Material amount of AFX Capital's client funds is missing, CySEC says - FinanceFeeds

Material amount of AFX Capital’s client funds is missing, CySEC says

Maria Nikolova

No decisive conclusion can be reached with regards to the size of the deficit, the Cypriot regulator says.

The Cyprus Securities and Exchange Commission (CySEC) has earlier today published an announcement for the clients of AFX Capital Markets Ltd, the retail FX brokerage whose CIF license was suspended back in July this year.

CySEC reiterates that it is conducting an investigation for the alleged violation of section 22(1) of Τhe Investment Services and Activities and Regulated Markets Law of 2017 (‘ the Law’) due to AFX’s possible non-compliance with the authorisation condition in section 17(9) (organisational requirements) of the Law, as specified in paragraphs 4, 6 and 9 of Directive DI87-01, for the safeguarding of funds belonging to clients.

Despite the complexity of this particular investigation, CySEC says it aims to finalise it as soon as possible.

It should be noted that in the meantime AFX’s license remains suspended.

The regulator explains that, according to the information gathered, there is a material amount of client funds missing. At this stage, no decisive conclusion can be reached with regards to the size of this deficit which is subject to CySEC’s ongoing investigation, the Commission says.

In the meantime, CySEC and the Financial Ombudsman have established an exemption to the normal complaint procedure. Under the amended procedure, AFX clients can submit their complaint through the respective websites, without a unique reference number (URN).

Shortly after the suspension of AFX’s license in Cyprus, the website of the firm has gone black. It is not accessible at the moment.

In the UK, AFX Markets went into administration, with a recently published report by the administrators showing a gap in client funds. Information provided by AFX to the Financial Conduct Authority on July 23, 2019, indicated that the company held £7.8 million in client money with 1,025 live customers. On August 12, 2019, the company notified the FCA that there was only £458,697 held in their UK bank accounts. Thus, there is a deficit of more than £7.3 million.

Since their appointment, the administrators have sought the assistance of the directors of AFX but requests for important information to assist the administrators remain outstanding.

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