CySEC Delists OptionRally and Four Brokers from Investor Compensation Fund

abdelaziz Fathi

The Cyprus Securities and Exchange Commission (CySEC) today published a new list of financial services providers that were disbarred from its lifeboat scheme.

CySEC

However, the clients of these brokers 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 most notable brand of those expelled from the CySEC’s compensation scheme is the now-defunct binary options broker OptionRally. Following the firm’s decision to renounce their authorisation in Cyprus, OptionRally said goodbye to its CySEC approval almost a year ago.

In 2017, OptionRally was hit by a series of fines and license suspensions, but the CySEC ultimately cancelled its previous penalties after the firm satisfied its regulatory obligations.

OptionRally, founded in 2010, had acquired its CySEC license back in 2013 when the brand began to expand out of its origins in Israel.

In addition to OptionRally, the CySEC has written off Deloitte Investment Services Ltd, Rodeler Ltd, Stocks Forex AF Ltd, and Globia Wealth Ltd.

CySEC further explains to the public that “It should be noted that losing membership of the fund does not mean a loss covered clients’ rights to compensation for investing that took place until the loss of membership. Any outstanding debts owed by members to the fund, continue to exist until they are paid, irrespective of their deletion.”

What’s Next?

The regulator often kickstarts the compensation payment procedure after it revokes the authorization of a company that is not expected to pay back its obligations in the near future.

The next step, if any, will see the ICF inviting covered clients to make their claims against the company, designating the procedure for filing compensation applications and the deadline for their submission. Next, the fund publishes the details in at least two local newspapers, including the address at which investors may be informed about the progress of their applications.

The amount of the compensation payable to each client is calculated in accordance with the contractual terms governing his relationship with the faltering broker, but in general, the maximum amount does not exceed €20.000.

Earlier in 2019, CySEC changed maximum compensation for valid claims to be either 90 percent of the cumulative covered claims or €20.000, whichever is lower. Therefore coverage = Min (90 percent Χ claimed amount, €20.000). This means that an investor who holds €50.000 with a CIF, which runs into trouble and is unable to pay, will get €20.000 from the ICF. However, if the claim is for €10.000, the coverage will be only 90 percent or €9.000, not 100 percent, as previously calculated.

Read this next

Digital Assets

Jacobi Asset Management seeks FCA’s greenlight for Bitcoin-pegged ETF

Crypto asset manager Jacobi Asset Management has received a regulatory go-ahead for an exchange-traded fund that seeks to track the price of Bitcoin (BTC) while satisfying the laws in the UK.

Digital Assets

Tether, Bitfinex to pay $41 million fine to end CFTC probe into USDT reserves

The US Commodity Futures Trading Commission (CFTC) settled Friday a nearly two-year investigation into the finances and corporate practices of Tether and Bitfinex.

Retail FX

Cypriot license of Dualix & AGM Markets parent wholly suspended

After several months of pause, the Cypriot authorities is once again flexing their muscles and actively finding compliance irregularities.

Retail FX

CySEC Suspends ‘in whole’ CIF License of Maxiflex Ltd (EuropeFX)

The Cyprus Securities and Exchange Commission (CySEC) today said it has wholly suspended the Cyprus Investment Firm (CIF) License of FX retail brokerage firm Maxiflex Ltd (trading as EuropeFX).

Retail FX

Freetrade celebrates 1 million UK users as trading platform plans to roll out in Europe

Freetrade will soon be launching in Sweden as the trading platform begins to roll out across Europe in 2022.

Industry News

Neteller launches fiat-to-crypto withdrawals 8 months after Skrill

Its sister digital wallet, Skrill, has launched its fiat-to-crypto withdrawal service in February of this year.

Institutional FX

Mexico gets US fractional shares trading via GBM – Drivewealth partnership

Drivewealth is a pioneer in fractional investing and has much to do with the momentum for real-time fractional trading within the industry.

Industry News

Jarden Securities gets slap on wrist from NZ’s FMA for violations prior merger

The regulation allows derivatives issuers to deposit money into the trust account to safeguard against the risk of a shortfall, but the FMA found the OMF did it for business-related payments to third party providers.

Industry News

Plum gets $14 million in funding as it enters race for super app

Plum, a money management app launched in 2017, has announced that it has raised $14 million in its Series A funding round from a host of investors that include Ventura Capital, dmg ventures, Global brain, and others.

<