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Financial Mail calls Cyprus the ideal turf for rip-off operators and why CySEC should change its management!

CySEC fails to regulate its subjects
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The decision of the UK regulator FCA to revoke the passporting for the CySEC regulated forex and CFD brokers Rodeler, F1Markets, Hoch Capital, and Magnum FX (Cyprus) for the UK market cannot be overestimated. Up to now, the individual EU regulators have been rather cuddly and, in the case of problems with notoriously weak regulators such as CySEC, have relied on the excuse of a lack of competence. The EU license passporting agreement was blamed time and again for non-actions. Now in the course of the Brexit, the FCA is finally showing its guts to stop this passporting abuse, according to Tony Hetherington, an investigative reporter with the Financial Mail on Sunday.

Every rip-off operator in Europe knows that if you want to set up a shady business, Cyprus is the place to go. Having a licence there gives you the right under Brussels rules to ‘passport’ your business into other European countries, which is why F1 Markets appears on the public register of our own Financial Conduct Authority even though it has no offices or staff in Britain.

Tony Hetherington in Financial Mail on Sunday

The honor belongs to CONSOB

We welcome Tony’s open statement and agree with him 100%. However, the truth must be honored at this point. It was not the FCA which, in the course of the Brexit, took the step to revoke the EU License Passporting regulations for the aforementioned Cypriot companies. It was the regulator of Italy, which remains in the EU, CONSOB, which took this necessary action back in December 2019. This gives a bit of hope for EU investors.

CySEC is a problem for EU investor protection

UK leaves the EU. OK, that is a fact and provides the FCA with a new sort of responsibility. But what are the remaining EU member states and their national regulators doing with weak regulators like CySEC? The behavior of CONSOB actually gives hope. Remarkably, after the CONSOB decision, the CySEC did not react publicly (and only the public reaction has value for investors). It took the FCA for the CYSEC to move. At the same time, all EU regulators have long known that the companies mentioned above (and many other CySEC-regulated entities) are a huge problem for EU investors.

Demetras Kalogerou CySEC CEOMaybe a new CySEC leadership could finally ensure that the EU is not attacked by “regulated” rip-off operators from Cyprus. The current leadership of the CySEC with its Chair Demetra Kalogerou is apparently not capable and/or willing of implementing an efficient compliance regime. This is actually an open secret in the EU watchdog community.

Currently, the EU Commission is striving to establish a central supervisory authority and to introduce an EU-wide compliance rule book. This is good news. However, it would also be time for CySEC to be run by people who are not run as compliant henchmen of rip-off operators from Israel.

CategoriesCONSOB CySEC

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