CySEC removes two firms from investor compensation fund

The Cyprus Securities and Exchange Commission (CySEC) has announced that two investment firms have been removed from the Investors Compensation Fund (ICF).

The decision concerns VM Vita Markets Ltd and HTFX EU Ltd, whose membership in the fund was withdrawn under the regulator’s rules.

The announcement was issued by the Cyprus Securities and Exchange Commission, which oversees investment firms and market activity in Cyprus.

The affected companies were members of the Investors Compensation Fund, a safety mechanism designed to protect clients if an authorised investment firm is unable to return funds or financial instruments owed to them.

CySEC explained that the removal of the firms from the fund followed its earlier decision to withdraw their Cyprus Investment Firm (CIF) authorisations.

In other words, once the companies lost their licences to operate as Cyprus Investment Firms, they could no longer remain members of the compensation scheme.

The regulator sought to reassure investors that the change does not automatically strip clients of their rights.

“In accordance with paragraph 6(3) of the directive, the loss of ICF membership status does not mean loss of rights of covered clients to receive compensation in relation to investment operations carried out until the loss of membership status, if the conditions for compensation are fulfilled pursuant to the directive, nor does it obstruct the initiation of the compensation procedure for covered clients,” CySEC said.

This means that clients who carried out eligible investment transactions before the firms lost their membership may still have the right to seek compensation, provided the conditions set out in the rules are met.

The commission also made clear that the process for submitting compensation claims is not blocked by the withdrawal of membership.

The decision highlights how the investor protection system in Cyprus operates alongside firm licensing, with participation in the compensation fund tied directly to holding a valid authorisation.

It also underlines CySEC’s supervisory role in maintaining oversight of the market and ensuring that client safeguards remain in place, even when firms exit the system.