The Cypriot watchdog – CySEC – has informed on Friday that it has suspended the licenses of four CIF-licensed brokerage groups.
These are the following brokers, whose licence has just been suspended:
Leadtrade Ltd, which operates the TopOption, Prestige Option, Excellence Option and Platinium Option binary options brokerage brands,
TTCM Traders Trust Capital Markets Ltd, which operates TradersTrust,
Gametech (Cyprus) Ltd, which operates binary options broker ProOptions, and
Dragon Options Ltd, which operates the eponymous binary brand Dragon Options.
CySEC states for all the four brokers, that the suspension was for suspicions of an alleged violation of a lack of Own Funds, and inadequate Capital Adequacy Ratio. Each broker 10 days to take action in order to comply with the aforementioned provisions.
However in the interim, while the license suspensions are in force, each broker cannot take on any new clients, cannot receive, transmit or execute any orders from clients, cannot advertise itself as an investment services provider, and must mention on all of its websites that its CIF licence has been suspended. The brokers may however close out client positions and return funds to clients.
Nevertheless, such approach of CySec will only end in going offshore and abandoning regulated broker status under the new restrictions placed by CySEC and other European regulators on licensed brokers.
Two major restrictions are related to bonuses for clients as one of the major marketing tool, used predominantly by binary option brokers in attracting new clients and in enticing existing clients who lose money to deposit even more funds, and the pending requirement to have all customer facing activity – sales, retention, customer service – physically supplied from Cyprus or from another MiFID-member EU country to which the broker’s license has been passported.
Here it seems that the regulated brokers are losing the benefits of being part of the “brokerage elite” as unregulated brokers may use much wide range of tools to attract clients, who are interested in such advantages.
Dragon Options has already published a pop-up message on its website informing that the client accounts have been transferred to an offshore company called Rainbow Capital Ltd. Rainbow Capital Ltd. is an entity registered in Vanuatu, a popular offshore destination.
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