Eleven Forex Brokers lose CySEC Investor Compensation Fund Membership

CySEC writes off eleven handful forex brokers from its investor compensation fund membership. Besides, the list holds some now-defunct Forex brokers, including UBFS Invest, Spot Capital Markets Ltd., and Alfa-Forex.

05 November 2019, AtoZMarkets –The Cyprus Securities and Exchange Commission is better known as CySEC. It is the financial regulator of Cyprus. As an EU Member State, the regulation and financial operations of CySEC also comply with the European MiFID Financial Harmonization Law.

11 investment companies left/deleted from the ICF

CySEC announced today that 11 investment companies had been removed from the Investor Compensation Fund. However, the reason behind it is that the 11 companies in question lost their CIF license.

The companies who have left/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. SL 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 the rights of the covered clients to compensation in respect of investment transactions made prior to the loss of membership.

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Read More: Italian Regulator Blocks Six Unauthorized Forex Trading Websites

Changes to the legal framework

Recall that last March, CySEC announced changes to the legal framework governing the operation of the ICF.  As a result of these amendments, any provision relating to the limitation or refund of membership fees paid to the ICF under the new ICF directive will be removed. Yesterday, CySEC Lifts IGM Forex Suspension.

Therefore, ICF members require to maintain a minimum liquidity reserve of 3% (3 per 1,000) of their clients' eligible funds and financial instruments. So, the client must independently audit and sort that.

The amendments do not envisage any limitation on the potential extraordinary contributions of an ICF member. Besides, in the event of an adverse scenario requiring the ICF to finance the investor compensation if that meet the necessary conditions.

The new rules apply the discretionary power provided by Directive 97/9 /EC with regard to investor compensation levels. So that the maximum limit of compensation coverage is € 20 000 or 90% the hedged investor's claim, whichever is lower.

The requirement to participate in the ICF applies to all entities providing investment services and ancillary care. Regardless of whether the clients' funds and financial instruments held or not. So, this means that participation in the ICF is also mandatory for Cyprus investment firms (CIF).

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