The Cyprus Securities and Exchange Commission (CySEC) today published a new list of financial services providers that were written off its lifeboat scheme. The newly-erased brands are Alfa Capital Holdings (Cyprus) Ltd and UGL Exchange Ltd.
However, the Cypriot watchdog confirmed that clients of these brokers are still entitled to benefit from the Investor Compensation Fund (ICF), which serves to protect the claims of covered clients and provide them with compensation in case a member could not meet its financial obligations.
Alfa Capital renounced its Cyprus Investment Firm (CIF) License almost a month ago. The surrender of its license was entirely voluntary based on the company’s decision and does not arise as a result of any regulatory action taken by the CySEC.
It had been operating the retail FX brand Alfa-Forex, but in 2018 announced that it would be focusing more on its institutional operations, after no longer offering its services to individual clients and other users which are categorized as ‘retail’ under MiFID, from the end of June 2019.
On the other side, FX retail brokerage, UGL Exchange lost its authorisation back in July 2020 after CySEC concluded that the firm does not fulfill the terms of its operational license.
The regulator further explained to the public that “it should be noted that losing membership of the fund does not mean a loss covered clients’ rights to compensation for investing that took place until the loss of membership. Any outstanding debts owed by members to the fund, continue to exist until they are paid, irrespective of their deletion.”
The regulator often kickstarts the compensation payment procedure after it revokes the authorization of a company that is not expected to pay back its obligations in the near future.
The next step, if any, will see the ICF inviting covered clients to make their claims against the company, designating the procedure for filing compensation applications and the deadline for their submission. Next, the fund publishes the details in at least two local newspapers, including the address at which investors may be informed about the progress of their applications.
The amount of the compensation payable to each client is calculated in accordance with the contractual terms governing his relationship with the faltering broker, but in general, the maximum amount does not exceed €20,000.