Xtrade CySEC CIF license suspension is the next breaking news from CySEC. While some industry players think that CySEC is exaggerating, some think these actions were long due.
1 June, AtoZForex – The Cyprus Securities and Exchange Commission (CySEC) has published an announcement in regards to the retail Forex broker Xtrade Europe Ltd. Particularly, the Cypriot regulator has informed the public about Xtrade CySEC CIF license suspension, ‘partial suspension’ .
We have looked into Xtrade CySEC CIF license suspension reasons. Specifically CySEC's selective measures in this suspension.
It is of course no wonder that CySEC license gives a full power for those entities aiming to enter the European retail Forex or Binary options market. Meanwhile, with so much demand, and so much limited experience (CySEC is fairly new in regulatory business) CySEC had significant mistakes in the past. However, it is time to correct those mistakes. Indeed this is probably the reason why CySEC Forex warnings and fines has been on the rise recently.
Latest CySEC compliance action covers Xtrade CySEC CIF license suspension. According to the regulator, Xtrade’s marketing materials and advertisement did not appear fair, transparent and clear. The official document from the Cypriot watchdog states that CySEC believes that Xtrade has violated the following CySEC guidelines:
A. Section 36(1) of the Law and paragraph 6, sub-paragraphs (1) and (2), of Directive DI144-2007-02 of 20121 , as the marketing material disseminated by the Company and/or its associates (affiliates/Introducing Brokers/Business Introducers – ‘associates’) does not seem to be fair, clear and not misleading.
1B. Section 28(1) of the Law due to the Company’s possible non-compliance, at all times, with the authorisation and operating conditions of section 18(2)(a) of the Law and paragraph 5(1) of Directive DI144-2007-01 of 20122 as it does not seem to have in place adequate policies and procedures sufficient to ensure its compliance with the above - considering its inability to control and monitor the marketing material that the Company and/or its associates disseminate.
Xtrade fired sixty employees
Based on the information we have received earlier in May Xtrade fired sixty employees in their Israel office. Majority of the Xtrade staff lay offs was in marketing and European conversion departments. These lay offs are probably due to the updated CySEC's call center rule as well as ISA's operations pressure on Israel based entities.
Meanwhile, Xtrade has opened a new office in Macedonia.
Partial Xtrade CySEC CIF license suspension meaning
CySEC fined XFR financial EUR225K for the previous brand name, XForex last year. Thus, it appears that the Xtrade and CySEC could not come to a common ground after the XForex CySEC Fine. As a result, the company has now received harsher action, partial suspension.
By issuing a ‘partial suspension’ of the CIF license, the CySEC has highlighted that Xtrade is not able to take new clients onboard. However, the regulator allowed Xtrade Europe Ltd to still carry out business with its existing clients.
Moreover, the CySEC has stated that the firm has one month to comply with the regulatory provisions. According to watchdog’s official notice, during this one month, Xtrade Europe Ltd:
1. Is banned from entering into a business relationship with any person and onboard any new client;
2. Cannot receive, transmit or execute any orders from new clients for buying any financial instruments;
3. Cannot provide/perform, to any new client, any investment services/activities in Cyprus or outside Cyprus (in member states and third countries);
4. Should not distribute any marketing material (advertise);
5. Must post on all its websites that its CIF license (authorization) has been partially suspended for the provision of financial services and the performance of financial activities to new clients.
The CySEC explains that this decision was taken due to the fact that the alleged violations might potentially harm the clients’ interests. Moreover, the violations are potentially dangerous for the adequate operation of the capital market. See the original announcement of CySEC here.
Xtrade global operations
CySEC is not the only license Xtrade holds. The company holds its CySEC license under Xtrade Europe name. Meanwhile, Xtrade operates under Xtrade.BLZ name in the IFSC of Belize. Finally, they also hold a license from Australian watchdog ASIC.
AtoZForex team has reached to Xtrade for more information. At the time of publication, we have not received any update from the company.
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