, the Cypriot intermediary continued to break laws even after the watchdog sent several complaints to its original regulator, Cysec, about its misconduct. The claims refer to non-compliant practices made by the brand’s operator, including promoting the contracts for difference (CFDs) to non-professional investors.

Moreover, the Cyprus broker violated the EU directive that mandates negative account protection, ensuring that customers cannot lose more than their trading stake. Furthermore, Consob accused their staff of exercising pressures on their clients to deposit more funds, though the current rules forbid bonuses and other incentives that may have encouraged overtrading in recent years.

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