30 March, AtoZForex, Amsterdam - 2016 is the year of no mercy for Cyprus Securities & Exchange Commission (CySEC). With today’s €235K AnyOption CySEC fine, Cyprus watchdog once again shows that 2016 is not going to be 2015.
The issued announcement covers an administrative fine of €235,000 against the Cypriot Investment Firm (CIF) Ouroboros Derivatives Trading Ltd, which is the parent company of Anyoption, Binary Options Broker over non-compliance with three main regulatory legislations:
- the Investment Services and Activities and Regulated Markets Law of 2007, as amended from time to time (‘L.144(Ι)/2007’),
- the Directive DI 144-2007-01 of 2012 of the Securities and Exchange Commission for the Authorisation and Operating Conditions of CIFs (‘Directive 1’),
- the Directive DI 144-2007-02 of 2012 of the Securities and Exchange Commission for the professional competence of Investment Firms and the natural persons employed by them (‘Directive 2’).
Although the announcement does not mention the name of AnyOption, it should be noted that Ouroboros Derivatives Trading Ltd is the owner of AnyOption brand name which is binary options broker.
Although the €235K AnyOption CySEC fine announcement was made today on the 30th of March 2016, the decision was made during the CySEC board meeting held on 18/01/2016.
Meanwhile the given €235K fine is divided into 7 categories according to the announcement:
Α. €70.000 was given for non-compliance with Section 6(8) of L.144(Ι)/2007 based on breach of company license scope as the company provided Investment Advise
Β. €10.000 for non-compliance with Section 28(1) of L.144(Ι)/2007 as the company failed to comply at all times with the authorization and operating conditions, as laid down in Section12(4) of L.144(I)/2007. This mostly applies to the company’s executive director who did not commit necessary time nor effort to perform his duties and did not adequately supervise the Company’s services/activities.
C. Additional €10.000 fine was given for not keeping an up-dated/complete internal operations manual as well as the Company did not implement and maintain effective and transparent procedures for the reasonable and prompt handling of complaints eceived from clients. which is a part of the Section 28(1) of L.144(Ι)/2007 and Section 18(2)(a) of L.144(Ι)/2007 and paragraph 4(1)(f), 13 and 14 of Directive 1.
D. €20.000 fine was given due not to taking reasonable measures to avoid any aggravation of the operational risk and not to impair the CySEC’s ability to supervise the Company’s compliance during outsourcing of the company marketing and sales services outside Cyprus.
E. €40.000 fine was given as a result of failure to act fairly, honestly and professionally in accordance with the best interests of its clients in relation to the terms and conditions for the granting of benefits (trading bonus).
F. €30.000 fine was given due to unfair, unclear and misleading advertisement.
G. €15.000 fine given due not to providing appropriate nature of the business to the clients, the nature and risks of the investment service offered and the specific type and the proposed financial instrument.
H. €40.000 fine was given due to incomplete process where the company failed to ask clients to provide the necessary information regarding their knowledge and experience, to assess whether the investment service or financial instrument envisaged is appropriate for them.
What next for AnyOption?
The company has agreed with CySEC to take a number of corrective measures:
- improve compliance and the monitoring of the activities of the call centers
- continuous staff training
- move all call centers to Cyprus, which will contribute to a more efficient monitoring of the activities of the call centers
- adopted complaint handling procedures and its clients are informed of the procedure through the Company’s website
- corrective measures regarding the granting of benefits to clients
- revision of the terms and conditions for the granting of benefits to clients
- revised the material directed to clients via its website
CySEC in action
In 2016 CySEC has been focusing on compliance issues with every CIF inside the country. While previously many brokers had their registration in Cyprus and their actual operations in Israel and many other countries, CySEC appears to be focused to bring the employment and structure home.
Outsourced Sales/Call center teams often convince traders by offering them “daily analysis” or even “daily individualized trade advises in the form of Forex signals” while the reality is that they can only provide market commentary as a part of broker research which is a broad commentary and often not tradable.