Why and Under What Circumstances Will Your CIF License Be Withdrawn or Suspended?

The Cyprus Securities and Exchange Commission (CySEC), the financial regulatory body of Cyprus, is not only responsible for examining applications and granting operating licenses to entities, but also empowered to suspend or revoke the CIF license of a company under certain circumstances.

CySEC’s role in supervising the online trading industry is of great importance to the whole Cypriot economy, and thus it is very strict, precise and pay high attention to details. That's why brokers under its supervision often find it hard to keep up with the pace of the fast-changing regulations and the stringent demands of the regulator.

Therefore, regardless of whether you are a CySEC-regulated broker or a company preparing to apply for a CIF license, knowing the circumstances where your CIF license could be withdrawn or suspended can be helpful for you to better comply with regulations and operate your businesses.

Brokers Whose CIF Licenses Were Revoked or Suspended in 2021

In 2021, we noticed that many brokers’ CIF licenses have been revoked or suspended by the regulator. The table below sums up these companies:

During 2021, CySEC revoked the CIF licenses of nine investment companies including Otkritie Capital Cyprus Ltd, Coverdeal Holdings Ltd, Deloitte Investment Services Limited, WS FINANCIAL AND INVESTMENT SERVICES LTD, Rodeler Ltd, Felicitas Management Investment Services Ltd, Globia Wealth Ltd, Belight Capital Group Ltd and London Capital Group (Cyprus) Ltd.

In addition, the Cyprus regulator suspended the CIF licenses of four investment companies including Depaho Ltd, Indication Investments Ltd, Maxiflex Ltd and Maxigrid Ltd, while Indication Investments Ltd regained the license on 23 August 2021.

Withdrawal and Suspension of CIF Authorization

The CySEC may wholly or partially withdraw a CIF authorization, where:

• The CIF has obtained the authorization on the basis of false or misleading details or by any other irregular means or has submitted or notified or otherwise publicized in any way false or misleading information, details or documents;

• The CIF no longer meets the conditions under which authorisation was granted;

• The CIF has seriously or/and systematically infringed the provisions with regards the operating conditions and obligations of CIFs;

• ​The CIF falls within any of the cases stated in other Cypriot legislation, in respect of matters outside the scope of this Law, and which provides for the withdrawal of authorization.

The CySEC may wholly or partially suspend a CIF authorization:

• Simultaneously and immediately, with the beginning of a CIF authorization withdrawal proceedings, if at its absolute discretion the continuation of operation by the CIF, until the commission has reached a decision as to whether to withdraw or not the CIF authorization, possibly endangers the CIF's clients’ interests or the investors’ interests or generally the regular operation of the capital market.

• where, upon judging the gravity of the violations laid down in the second and third conditions of withdrawal of license, it decides not to proceed with the withdrawal of CIF authorization.

What Shall A Broker Do If Its CIF License Was Revoked or Suspended

Where a CIF authorisation is withdrawn, the company shall cease to provide services or/and perform activities, or depending on the circumstances, a CIF shall cease to provide those services or to perform those activities for which the authorisation was withdrawn.

Where a CIF authorisation has been suspended, the CIF is not allowed to provide those services or/and perform those activities, in relation to which its authorisation has been suspended.

If you’ve decided to apply for a CIF authorization, there are several aspects you should consider. Among them are basic requirements, specific processes and the cost of application. But knowing the circumstances where CIF license could be withdrawn or suspended is also important.