Libertex Parent Pays €160,000 to Settle Violations with CySEC

The Cyprus Securities and Exchange Commission (CySEC) has just announced that it has reached a settlement with Indication Investments Ltd, fining the firm €160,000 for violating the Investment Services and Activities and Regulated Markets Law.

Cyprus Investment Firm (CIF) Indication Investments Ltd is operating the CySEC-approved domain The company runs the FX retail brand Libertex, stands for Liberty Exchange, which enables the broker to offer its services across Europe.

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The CySEC settlement reflects the possible violations of several articles of the Investment Services and Activities and Regulated Markets Law, the regulator states.

More specifically, the fine was for non-compliance with articles 22(1) regarding the conditions for CIF authorization, as well as articles 17(3)(a) and 17(4), which often refers to a CIF’s organizational requirements.

Indication Investments has taken corrective measures

The CySEC has also refenced ESMA’s temporary intervention powers as Indication Investments seemingly violated the leverage limits offered to retail clients, as well as the margin close out rule on a per account basis. The latter intended to standardize the percentage of margin (at 50% of minimum required margin) at which providers are required to liquidate CFDs trades.

However, it is important to note that fines are usually issued within six months of an inspection, which dates back to November 2018, so at the point of the fine, the majority of issues should have already been resolved.

Several European regulators pushed to come up with country-level permanent restrictions against CFDs and binary options even as every EU member has the right to implement its own rules tailored to their national markets.

The ESMA rules also mandate negative account protection, ensuring that customers can’t lose more than their trading stake, avoiding a repeat of the debacle following the 2015 Swiss Franc collapse. Finally, the rules forbid bonuses and other incentives, whether monetary or non-monetary, that may have encouraged overtrading in recent years.

For brokers, the biggest blow has been ESMA’s decision to limit how much leverage they can offer to their clients to juice up bets. Regulated firms have been forced to limit the leverage they offer to a maximum of 30:1, with limits of as little as 2:1 on cryptocurrencies. Revenues and profits at XTB, Plus500, IG Group, and similar CFDs brokers have slumped since the rules came in force.

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