EU regulators’ problems with CySEC and its investment firms

CNMV is pissed-off by CySEC investment firms
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Before Brexit, the UK Financial Conduct Authority (FCA) suspended the EU license passporting rules and banned several CySEC-regulated Ínvestment Firms (CIF). Among them Magnum FX, Rodeler, Hoch Capital, and F1Markets. Roy Almagor‘s two firms – Maxigrid and Maxiflex voluntarily withdrew before the FCA blocked them. The Italian Consob has already blocked some CySEC CIFs from the Italian market before the FCA. Now a problem is also looming from Spain’s CNMV as per a CySEC circular. Truth is, that CySEC and its CIFs have long been an issue for EU regulators.

Already on November 24, 2020, the CNMV had pointed out in a public statement the problems with regulated investment firms (IFs) of other regulatory regimes in the EU. The Spanish regulator pinpoints the issues with cross-border marketing and other bad practices. This primarily referred to CySEC CIFs. These would attack Spanish consumers and investors through unauthorized affiliates but also through unauthorized related companies via boiler rooms.

CySEC issued a circular on January 21, 2021, alerting its CIFs to the situation with CNMV. The circular was signed by the regulator’s long-time chairwoman Demetra Kalogerou and urges the CIFs to reconsider their business practices regarding aggressive marketing via affiliates, boiler rooms, and the operation of unauthorized Spanish websites.

In fact, the international broker scene knows that a large number of the nearly 250 CIFs operate outside or circumvent EU regulation via offshore companies and affiliates. CySEC actually provides for CIFs to report and have their subsidiaries and affiliates approved. In fact, hardly any CIF complies with this provision. And, sure, CySEC and its Chairwoman Demetra Kalogerou know this very well. The CySEC CIFs and the laissez-faire regulation in Cyprus indeed are a problem for the entire EU.

Additional source: Finance Magnates


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