CySEC Fines Itrade Global €1 Million for Violating Investment Laws in 2020

Itrade Global (Cy) Limited and its affiliated companies have been fined €1 million by the Cyprus Securities and Exchange Commission (CySEC) for breaking Cypriot investing regulations in 2020.

Suspected Non-Compliance

According to CySEC, the settlement settled claims of violating a number of rules, including conflicts of interest and client information. Although Itrade Global has three retail FX brands—InvestFW, TradeFW, and Tradedwell—the punishment is a result of transgressions committed by a “tied agent” the business hired to represent it in Spain.

INVESTFW

TRADEFW

TRADEDWELL

Breakdown of Regulatory Actions

In a summary of the regulatory action, CySEC said that its decision was based on potential breaches of local laws as well as for not approaching customers honestly. The brand was highlighted for not adhering to the permission requirements indicated in a number of articles, particularly those pertaining to the suitability of the items sold to certain clientele categories.

Failure of Marketing Material Compliance

The assertion relates to the broker's inability to set up sufficient rules and processes to guarantee that the marketing materials it uses to comply with legal requirements. This can be failing to keep an organized record of the facts pertaining to the evaluation of its marketing materials or a manual for internal operations.

Violation of the Law's Section 24(1)

Itrade Global failed to take reasonable steps to detect or avoid conflicts of interest between itself and its linked agent on the one hand, and its customers on the other, leading to the particular issue of a punishment of €120.000 for violating section 24(1) of the Law.

Failure to comply with the requirements for information provision

The financial penalty, according to CySEC, was also imposed for breaking other laws relating to the broker's website's information, which was insufficient or inappropriate to give customers a reasonable understanding of the nature and risks of the investment services the business provides.

“Section 17(3)(c) of the Law, as the Company, in the product approval process, it did not specify an identified target market of end clients and did not ensure that all relevant risks to such identified target market were assessed and that the intended distribution strategy was consistent with the identified target market,” according to the statement.

CNVM Notice

The CNMV warned several European brokers in a circular it sent last year in an aggressive tone that they could have to stop operating in Spain if they continued their unethical business practices. The advice primarily applies to businesses that provide retail investors in Spain with forex, contracts for difference (CFDs), and other speculative products.

CFD Brokers Located in Cyprus Are Being Examined

The Spanish regulatory agency said at the time that it primarily analyzes CFD brokers with offices in Cyprus and that it has its eyes set on those who use excessively aggressive techniques and procedures. Additionally, the CNMV's scope includes information supplied via marketing channels as well as actions regarding the acquisition of retail customers.

Itrade Global (Cy) Limited was penalized €1 million by CySEC in 2020 for breaking the country's investment regulations. The settlement addresses claims of violation of a number of articles, including conflicts of interest and client information. The brand was reported for not adhering to the licensing requirements, particularly with regard to the suitability of the items sold to certain clientele categories. Section 24(1) of the Law was broken, and a €120.000 punishment was issued for it. A financial penalty was also imposed for breaking other information-related articles.

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