CySEC says IC Markets was offered 1000:1 leverage: €200,000 fine

The Cyprus-regulated entity that operates the IC Markets brand, IC Markets (EU), has been fined €200,000 by the Cyprus Securities and Exchange Commission (CySEC) for “knowingly and intentionally” violating leverage rules.

According to today’s (Friday) regulatory announcement, the broker’s Cyprus-regulated entity offered its clients leverage levels of up to 1,000:1 by onboarding them to an offshore entity. Within the European Union, foreign exchange and contracts for difference (CFD) brokers can only offer leverage of up to 30:1.

“CySEC takes any misconduct by supervised entities seriously and is committed to stopping non-compliant operations in order to enhance investor protection and the responsible growth of the investment industry,” said Dr. George Theocharides, Chairman of CySEC.

However, IC Markets has denied the basis of the regulator’s decision, vowing to appeal the case. A spokesperson for the company told Finance Magnates: “IC Markets (EU) Ltd categorically denies the basis of the Cyprus Securities and Exchange Commission’s (CySEC) decision of 19 July 2024, and will vigorously pursue an appeal. CySEC ignored irrefutable audited evidence and instead based its decision on information provided by a former employee, who was dismissed for misconduct.”

“This individual intimidated and threatened the regulatory intervention firm, claiming strong personal connections within CySEC. Furthermore, CySEC appears to have made assumptions without providing concrete evidence, resulting in a decision based on speculation rather than facts. This raises serious questions about the impartiality and integrity of the regulatory process.”

The company added: “This reliance on biased testimony, while ignoring compelling evidence, suggests a pattern of selective and disproportionate application of regulatory authority by CySEC, endangering transparency, market integrity and fair competition. IC Markets is committed to challenging this decision through the appeals process.”

Strict rules regarding leverage

Based in Australia, IC Markets offers leveraged trading with margin on FX and CFDs on other asset classes. In addition to Australia and Cyprus, the broker is also regulated in the Seychelles and the Bahamas, which are offshore jurisdictions that allow brokers to offer higher levels of leverage to retail traders. It has also recently entered Africa by obtaining a license in Kenya.

Unlike offshore regulators, the European Securities and Markets Authority (ESMA) capped the leverage offered to retail traders at 1:30 in 2018, while the Australian counter also introduced similar restrictions in 2022. Regulators cited protecting retail clients from taking risky leveraged positions as the reason for imposing leverage restrictions.

“In imposing the administrative fine, CySEC took into account, among other factors, the importance given to ensuring that persons subject to its supervision fully comply with the provisions of the law,” the Cypriot regulator said in its statement. “IC Markets (EU) Ltd failed to ensure the protection of its clients’ interests, a matter to which CySEC attaches particular importance.”

Interestingly, CySEC highlighted that IC Markets had demonstrated “repeated behavior” in violating, as the regulator had intervened in similar violations by the broker in 2021. At the time, the broker “assured CySEC that it would take corrective action.”