CySec fined Binary provider IQ Option for €180.000
The Board of the Cyprus Securities and Exchange Commission (CySec) wishes to inform investors that, at its meeting held on 5 September 2016, decided to impose a total administrative fine of €180.000 to the CIF IQ Option Europe Ltd (‘the Company’) for noncompliance with the following legislation:
1. the Investment Services and Activities and Regulated Markets Law of 2007, as amended from time to time (‘the Law’),
2. the Directive DI 144-2007-01 of 2012 of the Securities and Exchange Commission for the Authorisation and Operating Conditions of CIFs (‘Directive 1’),
3. the Directive DI 144-2007-02 of 2012 of the Securities and Exchange Commission for the professional competence of Investment Firms and the natural persons employed by them (‘Directive 2’).
The administrative fine imposed on the Company is broken down as follows:
Α. €5,000 for non-compliance with Section 28(1) of the Law, as it failed to comply at all times with the authorization and operating conditions, as laid down in Section 16 of the Law since its head office was not situated in Cyprus.
Β. €10.000 for non-compliance with Section 28(1) of the Law, as it failed to comply at all times with the authorization and operating conditions, as laid down in Section 18(2)(a) of the Law and paragraphs 4(1)(f), 9 and 14 of Directive 1, as it did not establish adequate policies and procedures sufficient to ensure its compliance with its obligations pursuant to the Law and Directive 1. Specifically:
i. The Company did not establish and maintain adequate policies, measures and procedures regarding the approval of the information addressed and provided to clients, the assessment of appropriateness and the assessment of the chosen liquidity provider.
ii. The Company did not maintain adequate and orderly records of client orders, client transactions, marketing material and the approval of information addressed to clients prior to the agreement for the provision of services, and of its affiliates, and was not in a position to make these available to the CySEC.
iii. The Company did not include in its operation manual the specific policies and procedures maintained in relation to the assessment of appropriateness, the information addressed and provided to clients or potential clients and the choice of liquidity provider.
iv. The Company did not ensure that its senior management and the board of directors assessed and periodically reviewed the effectiveness of the policies, arrangements and procedures set up for its compliant with its obligations, and did not take appropriate remedial measures.
C. €20.000 for non-compliance with Section 28(1) του Νόμου of the Law, as it failed to comply at all times with the authorization and operating conditions, as laid down in Section 18(2)(d) of the Law and paragraph 16, subparagraphs (2), (3), (c), (e), (i) and (6) of Directive 1, as, it did not take reasonable measures to avoid any unjustified aggravation of the operational risk, when outsourcing activities or operational functions to third parties, taking into consideration that:
i. The Company proceeded to the outsourcing of functions to such a degree which rendered it a letter box entity.
ii. The Company did not exercise due skill, care and diligence when outsourcing the functions of promotion and marketing.
iii. The Company did not take measures to ensure that the service providers to whom activities were outsourced were providing the said activities effectively and professionally, and did not properly supervise the carrying out of the outsourced functions, and adequately manage the risks associated with the outsourcing.
iv. The Company did not take measures for the effective supervision of the service providers and did not take adequate measures when the service providers did not offer the outsourced services adequately, and did not provide effective access to data related to the outsourced activities.
D. €40.000 for non-compliance with Section 36(1) of the Law as it failed to act fairly, honestly and professionally in relation to the bonus terms and conditions accepted by the Company’s clients and the practices applied to this respect.
Ε. €30.000 for non-compliance with Section 36(1)(a) of the Law and paragraph 6, subparagraph (2)(b) of Directive 2, as the information included in its website, the information on clients’ online accounts and the information on sample marketing material assessed, were not fair, clear and non-misleading in accordance with Section 36(1)(a) of the Law and the Company did not ensure that these satisfy the terms of paragraph 6, subparagraph (2)(b) of Directive 2.
F. €15.000 for non-compliance with Section 36(1)(b) of the Law and paragraphs 6, 8-12, 15 and 16 of Directive 2, as, the information provided to its clients/potential clients were not appropriate so that the clients are reasonably able to understand the nature and risks of the investment service offered and the specific type and the proposed financial instrument, and in accordance with Section 36(1)(b) of the Law and paragraphs 6, 8-12, 15 and 16 of Directive 2.
G. €40.000 for non-compliance with Section 36(1)(d) of the Law and paragraphs 15 and 16 of Directive 2, as, it failed to ask clients to provide the necessary information regarding their knowledge and experience, to assess whether the investment service or financial instrument envisaged is appropriate for them.
Η. €20.000 for non-compliance with Section 38 of the Law since it not take all the reasonable steps to obtain, when executing orders, the best possible result for its clients, since due to the strike and expiry prices used, in comparison with market prices of the underlying assets, μέσου, resulted in loss making trades for clients, rather than profitable trades.
Source: CySec – decision-09-30-2016-for-iq-option-europe-ltd-administrative-fine
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