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London Capital Group Rubs Shoulders With CySEC

The Cyprus Securities and Exchange Commission (CySEC) has imposed on London Capital Group Cyprus Ltd an administrative fine of EUR 40,000 for going against Article 16(2) of the Regulation (EU) 596/2014 on market abuse.

But, London Capital Group isn’t the only broker that has had to rub shoulders with the watchdog. Forex brokers can’t get away with anything these days, not even when they’re based in Cyprus. But, don’t take my word for it.

Recently, CySEC has been active in its oversight within the Forex industry landscape. They have partially suspended the Cyprus Investment Firm (CIF) license of Indication Investments Ltd, operator of FX and CFDs broker Libertex.com earlier this month.

But, why? The decision was reached, partly after they were able to determine that many traders on their site had not received a fair representation when it came to price-setting for various currencies pairs during trade execution periods last year.

Some trades occurred at rates up to 10% lower than those stipulated by international forex market participants or markets makers.

But, these were just among the multiple allegations the watchdog had against Libertex influencing the August 3 decision. The common ground? All of them pointed to a single thing – mandatory compliances violation.

Adding to that, CySEC has found that the broker may have ignored restrictions on selling CFDs to retail clients.

On the same note, CySEC is warning brokers about penalties for not complying with regulations that restrict marketing, distribution, and sale of CFD products to only qualified investors who are capable of assessing risks associated with these financial instruments.

In a similar case, The Cypriot regulator made an intense decision when dealing with Globia Wealth Limited who chose of its accord to renounce its own CIF license last month after regulatory concerns were raised about them.

In late July, Cyprus’s financial services supervisor announced that GBL will no longer have access to any form of capital market support. They were also banned from providing cross-border investment management activities until further notice. Meaning all digital assets are put on hold.

The Cyprus Securities and Exchange Commission’s board held a meeting on April 5, 2021, discussing London Capital Group (Cyprus) Ltd failure to comply with multiple mandatory requirements as stipulated in article 16(2) of Regulation (EU) 596/2014 on market abuse, and further in Articles 2 and 3(8) of the Delegated Regulation (EU) 2016/957 supplementing Regulation (EU) 596/2014.

Remember, these regulations are in place to help brokers safeguard their clients.

For instance, London Capital Group was found guilty of not putting in place measures to unmask and report suspicious transactions and orders that may lead to further crimes like money laundering.

Neither do they have systems in place to monitor such. As of press time, the broker is yet to release an official statement of the decision reached by the CySEC.

One thing is clear, though – The Cypriot financial watchdog has been making unprecedented moves that will change the economic landscape of Europe forever.

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