BuzzTrade Parent Company Renounces CIF License
The Cyprus Securities and Exchange Commission announced via a press release on Friday that binary options broker Air Finance Pro Ltd. renounced its Cyprus Investment Firm (CIF) license and will no longer be regulated by the watchdog. The company, which operates its business through several websites including www.investing-area.com, www.buzztrade.com, and www.ytfrtradeltd.com, has been in hot water with CySEC since the middle of 2016.
The brokerage firm had their license suspended in June over non-compliance issues the Cypriot regulator claimed were highly detrimental to investors and customers alike. CySEC followed up its initial suspension with two extensions of the ban, which extended well into the end of the year.
The company chose to let its license lapse and will no longer be licensed by any regulator in Europe, leading to questions about its future in the region. Air Finance’s position could become a new norm as more companies choose to ignore increasingly restrictive regulatory frameworks and operate outside of traditional licensing.
Air Finance Walks out on CIF
Air Finance Pro has opted to let its CIF license lapse after failed efforts to have its suspension lifted by CySEC. The binary options broker has had its license suspended since June after the Cypriot regulator charged it with non-compliance. According to the watchdog, the broker failed to meet several requirements tied to operations and regulation, specifically in reporting and filing obligations. CySEC argued that non-compliance would harm the company’s customers and investors alike, choosing to suspend its license
The penalty was later extended twice after Air Finance repeatedly failed to meet compliance standards. During the suspension, Air Finance was not allowed to onboard new clients, receive, process, or execute trades, provide any investment services in Cyprus or abroad. Additionally, it had to display a notice of suspension on its websites. It is unclear if the company broke the terms of its suspension, although it did close several of the websites it operates.
Under its renouncement, Air Finance will still be required to settle any obligations related to investment services that have lapsed within three months. Without a CySEC license, Air Finance will lose its “passporting” privileges, which allow it to use its CIF license to establish offices elsewhere in the EU without requiring individual licenses. It has become increasingly difficult for binary options providers to become regulated in Europe as sentiment turns against the industry.
The revocation of the license will become official early in 2017 and it is unclear if Air Finance will continue to operate without regulation in Europe or if it will seek new licensing elsewhere.
What Next for Air Finance?
While it is not the first company to lose its license, Air Finance’s next moves could be the beginning of a new trend in Europe. As regulatory frameworks become more costly and restrictive, many companies might choose to forgo licensing. Additionally, there are fewer countries willing to extend financial services licenses to binary options brokers as more governments implement sanctions against the industry as a whole.
Air Finance has not announced plans to apply for licensing elsewhere, but there is a real possibility it might simply continue to operate without regulation. If so, it would become one of the more high-profile companies to go that route, pointing to a new potential path for brokers that are being suffocated by expensive regulation and competitive disadvantages.
As public sentiment turns against the industry, European governments, and even the EU itself, have taken legal action against binary options and related industries. Belgium entirely banned the industry, while France blocked advertisements and marketing communications by binary options brokers.
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