The Cypriot authorities do not possess the necessary powers to regulate investment companies such as forex, which offer high risk investment services.
It has been noticed that in order to protect both the consumers and Cyprus’ reputation as a legitimate financial centre, regulation needs significant improvement to monitor high risk investment firms more effectively.
Forex companies and investment firms, offering their customers the opportunity to engage in foreign exchange trading and other complex investment products, accumulate one third out of more than 190 investment firms regulated by the Cyprus Securities and Exchange Commission (CySEC), with the rest offering traditional investment services.
“Since these companies offer complex products to retail investors we have to monitor them closely in an effort to make them comply with the rules and regulations in order to minimise potential reputational risk”.
-Demetra Kalogerou, Cyprus Securities and Exchange Commission (CySEC) chairwoman
Cyprus’s reputation as a financial centre suffered a big blow in 2013, whilst the depositors’ bail-in made headlines around the world. In addition to this, a number of Forex trading companies, abroad, suffered heavy losses following the Swiss currency devaluation, leading some of them into extinction.
According to the chairwoman, “marketing techniques used may turn out to be misleading or to mean something different to what the investors may have understood”.
Mrs Kalogerou shared optimism mentioning that CySEC will obtain advanced regulatory and supervision powers on the investment companies as soon as the new European Directive is implemented in 2017.
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