The Cyprus Securities and Exchange Commission (the “CySEC”) has warned Cyprus Investments Firms (CIFs) trading in contracts for difference (CFDs) that they must take immediate action to improve their practices, or they shall face enforcement action.
CySEC said it is introducing additional controls for cross-border services and that investor protection will be strengthened under new rules regarding how complaints are being handled. Where repeated weaknesses and/or a failure to implement remedial measures is detected, CYSEC will impose “significantly higher” fines or proceed with suspending or revoking the respective CIF licence.
Under new rules, CySEC will compel firms that receive 20 or more complaints to appoint an internal auditor to undertake an investigation and submit a report. Additional controls are also being introduced to examine the organisational structures of new applicants. Specific emphasis will be placed on whether they can adequately carry out and monitor cross-border activities. CySEC is also focusing attention on applicants’ advertising campaigns, warning that it will not tolerate aggressive marketing behaviour nor the provision of misleading information to investors, or any other abusive practices.
Key acquisitions by CySEC include a specialised system that analyses and monitors CIF online marketing materials and social media activities. The system can detect all related mentions from any source internationally and carry out real-time monitoring with an instant alert trigger for any related keyword combination.