CySEC lashes back at critics

Over the past couple of days CySEC has come out with a number of announcements regarding fines charged to a number of CySEC regulated brokerages, with the most notable being the 50,000 Euro fine given to eToro and the 100,000 Euro fine given to the operators of UFX Markets. But today CySEC has made a public statement in which it defends the actions of the past couple of days:  

‘CySEC wishes to stress that a settlement agreement DOES NOT in any way give a safe harbor to anyone from his obligations to comply with the relevant legislation. Following a settlement agreement, CySEC carries out new inspections to make sure that compliance has been achieved.

It is noted that the amounts due from settlement agreements are calculated as revenue (income) to the Treasury of the Republic and are not calculated as an income for CySEC.’ 

This statement seems to be hitting out against people who have made two of the following criticisms of CySEC recent behavior

  1. That CySEC has been imposing such fines in a way to make up for a loss of governmental revenue to the body, something which LeapRate appeared to accuse CySEC of. 
  2. That CySEC is offering safe harbor to brokerages which are breaching regulation in return for cash in the form of fines. Meaning that questionable brokerages are operating with their licences intact. 
CySEC’s response deals with these criticisms in two ways, firstly regarding the issuing of fines they state that fines issued by CySEC are not calculated as revenue for the organisation and are instead counted as revenues for the government. While Cyprus may be in dire straights I doubt the government has put any pressure on CySEC to clamp down on brokerages for financial reasons.  
 
The letter also responds to accusations that Cyprus is acting as a safe haven for brokerages and thus allowing them to flout MiFID regulations. Again Cyprus denies these accusations stating that the recent organisations which have been fined, will have new inspections undertaken to ensure that they comply fully with the regulations in the relevant respects. 
 
One possibility for the actions undertaken by Cysec in the past couple of days may be governmental pressure. The government of Cyprus is in need of a bailout of around 17 billion Euros, with Germany stating that they want to see some change with how Cyprus is regulated in general. Whether the government is applying more pressure on regulatory bodies now the country is in Europe’s spotlight may be one possibility or it may be simply a case of CySEC toughening up its act.

 

Admin

2 comments

  1. Just a little clarigication: the fine on eToro has been imposed in relation to alleged weaknesses in the early stages of eToro operation back in the year 2010. All weaknesses have been rectified as confirmed by CySEC. We are working in full cooperation with CySEC to make sure that we follow the highest compliance standards.

    Thank you,
    eToro Team

  2. Again Thanks for your comment and I understand that your fine was for alleged weaknesses in 2010. I have no doubts that eToro are currently completely compliant with CySEC regulations now and it seems rather harsh from CySEC to back date a fine as such. I hope this fine from CySEC hasn't damaged your reputation to much and you bounce back from it.
    Many Thanks,
    Made To Trade

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