€100k: CySEC fines BCM Begin Capital (CapitalPanda and ProfitLevel) for “possible violations”

Rick Steves

The brokerage firm operates ProfitLevel, CapitalPanda, and Begin Capital Markets.

The Cyprus Securities and Exchange Commission has fined BCM Begin Capital Markets CY Ltd €100,000 for “possible” violations of the Investment Services and Activities and Regulated Markets Law of 2017 – L.87(I)/2017.

The CySEC-regulated CFD brokerage firm was able to settle with the regulator after the latter found “possible violations” between January 2021 and September 2021.

BCM Begin Capital Markets CY Ltd holds CIF license number 274/15 and operates a number of brands including Profit Level (www.profitlevel.com), Capital Panda (www.capitalpanda.com), and Begin Capital Markets (www.begincapitalmarkets.com).

Compliance issues between January and September of 2021

More specifically, the violations concern the broker’s compliance with:

  • 1. Article 5(1) of the Law, regarding the requirement for CIF authorization.

“5.-(1) The provision of investment services and/or the performance of investment activities as a regular occupation or business is subject to prior authorisation in accordance with this Chapter. In relation to CIFs, such authorisation is granted by the Commission”

  • 2. Article 25, paragraph (1) and (3), of the Law, regarding general principles and information to clients.

“25.-(1) A CIF must, act honestly, fairly and professionally when providing investment services, or, where appropriate, ancillary services, to clients, in accordance with the best interests of its clients, and comply, in particular, with the principles set out in section 26.”

“25.-(3) CIFs must ensure that: (a) all information, including marketing communications, addressed to clients or potential clients are fair, clear and not misleading, and (b) marketing communications are clearly identifiable as such.”

BCM Begin Capital Markets has already paid the €100.000 fine, according to the government agency. Amounts payable relating to settlement agreements are considered revenue of the Treasury of the Republic and do not constitute income of CySEC.

CySEC updated rules on cross-border activities

CySEC has recently updated the rules for brokers’ cross-border activities. According to the circular, onboarding overseas clients now requires a broader set of features and the presence of an active regulatory approval to ensure soundness of operating in another jurisdiction.

However, the Cypriot regulator has opened both doors – flexibility in its legal requirements as well as the ability to restrict the CIF’s access to provide investment activities in a third country.

The CySEC’s newest circular is devoted entirely to explaining the exact steps of the process. CIFs should carry out the following actions:

  • Prior to providing/performing the said services/activities in third countries, CIFs need to acquire the necessary authorisation by the respective competent Authorities of the third countries, in accordance with their legislative framework.
  • (ii) CIFs should provide CySEC with a certified copy of the authorisation for the provision of these services by the competent Authority of the third country.
  • (iii) In the case that the third country does not require such authorization, the CIF must provide CySEC a relevant certificate from the competent Authority of the Third country, stating that the legislation does not require such authorisation for the services/activities to be carried out.
  1. CIFs are exclusively responsible for acquiring such authorisation by the competent Authorities of the third countries.
  2. CIFs must also file this information in the Portal and notify CySEC in writing of any subsequent changes to the third countries in which they operate.
  3. All existing and newly established CIFs must declare on their websites the names of all the third countries in which they provide/perform services/activities.
  4. CIFs that are already operating in third countries should ensure that they continue to comply with the Legislative Framework applicable in the relevant Third Country.

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