The Cyprus Securities and Exchange Commission, CySEC, which is the independent public supervisory authority responsible for the supervision of the investment services market and transactions in transferable securities carried out in the Republic of Cyprus, announced on 9 December its decision to fine the company Zoompartners Ltd, which is the parent company of the Zoomtrader binary options broker.
According to CySEC’s official announcement, Zoompartners was found to have violated Article 4 of the Investment Services and Activities and Regulated Markets Law, because since October 2012 it was providing investment services through binary options contracts via its website, without holding a valid Cyprus Investment Firm (CIF) license.
The fine imposed was 15,000 Euros, which is a relatively low amount if one takes into account the maximum amount that could potentially have been imposed, which is 350,000 Euros. The explanation given by CySEC in order to justify the low level of the fine was that there where mitigating circumstances in favour of the company, since it was recognized that Zoompartners has already taken measures to apply for a license and terminate its activities within the jurisdiction of CySEC until it obtains such a license.
Although critics might argue that CySEC could have come down harder on brokers found to be breaching the law, it appears that this regulator is gradually upping its act and it means business when it is declaring that the grace period is over for all brokers operating in and from Cyprus. Ever since the peak of the financial crisis in Cyprus back in March this year, forex and binary options trading from brokers operating from the island has shown a rapid increase. The regulator seems to be coming into terms with the new developments and while it is trying to capitalise on this newly flourishing market, it is also trying to tie any loose ends and safeguard the new operation of such activities, in line with Cypriot and EU laws and trying to ensure the interests of traders.
The intention to toughen up its stance was also publicly announced by CySEC’s chairwoman Demetra Kalogirou at a reception on 3 December 2013, which was hosted in honour of the Directors and shareholders of the entities from outside Cyprus, which are under the supervision of CySEC.