Fortunately, the clients of both brands 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Earlier in April, CySEC had withdrawn the license of Trilt Ltd, the Cypriot arm of a multi-regulated broker that operates under the same brand name across Europe. Trilt Ltd has a considerable global presence and offers CFDs in several markets including forex, cryptocurrencies, indices, stocks and commodities. The broker is authorised by Cyprus Securities Exchange Commission (CySEC), and has also been registered with the Spanish CNMV, Italian CONSOB, German Bafin, French AMF and Norway FSA.
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 companies in questions, 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.
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.
