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Stop Abuse of Clients‘ Money
Stop Abuse of Clients' Money
In recent years a large number of online investment firms offering speculative financial instruments (and mainly operating from Cyprus), have developed a business model based on making profit upon retail clients' losses.
This business model is aimed to make retail clients lose their entire deposited capital through high risky and high leveraged financial instruments, which are dealt on trading platforms which are not regulated venues and can be easily manipulated by the owners.
If clients do not lose money, such investment firms usually refuse to payout clients' funds or delay the payments for months, which has been a widespread and systemic practice for years in the European Union due to the lack of supervision and sanctions.
We request the EU-wide implementation of a real, consumer-friendly protection of clients' money.
For this purpose, we suggest clients' money which is invested in speculative financial instruments to be protected by following measures:
1. ESMA has to use intervention powers pursuant to Art. 40 MiFIR in order to ban the business practice of withholding clients' money.
2. Clients' deposited money must be anytime available to retail clients. Clients' withdrawal requests must be executed within 1 working day. Non-compliance must be sanctioned with a fixed daily penalty, payable to the client.
3. Before charging clients' money with losses, investment firms have to submit evidence of best execution and compliance with MiFID 2 (reversal of proof in favor of clients).
4. Investment firms have to submit daily reports to the NCA's about
a) details of deposited clients' money
b) details of received withdrawal requests
c) details of executed withdrawal requests.
5. Reports about the profit made by investment firms with speculative financial instruments must be made public. Audited financial statements of MiFiD investment firms must be made public.
6. Brokers dealing on own account (market makers) have to publish the warning: OUR PRODUCTS ARE NOT TRADED ON AN EXCHANGE