Unregulated CFD & FX Sites Increasing
It’s officially been over a year since the European Securities and Markets Authority revealed their new product intervention measures for the union. Since that announcement, unregulated entities in Europe have increased dramatically. Regulations across the continent are trying to fight back, such as the Cyprus Securities and Exchange Commission. Every week they’re flagging down new websites that are unregulated and providing CFDs, Cryptocurrencies, Forex or Binary Options.
Several websites have been listed as unregulated entities from CySEC. Those include:
Most of these sites claim to be regulated by the Cyprus Securities and Exchange Commission. CySEC has confirmed that none of these websites even made efforts to receive a license and have warned consumers across the European Union to not trade with any of these several sites.
Cyprus has seen an influx of companies entering their region, but not making efforts to receive a licence from CySEC. The flow of illegal finance activity in the country is the result of the product intervention measures implemented by the ESMA. This saw countless investors; retail clients and brokerages leave their markets for an unregulated service. This was so that everybody could continue to maintain the high leverages they’d grown accustomed to, but regulations are doing everything in their power to ensure that the impact of these unregulated entities is minimal.
CySEC needs to implement a third version of the MiFID Regulatory Guidelines. This is possible now that the regulation board has priority control over Cyprus’s regulated FX & Crypto markets. By removing a significant portion of the product intervention measures implemented by the ESMA, most brokerages unregulated in Cyprus will move towards receiving a license. This is CySEC’s best shot at solving the issue, as even though Cyprus is considered a finance haven, they’ve still seen a decrease in trading volumes in the last year. Crypto has grown to be one of the largest industries in Cyprus, which means failure isn’t an option.
Misleading Tactics Luring Consumers
Not only have these firms avoided receiving a license through the Cyprus Securities and Exchange Commission, but they’ve also implemented misleading tactics onto clients. One of these tactics is by using a call centre outside of the European Union, which frequently claim that these unregulated websites are regulated and maintained by the protocols enacted by CySEC.
The regulator implores that consumers have vigilance when it comes to creating an account with any brokerage in Cyprus. It’s best to confirm with the national finance supervisors or with CySEC to determine if the brokerage is legal or not. Additionally, if the brokerage is illegal, the Cyprus Securities and Exchange Commission will immediately blacklist the site and recommend a secure one for consumers to continue their trading activities.
The success rate for CySEC is determined by the number of consumers that report unregulated websites or inquire about the reliability of another brokerage. Customer service agents are available globally through a telephone hotline and won’t record any of the information provided over during the call. The privacy related to an abuse claim ensures the safety of consumers.
The Cyprus Securities and Exchange Commission has also proposed a new form of regulation that would benefit retail clients. The new proposed rule would allow for three-tiers for cryptocurrency, with the smaller tier having a 20:1 leverage and the highest tier having a 50:1 leverage. By implementing these three new tiers, a minimum of a hundred new employees would be hired on with CySEC. These employees would work primarily to ensure that all FX & Crypto Brokerages in Cyprus are legally licensed.