The Cyprus Securities and Exchange Commission ('the Commission') wishes to inform the
Cyprus Investment Firms (the 'CIFs') the following:
1. It has been noted that CIFs grant trading benefits (e.g. bonuses) to their clients under certain
conditions. Sometimes these conditions are associated with the funds that clients deposit in
CIFs for trading. This practice is permitted provided that clients’ funds are free to withdraw
at all times and whenever the client wishes.
It has been observed, however, that the above does not always apply. There are cases
where the client, who has been granted a benefit, may withdraw his funds only when he
conducts trades whose total value reaches a specified, by the CIF, trading volume.
2. Any restrictions on the withdrawal of clients’ funds are not in compliance with the
provisions of the Investment Services and Activities and Regulated Markets Law, as in force
(“the Law”) and the Commission’s Directive DI144-2007-01 of 2012 for the authorisation and
operating conditions of CIFs (“the Directive”).
Furthermore, prompting clients to conduct trades with a view to achieving a specified
trading volume and then be entitled to withdraw their deposits are not accepted as fair and
good practice towards clients.
3. Specifically, all the above mentioned in point 2 seem to be not in accordance with the
provisions of:
i. Section 18(2)(j) of the Law which states that a CIF, when holding funds belonging to
clients must take every possible measure to safeguard clients’ rights.
ii. Section 36(1) of the Law which states that CIFs must act honestly, fairly and
professionally when providing investment services to their clients.
iii. Directive regarding the provisions for the safeguarding of clients’ funds.
4. CIFs that grant monetary benefits to their clients, must:
i. Provide accurate, clear and not misleading information, when advertising such a scheme.
ii. Describe in detail to their clients the way the scheme works, as well as its terms and
conditions.
iii. Always be able to separate the funds belonging to clients from the monetary benefit
granted to them.
iv. Monitor on a continuous basis and take all appropriate measures to always be able to
meet the terms of the scheme without affecting their capital adequacy.
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