Cypriot financial regulator CySEC just warned Cyprus regulated brokers against the risk of “Brexit”. If you are not familiar with the term “Brexit”, it is the term referencing to the risk associated with the incoming referendum on the potential exit of the United Kingdom from the European Union. The term Grexit was used several years ago in reference to the risk associated with the exit of Greece form the European Union under the same circumstances. Sooner this week the CySEC published an official Circular (C130) advising the Cyprus Investment Firms (CIFs) to keep a close eye on the risk associated with the highly debated Brexit referendum. As a reminder, Cyprus Investment Firms refer to almost all Cyprus regulated brokers (Forex, CFD and binary options)
The CySEC warns brokers against the risks associated with Brexit
The Cyprus Securities and Exchanges Commission reminded brokers that a referendum will be held in the United Kingdom on June 23, 2016, to decide whether the UK will leave or remain in the European Union. In case of a possible exit of the UK, there might be an impact on the financial markets, the regulator notes. The last estimates suggest that the referendum will be a close call and no one is able to make an informed prognostic on the issue of the vote. Some financial analysts have nevertheless predicted a 15% fall of the UK equity market should it leave the Union. The volatility of the British Pounds is also likely to reach an all-time-high into the event.
The CySEC targets CIFs active in the UK
Considering the potential impacts on British pound denominated assets, the CySEC is mainly targeting CIFs operating in the UK or proposing products tied to the UK currency. That is why, the CIFs which are active in the UK and/or maintain accounts in sterling pound, or offer products with the sterling pound are asked to closely monitor the risks to which they, or/and their customers are exposed or could be exposed and where necessary, take measures to minimize such risks.
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