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#1 10-07-2020 08:41:25

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2855
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CySEC assesses the costs of inactive trading accounts

CySEC assesses the costs of inactive trading accounts


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CySEC (Cyprus Stock Exchange Operation Committee) has examined the circumstances taken into account by Cyprus-regulated forex brokers when they apply inactivity fees to their traders. They've found some disturbing practices.

The CySEC's report focuses on a sample of 34 brokers, mainly oriented toward forex trading.

Several brokers have not provided sufficient info on the circumstances under which a trader or his/her account are considered inactive. For example, the info contained in the general conditions and agreements of the websites of certain brokers don't mention the invoicing of inactivity fees when a client's account becomes dormant, without giving any further explanation of the terms under which such an account is considered inactive. Many brokers have informed traders that an account is considered inactive when there is no "trading activity", but they have not expressly indicated what constitutes "activity".

The evaluation of trading activity has shown that a small number of brokers have linked this activity to the number of trades executed, and not to the act of trading itself. For example, a client's trading account was considered inactive if the number of trades made during a 60-day period was less than 5 trades per month. This is pretty outrageous when you think about it!

In general, brokers didn't specify the quantitative and qualitative factors taken into account to calculate the amount of the inactivity fee. CySEC has also found that a small number of forex brokers apply excessively high inactivity fees (ex: 75 euros or more) on a monthly basis, without providing a valid reason for imposing such a fee, nor an explanation for its calculation.

CySEC is particularly concerned that, for several brokers, the amount received for inactivity fees for the last 6 months of last year is excessively high, ranging from 1 million to 1.3 million.

A small number of brokers also charge inactivity fees retroactively. This means that traders have been billed at the start of the period during which no activity has been identified on the client's trading account, and not just after the period that must elapse for the trading account to be considered. as inactive.

CySEC says that it will continue to assess the policies and provisions of each broker relating to inactivity costs and that it will consider taking other measures, such as application surveys.

None of the companies involved in this investigation have made official comments on this. We will keep you posted as things evolve...

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