With the danger of being accused of becoming “Cyprocentric,” we will talk today again about Cyprus and more specifically about a new decision by the Cyprus regulator, the Cyprus Securities and Exchange Commission (CySEC). Those of you who follow the developments in the binary options scene closely and who are regular visitors of binaryoptionswire.com, should – by now – be aware of two facts. First, there has been an increase in the number of binary options brokerages that have obtained a license by CySEC, and can therefore operate as EU-regulated brokerages, with the upsurge being recorded throughout 2013. Second, amidst criticism, fears and misconceptions, portraying a lax approach by Cypriot authorities, CySEC has recently upped its scrutiny, handing out fines or suspending firms, in an effort to drive home the message that the grace period is over for everyone and all brokers who want to earn or retain their Cyprus Investment Firm status, should get their act together and fully comply with CySEC regulations.
CedarFinance is the latest “victim” of this CySEC “campaign,” but before we comment on this development, let us first see the pure facts. On 19th December, CySEC issued the following announcement:
“The Cyprus Securities and Exchange Commission announces that the authorisation of the Cyprus Investment Firm, T.B.S.F. Best Strategy Finance Limited, with number 213/13, is suspended, pursuant to section 26(2) of the Investment Services and Activities and Regulated Markets Law, because there are suspicions for an alleged violation of the requirements for authorisation and in particular of sections 10(1) – Initial Capital, 11 –Memorandum of Association, 12 – Persons who effectively direct the business, 13 Shareholders, 28 – Ongoing obligations, 33 – Shareholders.
The above decision was taken due to the fact that the previous mentioned alleged violations may possibly endanger the Company’s clients interests and generally the smooth operation of the capital market.
The Company must, within one month, take actions in order to rectify the situation.
It is provided that the Company cannot, pursuant to section 26(5) of the above mentioned Law, provide, or purport to provide - directly or via its website www.cedarfinance.com -investment and ancillary services, while the suspension of the authorisation is in force.”
Well, the first remark we want to make is that this announcement is vague and not very enlightening as to what exactly the problem is with CedarFinance. I t appears that the people over at CySEC are called to play a very difficult balancing act. On the one hand they are happy to attracting forex and binary firms over to Cyprus and are eager to continue being the champions as regards licensing binary options brokers in the European Union. This is why it appears they granted licenses with grace periods in the first place. Our sense is that they had initially licensed some of the already existing firms, granting them a grace period during which they had to comply with and fulfill certain obligations, but now that the grace period is over they need to act upon it, also because they are coming under fire, scrutiny and criticism for not being tough enough.
Thus, CySEC needs to become stricter, but does not want to alienate the investment firms altogether. This is probably why it suspended Cedar’s license, without being clear or specific about the exact reasons, opting instead for constructive ambiguity and giving them a month to get their act straight.
From what we could gather however, it seems that the breach is of an administrative nature. What puzzles us is that this suspension comes only a little over a month after the company gained its license, since this was announced on 4th November 2013. What puzzles us even further is the rumours being circulated that perhaps Cedar Finance knowingly and intentionally breached the terms of its licensing and that it is no longer interested in having the CIF status, since it has proven to be more hassle and expense than they had thought originally. Cedar Finance was plagued by fraud and scam allegations in the past and we would have thought that their move to apply for and obtain the status of a regulated broker, signified their intention to straighten up their act and make a fresh start. If the rumours are true and they do not intent to comply, then perhaps things were not so.
In any case things are bound to be clarified soon enough, since the one month period will be over and Cedar will either conform, with CySEC then lifting the suspension. If this is the case then perhaps all this was just a small administrative hick-up. Alternatively, if Cedar fails to comply, then CySEC will sooner or later return on the matter and revoke the license all together. If this is the case, then it would mean that the regulator was right to intervene and that the company had a different agenda all along. We will refrain more any additional commentary, but will follow the story as it unfolds and return to it when it is deemed necessary.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.