24Option has been banned from providing its services in Italy following several complaints forwarded to Consob by Italian investors.
Why Consob banned 24Option?
Per the statement on the watchdog’s website, 24Option is no longer allowed to solicit or take on new clients from Italy. Furthermore, relations with existing clients must be terminated. These clients must also be allowed to close their positions and withdraw their funds.
The clampdown includes the following internet domains related to the company:
24Option was banned for repeatedly violating the regulations in force despite the directions of CySEC. The ban was noteworthy because this is the second instance of a Cyprus-based company is being denied access to the Italian market.
The company has also violated the EU directive that mandates negative account protection. This ensures that customers can’t lose more than their trading stake.
24Option is now barred from providing investment services in Italy. The decision also prevents the Cypriot intermediary from soliciting customers or to continue their current relations with Italian clients.
The watchdog clarified that it made the latest decision under the article 7-quarter, paragraph 4 of the Consolidated Law on Finance (TUF). Their decision is also based on article 86 of Mifid2. This legislation allows CONSOB to order investment firms and brokers operating in the country from another EU member state, through the EU passporting regime, to cease their operations after informing the competent authority of the member state.
Italian investors complained about CFDs
The prohibition was justified by several complaints forwarded, even recently, to Consob by Italian investors, describing serious irregularities made by the Cypriot firm. The complaints concerned activities related to Contracts for Difference (CFDs), financial instruments regarding which Consob already intervened. They have done this by restricting the marketing of CFDs in Italy to retail investors.
In some cases, the complaints against Rodeler concerned the total loss of the invested capital. It also involves the inappropriate classification of clients as well as aggressive marketing techniques.
Consob’s precautionary measure will remain in force until clear evidence is obtained from CySEC. The evidence will prove that Rodeler Limited has fixed the issues reported by the Italian clients.
The French regulator banned traders from trading with 24Option in May 2018, after the AMF determined the company was providing binary options services to French clients. The watchdog, however, waived the prohibition. This was after 24option had taken measures to remedy the situation, namely marketing only trading products allowed in France.
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