Nicosia, Cyprus. The Cyprus Securities and Exchange Commission (CySEC) said it has removed two investment firms from the Investors Compensation Fund (ICF) following the withdrawal of their Cyprus Investment Firm authorisations.
Firms removed from the compensation scheme
CySEC said the decision concerns VM Vita Markets Ltd and HTFX EU Ltd, whose membership in the ICF was withdrawn under the regulator’s rules. The commission oversees investment firms and market activity in Cyprus.
Link to loss of authorisation
CySEC said the firms’ removal from the ICF followed its earlier decision to withdraw their CIF authorisations. It said that once the companies lost their licences to operate as Cyprus Investment Firms, they could no longer remain members of the compensation scheme.
Client rights and compensation claims
The regulator said the change does not automatically strip clients of their rights. “In accordance with paragraph 6(3) of the directive, the loss of ICF membership status does not mean loss of rights of covered clients to receive compensation in relation to investment operations carried out until the loss of membership status, if the conditions for compensation are fulfilled pursuant to the directive, nor does it obstruct the initiation of the compensation procedure for covered clients,” CySEC said.
CySEC said clients who carried out eligible investment transactions before the firms lost their membership may still have the right to seek compensation, provided the conditions set out in the rules are met. It also said the process for submitting compensation claims is not blocked by the withdrawal of membership.
How might this decision affect your understanding of compensation rights for covered clients?