Cyprus Brokers: 2675 complaints in 2015

Most forex and binary options brokers are based in Cyprus, and that for a very good reason.

EU rules on investment services contain a loophole: the Single Market freedom allow Cypriot investment firms to make business in all Europe. But the principle of „subsidiarity“ also allows Cypriot investment firms to operate under the sole supervision of Cyprus authorities. It is unbelievable : financial regulators of other Member States have no jurisdiction on Cypriot brokers and will decline competence, if you complain.

Since the Cypriot supervision of investment firms is a „soft touch“ (or „no touch“) supervision, the sole competence of Cyprus allows Cypriot brokers to break the law in almost complete impunity.

In the past, the lack of supervision in Cyprus has been in several cases a „license to rob“ for investment firms.

This is particularly true in relation to the protection of clients‘ funds.

As shown in the Annual  Report of the Cyprus Securities and Exchange Commission (CySEC),  2675 complaints were filed to the CySEC in 2015:

70 % of these complaints were related to clients‘ funds.

If we consider  that 87 % of forex and binary options clients make losses, so that the complaints are filed by the clients‘ minority who is making profit, a number of 2000 complaints related to clients‘ funds is a huge number, which raises a basic question about the protection of clients‘ funds in Cyprus.

The CySEC does not provide any information about the outcome of these complaints. Could the brokers get away with clients‘ money ?

Damaged clients don’t have at the moment any possibility of a consumer redress against financial services in Cyprus. The EU directive on Alternative Dispute Resolution was not implemented, as stated in a letter by the EU Commission.

Another important aspect is the lack of a proper Investor Compensation Scheme in Cyprus. The current scheme is underfunded, has never paid compensation to investors and its financial statements are neither audited nor made public. So we believe that Cyprus Investor Compensation Fund only exists on paper. A reform has being discussed, but not yet implemented.

At this stage, we recommend not making business with forex brokers based in Cyprus.

Here an uncomplete list of forex and binary option brokers regulated in Cyprus. Please be aware that the „brand“ and domain names mostly differ from the company names. You find full and updated details about the domains of regulated companies on CySEC website

 

 

 

 

 

 

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