Updated August 6, 2015: On August 6, 2015, CySEC reported that they will continue to suspend the license of CommexFX. The suspension will remain in force until CySEC decides whether to withdraw CommexFX’s Cyprus Investment Firm authorization.
Updated July 6, 2015: On July 6, 2015, CySEC reported that they fined CommexFX Ltd €100.000 for numerous reasons, which CySEC detailed as follows:
€82.000 fine for violation of Article 28 (1) of the Investment Services and Activities and Regulated Markets Law of 2007 (the Law). Specifically, violations include:
- the persons who direct the business are not sufficiently reputable and experienced to ensure prudent money management
- lack of adequate internal controls
- inadequate arrangements to safeguard client funds
- failure to maintain adequate records
- being unable to segregate client funds from each other and from the company’s operating funds
- failure to make adequate arrangements in the company to minimize against loss of client funds due to negligence or poor administration and other failures
€3.000 fine for not properly advising CySEC of a change to a key position involved in running the company.
€15.000 fine for providing false and/or misleading information to CySEC over the course of its investigations. Abdel Rahman El Amary, a director of CommexFX Ltd, was also fined €30.000 by CySEC for violating this section of the Law.
So is CommexFX Ltd A Scam Forex Broker?
We don’t know the extent of any damages incurred clients of this forex broker. Therefore, we cannot say that they are scammers. However, the charges that CySEC makes against CommexFX Ltd are numerous and very serious. We would never choose to do business with CommexFX. Any trader looking for a new forex broker should carefully consider CommexFX’s violations. There are many other forex brokers to choose from with a better regulatory record.
Updated July 2, 2015: Following further review by the CySEC board on June 29, 2015, CySEC announced on July 2, 2015 that CommexFX Ltd will continue to have its license suspended. Though not confirmed, it is likely that CommexFX was unable to achieve regulatory compliance within the 15 days timeframe required by CySEC. With the license suspension still in place, CommexFX remains unable to perform its brokerage services. It is unknown when the suspension will be lifted.
On June 12, 2015, the Cyprus Securities and Exchange Commission announced that it had suspended the license of the Cyprus Investment Firm CommexFX Ltd. It did so due to suspicions that CommexFX Ltd had not complied with section 18(2) of the Investment Services and Activities and Regulated Markets Law of 2007. The applicable sections of this law state that a Cyprus Investment Firm must:
- “when holding financial instruments belonging to clients, to make adequate arrangements so as to safeguard clients’ ownership rights, especially in the event of the CIF’s insolvency, and to prevent the use of a client’s instruments on own account except with the client’s express consent;”
- “when holding funds belonging to clients, make adequate arrangements to safeguard the clients’ rights and, except in the case of credit institutions, prevent the use of client funds for its own account.”
CySEC further references the requirements for safeguarding client funds as specified in Directive DI144-2007-01 of 2012, for which we summarize the key points as follows:
- must keep records that enable it to distinguish client assets from its own assets; records must be accurate
- must keep client funds deposited separately from its own operating funds
- must maintain controls to protect against misuse, fraud, poor administration or negligence
- CySEC may prescribe specific measures to the company to be in compliance with the law, if CySEC deems the company’s measures to be inadequate
- The company may deposit client funds with a third party provided the company exercise all due skill, care and diligence in selecting and dealing with the third party, particularly if funds are to be deposited in a “third country”, and with particular care to the applicable regulation that would apply to the third party
- Upon receipt of client funds, the company is promptly required to deposit the funds in a client account with a central bank, a credit institution, a bank authorized in a third country, or a qualifying money market fund.
- The company is not allowed to use client funds to enter into transactions for financial instruments unless the client has specifically provided permission to do so for that instrument. The transaction must only be done under terms that the client has consented to
- Client funds can only be used as part of an omnibus account including other clients if permission to do so has been granted by the client, and with proper documentation requirements being met
If CommexFX Ltd is not complying with these requirements, it may mean that clients of this company are not adequately protected in the event the company has financial difficulties. As the recent Swiss Franc shock of January 2015 shows, many forex firms are vulnerable to bankruptcy, so this risk should be taken seriously.
CySEC requires that CommexFX Ltd take corrective action to achieve regulatory compliance within 15 days.
While under suspension, CommexFX Ltd cannot perform any investment services or activities, and must close client positions and return their funds and profits if requested to do so by their clients.
CommexFX Ltd is a forex and precious metals broker founded in 2011. It has headquarters in Cyprus and is regulated by the Cyprus Securities and Exchange Commission under license number CIF 153/11. The company is also regulated by the FCA in the United Kingdom, under registration number 590004.
Author: Forex Scam Alerts Google+