CySEC Claims IC Markets Offered 1000:1 Leverage: Fined €200k

2024-07-19T17:19:05.295+02:00

Friday, 19/07/2024 | 15:19 GMT by

Arnab Shome

  • The EU-regulated entity allegedly onboarded traders under the offshore regulated entities, offering 1000:1 leverage.

  • However, IC Markets has denied the basis of the regulator’s decision, vowing to appeal the matter.

IC Markets

The Cyprus-regulated entity operating the IC Markets brand, IC Markets (EU), has been fined €200,000 by the Cyprus Securities and Exchange Commission (CySEC) for “knowingly and intentionally” violating leverage rules.

Violating Leverage Restrictions

According to the regulatory announcement today (Friday), the broker’s Cyprus-regulated entity offered its customers up to 1000:1 leverage levels by onboarding them under an offshore entity. Within the European Union, FX and contracts for differences (CFDs) brokers can only provide leverage up to 30:1.

“CySEC takes any misconduct by supervised entities seriously and is determined to bring non-compliant operations to a halt in order to enhance investor protection and the responsible growth of the investment sector,” said Dr. George Theocharides, Chairman of CySEC.

However, IC Markets has denied the basis of the regulator’s decision, vowing to
appeal the matter. A spokesperson from the company told Finance Magnates: “IC
Markets (EU) Ltd categorically denies the basis of the Cyprus Securities and
Exchange Commission’s (CySEC) decision dated July 19, 2024, and will rigorously
pursue an appeal. CySEC has disregarded irrefutable audited evidence and
instead based its decision on information provided by a former employee, who
was terminated for misconduct.”

“This individual bullied and threatened the Company with
regulatory involvement, claiming strong personal connections within CySEC.
Furthermore, CySEC appears to have made assumptions without providing concrete
evidence, resulting in a decision based on speculation rather than facts. This
raises serious questions about the impartiality and integrity of the regulatory
process.”

The company added: “This reliance on biased testimony, while
ignoring undeniable evidence, suggests a pattern of selective and
disproportionate application of regulatory authority by CySEC, endangering
transparency, market integrity, and fair competition. IC Markets is committed
to challenging this decision through the appeal process.”

Strict Rules Around Leverage

Headquartered in Australia, IC Markets offers leveraged trading with margin forex and CFDs of other asset classes. In addition to Australia and Cyprus, the broker is also regulated in Seychelles and the Bahamas, which are offshore jurisdictions that allow brokers to offer higher leverage levels to retail traders. It also entered Africa recently by obtaining a license in Kenya.

Unlike the offshore regulators, the European Securities and Markets Authority (ESMA) capped the offered leverage to retail traders at 1:30 in 2018, while the Aussie counter also introduced similar restrictions in 2022. The regulators cited protecting retail clients from taking risky leveraged positions as the reason for imposing leverage restrictions.

“In imposing the administrative fine, CySEC took into account, among other factors, the importance attached to ensuring that persons subject to its supervision fully comply with the provisions of the Law,” the announcement by the Cyprus regulator stated. “IC Markets (EU) Ltd did not ensure the protection of its clients’ interests, a matter to which CySEC attaches particular importance.”

Interestingly, CySEC pointed out that IC Markets demonstrated “repeated behavior” with the violation, as the regulator intervened in similar breaches by the broker in 2021. At that time, the broker “assured CySEC of taking the corrective measures.”

The Cyprus-regulated entity operating the IC Markets brand, IC Markets (EU), has been fined €200,000 by the Cyprus Securities and Exchange Commission (CySEC) for “knowingly and intentionally” violating leverage rules.

Violating Leverage Restrictions

According to the regulatory announcement today (Friday), the broker’s Cyprus-regulated entity offered its customers up to 1000:1 leverage levels by onboarding them under an offshore entity. Within the European Union, FX and contracts for differences (CFDs) brokers can only provide leverage up to 30:1.

“CySEC takes any misconduct by supervised entities seriously and is determined to bring non-compliant operations to a halt in order to enhance investor protection and the responsible growth of the investment sector,” said Dr. George Theocharides, Chairman of CySEC.

However, IC Markets has denied the basis of the regulator’s decision, vowing to
appeal the matter. A spokesperson from the company told Finance Magnates: “IC
Markets (EU) Ltd categorically denies the basis of the Cyprus Securities and
Exchange Commission’s (CySEC) decision dated July 19, 2024, and will rigorously
pursue an appeal. CySEC has disregarded irrefutable audited evidence and
instead based its decision on information provided by a former employee, who
was terminated for misconduct.”

“This individual bullied and threatened the Company with
regulatory involvement, claiming strong personal connections within CySEC.
Furthermore, CySEC appears to have made assumptions without providing concrete
evidence, resulting in a decision based on speculation rather than facts. This
raises serious questions about the impartiality and integrity of the regulatory
process.”

The company added: “This reliance on biased testimony, while
ignoring undeniable evidence, suggests a pattern of selective and
disproportionate application of regulatory authority by CySEC, endangering
transparency, market integrity, and fair competition. IC Markets is committed
to challenging this decision through the appeal process.”

Strict Rules Around Leverage

Headquartered in Australia, IC Markets offers leveraged trading with margin forex and CFDs of other asset classes. In addition to Australia and Cyprus, the broker is also regulated in Seychelles and the Bahamas, which are offshore jurisdictions that allow brokers to offer higher leverage levels to retail traders. It also entered Africa recently by obtaining a license in Kenya.

Unlike the offshore regulators, the European Securities and Markets Authority (ESMA) capped the offered leverage to retail traders at 1:30 in 2018, while the Aussie counter also introduced similar restrictions in 2022. The regulators cited protecting retail clients from taking risky leveraged positions as the reason for imposing leverage restrictions.

“In imposing the administrative fine, CySEC took into account, among other factors, the importance attached to ensuring that persons subject to its supervision fully comply with the provisions of the Law,” the announcement by the Cyprus regulator stated. “IC Markets (EU) Ltd did not ensure the protection of its clients’ interests, a matter to which CySEC attaches particular importance.”

Interestingly, CySEC pointed out that IC Markets demonstrated “repeated behavior” with the violation, as the regulator intervened in similar breaches by the broker in 2021. At that time, the broker “assured CySEC of taking the corrective measures.”

Arnab Shome

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Arnab is an electronics engineer-turned-financial editor. He entered the industry covering the cryptocurrency market for Finance Magnates and later expanded his reach to forex as well. He is passionate about the changing regulatory landscape on financial markets and keenly follows the disruptions in the industry with new-age technologies.

  • 6442 Articles
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    During iFX EXPO International 2024, we had the pleasure to interview Andrew Loveridge from Acuity Trading.

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    During iFX EXPO International 2024, we had the pleasure to interview Andrew Loveridge from Acuity Trading.

    He discusses the evolving financial trading industry and the impact of AI, regulation, and technological advancements. He highlights the importance of natural language processing (NLP) and sentiment analysis in trading, detailing how these technologies are used to extract valuable data from text for trading purposes. Andrew also introduces their latest innovation, which merges technical analysis with sentiment analysis to provide more comprehensive trading tools.

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    During iFX EXPO International 2024, we had the pleasure to interview Andrew Loveridge from Acuity Trading.

    He discusses the evolving financial trading industry and the impact of AI, regulation, and technological advancements. He highlights the importance of natural language processing (NLP) and sentiment analysis in trading, detailing how these technologies are used to extract valuable data from text for trading purposes. Andrew also introduces their latest innovation, which merges technical analysis with sentiment analysis to provide more comprehensive trading tools.

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    During iFX EXPO International 2024, we had the pleasure to interview Andrew Loveridge from Acuity Trading.

    He discusses the evolving financial trading industry and the impact of AI, regulation, and technological advancements. He highlights the importance of natural language processing (NLP) and sentiment analysis in trading, detailing how these technologies are used to extract valuable data from text for trading purposes. Andrew also introduces their latest innovation, which merges technical analysis with sentiment analysis to provide more comprehensive trading tools.

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  • James Glyde | Pipfarm

    James Glyde | Pipfarm

    James Glyde | Pipfarm

    James Glyde | Pipfarm

    James Glyde | Pipfarm

    James Glyde | Pipfarm

    In this video, James Glide from PipFarm discusses the current state and future of the prop trading industry. He explains how Pip Farm uses gamification to manage risk, allowing traders to unlock features like higher leverage and faster payouts by earning experience points through achievements. James addresses the inherent risk management challenges in prop trading and the importance of building a track record with traders. He touches on revenue structure, emphasizing the need for a larger client base to make trading initiatives profitable. James also discusses potential regulatory changes and Pip Farm’s readiness to adapt. The session concludes with a focus on consistency and continuous improvement in their offerings.

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    In this video, James Glide from PipFarm discusses the current state and future of the prop trading industry. He explains how Pip Farm uses gamification to manage risk, allowing traders to unlock features like higher leverage and faster payouts by earning experience points through achievements. James addresses the inherent risk management challenges in prop trading and the importance of building a track record with traders. He touches on revenue structure, emphasizing the need for a larger client base to make trading initiatives profitable. James also discusses potential regulatory changes and Pip Farm’s readiness to adapt. The session concludes with a focus on consistency and continuous improvement in their offerings.

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    In this video, James Glide from PipFarm discusses the current state and future of the prop trading industry. He explains how Pip Farm uses gamification to manage risk, allowing traders to unlock features like higher leverage and faster payouts by earning experience points through achievements. James addresses the inherent risk management challenges in prop trading and the importance of building a track record with traders. He touches on revenue structure, emphasizing the need for a larger client base to make trading initiatives profitable. James also discusses potential regulatory changes and Pip Farm’s readiness to adapt. The session concludes with a focus on consistency and continuous improvement in their offerings.

    #financemagnates #pipfarm #financialnews #tradingnews #PropTrading #RiskManagement #Gamification #TradingStrategies #FinancialRegulation

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    In this video, James Glide from PipFarm discusses the current state and future of the prop trading industry. He explains how Pip Farm uses gamification to manage risk, allowing traders to unlock features like higher leverage and faster payouts by earning experience points through achievements. James addresses the inherent risk management challenges in prop trading and the importance of building a track record with traders. He touches on revenue structure, emphasizing the need for a larger client base to make trading initiatives profitable. James also discusses potential regulatory changes and Pip Farm’s readiness to adapt. The session concludes with a focus on consistency and continuous improvement in their offerings.

    #financemagnates #pipfarm #financialnews #tradingnews #PropTrading #RiskManagement #Gamification #TradingStrategies #FinancialRegulation

    📣 Stay updated with the latest in finance and trading!
    Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:

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    In this video, James Glide from PipFarm discusses the current state and future of the prop trading industry. He explains how Pip Farm uses gamification to manage risk, allowing traders to unlock features like higher leverage and faster payouts by earning experience points through achievements. James addresses the inherent risk management challenges in prop trading and the importance of building a track record with traders. He touches on revenue structure, emphasizing the need for a larger client base to make trading initiatives profitable. James also discusses potential regulatory changes and Pip Farm’s readiness to adapt. The session concludes with a focus on consistency and continuous improvement in their offerings.

    #financemagnates #pipfarm #financialnews #tradingnews #PropTrading #RiskManagement #Gamification #TradingStrategies #FinancialRegulation

    📣 Stay updated with the latest in finance and trading!
    Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:

    🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/
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    Don’t miss out on our latest videos, interviews, and event coverage.
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    In this video, James Glide from PipFarm discusses the current state and future of the prop trading industry. He explains how Pip Farm uses gamification to manage risk, allowing traders to unlock features like higher leverage and faster payouts by earning experience points through achievements. James addresses the inherent risk management challenges in prop trading and the importance of building a track record with traders. He touches on revenue structure, emphasizing the need for a larger client base to make trading initiatives profitable. James also discusses potential regulatory changes and Pip Farm’s readiness to adapt. The session concludes with a focus on consistency and continuous improvement in their offerings.

    #financemagnates #pipfarm #financialnews #tradingnews #PropTrading #RiskManagement #Gamification #TradingStrategies #FinancialRegulation

    📣 Stay updated with the latest in finance and trading!
    Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:

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