CySEC fines parent of InvestFW, TradeFW and Tradedwell with €1 million

CySEC has further 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.

Itrade Global operates three retail FX brands, InvestFW, TradeFW and Tradedwell. However, the CySEC’s fine apparently reflects the violations made by a “tied agent,” which the company appointed to act on its behalf in Spain.

The Cypriot watchdog provided a breakdown and specific details for the regulatory action, saying its decision was taken, based on possible violations of local regulations and for not acting honestly when approaching their clients. Further, the brand flagged for non-compliance with authorization conditions stated in many articles, which mainly concern the appropriateness of their products offered to certain client segments.

More specifically, the statement refers to the broker’s failure to establish adequate policies and procedures to ensure the compliance of its marketing material with regulatory obligations. This may include the failure to maintain an internal operation manual or orderly records of the information related to the assessment of its marketing materials.

A fine of €120.000 was specifically issued for violation of section 24(1) of the Law, the circular states, as Itrade Global did not take reasonable measures to identify or prevent conflicts of interest between itself and its tied agent on one hand and its clients on the other.

CySEC has further explained that the fiscal penalty was also imposed for non-compliance with other articles relating to the information provided on the broker’s website, which was not appropriate or sufficient to allow clients to reasonably understand the nature and risks of the investment service that the company offers.

“Section 17(3)( c) of the Law, as the Company, in the product approval process, it did not specify an identified target market of end clients and did not ensure that all relevant risks to such identified target market were assessed and that the intended distribution strategy was consistent with the identified target market,” the statement reads.

Last year, the CNMV issued a circular that adopted an aggressive tone and threatened some European brokers that they could end up closing their activity in Spain, as the watchdog was fed up with their unfair practices. In essence, the guidance concerns companies that offer forex, contracts for difference (CFDs) and other speculative products among retail investors in Spain.

At the time, the Spanish regulatory body said it mainly examines CFD brokers based in Cyprus, and that it has its sights set on those who use overly aggressive tactics and practices. Additionally, the CNMV’s tightening covers activities involving the acquisition of retail clients, including information provided through marketing channels.