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Screenshot of a breaking news alert e-mail from Q2 2017
The Cyprus Securities and Exchange Commission (CySEC) today published an announcement regarding an administrative penalty on Reliantco Investments Ltd, the parent company of retail FX broker UFXMarkets.
The Cypriot regulator decided to impose a fine of EUR 8,000 on the company for violating the Investment Services and Activities and Regulated Markets Law of 2007 (Law) and the Federal Directive 144-2007-02 of 2012.
The bigger part of the fine (a total of EUR 6,000) stems from the broker’s failure to obtain the necessary information about customers’ knowledge and experience with given investment instruments and in given investment segments. The rest of the penalty (EUR 2,000) is related to the broker’s appointment of a tied agent in Romania, whereas the latter had no registration in the Romanian public register.
In determining the size of the fine, CySEC took into account that the company had not committed similar violations in the past. It also considered that the company has taken steps to solve issues with affected customers.
The watchdog reiterates that Cyprus Investment Firms (CIFs) are obliged by the Law to assess whether a given product (service) is suitable for its clients.
Below you can find the text of the articles of the Law that Reliantco violated:
36 (1) c
“a CIF must, when providing investment advice or portfolio management, obtain the necessary information regarding the client’s or potential client’s knowledge and experience in the investment field relevant to the specific type of product or service, his financial situation and his investment objectives so as to be able to recommend the investment services and financial instruments that are suitable to its situation.”
36 (1) d
“a CIF must, when providing investment services other than those referred to in paragraph (c), ask the client or potential client to provide information regarding his knowledge and experience in the investment field relevant to the specific type of product or service offered or demanded so as to enable the CIF to assess whether the investment service or product envisaged is appropriate for the client; where the CIF considers, on the basis of the information received under this paragraph, that the investment service or financial product is not appropriate for the client or potential client, the investment firm shall warn the client or potential client, this warning may be provided in a standardised format; where the client or potential client elects not to provide the information regarding his knowledge and experience, or where he provides insufficient information regarding his knowledge and experience, the CIF must warn the client or potential client that such a decision will not allow the CIF to determine whether the investment service or financial product envisaged is appropriate for him; this warning may be provided in a standardised format.”
“A CIF may only appoint as tied agents persons who are registered in the public register of subsection (6) or the respective public registers of other member states that have been established pursuant to their corresponding legislation enacted in compliance with Directive 2004/39/EC.”
To view the original announcement (in Greek) about the fine, click here.