On Tuesday, the Board of the Cyprus Securities Exchange Commission announced that it had initiated the process of compensating clients of Maxigrid Ltd under the Investors Compensation Fund.
They made the decision on March 28 but was only publicly announced quite recently.
Maxigrid operates multiple forex and contracts for differences (CFDs) trading brands, such as Dualix and AGM Markets. It ran the operations from its Cypriot base after receiving a Cyprus Investment Firm (CIF) license in 2011.
However, due to recent events, the Board has decided to begin the process of compensation payments to eligible clients through the ICF. This will help to ensure that those who have been affected by Maxigrid’s collapse will receive the financial support they need.
Maxigrid’s story is a cautionary tale for all investors.
Maxigrid violated multiple mandatory compliance rules, leading to the suspension and the withdrawal of its license. Even before its license was withdrawn, the broker was unable to meet its obligations to investors.
This led to the initiation of the compensation process under the ICF.
The Compensation Fund
CySEC, or the Cyprus Securities and Exchange Commission, is the financial regulatory body for the Republic of Cyprus.
Like other European financial regulators, it regulates financial markets, which includes overseeing investment firms, stockbrokers, and other entities operating in the country.
One of the main ways CySEC protects investors is through the Investor Compensation Fund (ICF). The ICF compensates investors if their broker goes bankrupt or is unable to return their deposits due to financial constraints.
The compensation limit is €20,000 per investor. The process of claiming compensation from the ICF is not clear yet, as the ICF has to initiate its proceedings. Nonetheless, the existence of the ICF provides an extra layer of protection for investors in Cyprus.
Meanwhile, Maxigrid brands have stopped their services for a period of one month. They’ll not provide investment services, transact with any person, or accept new clients.
