Though constantly mocked for being perhaps the most lax financial regulatory body, the Cyprus Securities and Exchange Commission (CySEC) is continually working to discredit these rumors. CySec is the financial regulatory agency of the Republic of Cyprus. Since Cyprus became a member of the European Union in 2004, CySec has become part of European MiFID regulation, giving firms registered in Cyprus access to all European markets. Many overseas firms have since registered in Cyprus to take advantage of this regulatory regime.
CySec has always been one of the weakest Forex regulatory agencies and has of late been taking measures to improve its image. We have seen CySec's policies up front over the last few months in their efforts to underscore what they see as the importance for brokers to "?correctly screen their clients and comply with laws and regulations."
On May 27th, they imposed a €5000 administrative fine against Trading Point of Financial Instruments after the brokerage failed to comply with CySEC's policies regarding client fund protection. The firm was also fined for irregularities in its anti- money laundering policies. Trading Point of Financial Instruments is the company behind the popular broker XEMarkets. CySec claimed that the minimal fine was levied in consideration of the "?the fact that the firm has never been fined in the past." Trading point, an exceptional broker out of South African has always operated in accordance with MiFID regulation.
To further prove its determination, last week CySec confirmed that LQD Markets had agreed to settle with the regulator after having received a request to pay €80,000 following a compliance inspection carried out by the controller. A spokesman for LQD Markets explained on behalf of the company that it has cooperated fully CySEC and has undertaken a number of remedial measures and improvements. They have also agreed to pay part of the administrative costs, a move they consider to be their commitment to their own improvement. They are now in full compliance to CySEC's satisfaction.
CySEC's current stringency seems to have been assumed following the introduction of a stricter European regulatory framework which was emphasized by CySEC Chairman Demetra Kalogirou at this year's Forex Magnates IFXEXPO in Cyprus. The focus at the Expo was the future of the FX industry in Cyprus following this year's banking crisis and Ms. Kalogirou confirmed CySEC's commitment to supporting the FX industry on the island, whilst safeguarding customer confidence by ensuring that its rules and regulations are strictly adhered to.
The SEC Also Flexes its Muscles
Following in the footsteps of CySEC, the Securities and Exchange Commission filed a civil injunctive action on June 5 in the United States District Court for the District of Nevada charging the Cyprus-based company, Banc de Binary Ltd, with selling binary options illegally to U.S. investors. Banc de Binary Ltd was among the first binary options brokers in the European Union; it began offering binary options to investors across the United States in 2010.
The SEC alleges that Banc de Binary has been offering and selling binary options without first registering the securities as required under the federal securities laws. The broker is accused of creating accounts with the company, depositing money into those accounts, and then purchasing binary options whose underlying assets include stock and stock indices. Apparently, they were able to successfully attract customers with modest means.
Banc de Binary Ltd released the following statement to all its US clients informing them that they will no longer be conducting business in the United States:
