CySEC names 11 firms losing their Investor Compensation Fund membership

Maria Nikolova

The firms are delisted because they have lost their CIF authorizations.

The Cyprus Securities and Exchange Commission (CySEC) today announces that 11 investment firms have been delisted from the Investor Compensation Fund. The reason for the delisting is that the 11 firms in question they have lost their CIF licenses.

The firms who have left / are deleted from the ICF are:

  • 1. Argo Capital Management Cy Ltd
  • 2. Centaur Financial Services Ltd
  • 3. DFG Capital (Cyprus) Ltd
  • 4. Globesco Capital Ltd
  • 5. Kit Finance Brokers Ltd
  • 6. Lykke Cyprus Ltd
  • 7. NTFX Capital Ltd (ex. Alpha Forex Ltd)
  • 8. Postscriptum Capital Ltd
  • 9. S.L. Capital Services Ltd
  • 10. Spot Capital Markets
  • 11. UBFS Invest – Moneychoice Brokers Ltd

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.

Let’s recall that, in March this year, CySEC announced 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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