The Italian security regulator, CONSOB, has ordered the Internet service providers (ISPs) in the country to prevent investors from accessing 7 online brokers. As a result, this brings the number of brokers in this dilemma to 124.
According to CONSOB, the reason for this obstruction is the unlawful operation of the affected brokers. It stated that the online brokers have been doing business in the country without the proper authorization from the regulator.
In June last year, CONSOB banned retail customers from buying a binary option, a decision that was inspired by ESMA’s banning decision. It also included non-professional investors in its restriction on the promotion of contracts for difference (CFD). The warning list by the regulator also included some dealings in crypto assets, either on related derivatives or through underlying coins.
Affected websites still operational
The order shall not take effect until a couple of days when due process is complete. Due to some technical bottlenecks, the order will not take effect immediately, which means investors with the brokers in question will have time to close their trade with them.
Some of the brokers affected include RL Ltd, Tradepoint Systems Ltd, RMT 500Ltd, Local Trader Ltd, Ks-securities, as well as Ace Capital Ltd.
CONSOB further revealed that the flagged companies were found to have engaged in “misleading” and unlawful” marketing practices when promoting forex and other retail products.
CONSOB bent on sanitizing the Italian securities market
The Italian regulator is known to be very fierce and strict on activities of leveraged trading. In fact, it’s one of the strictest regulators in Europe. In a move to sanitize the industry, it banned two licensed CFD and Forex brokers for their unlawful leverage activities. The two companies Hoch Capital Ltd and 24Option are still under the ban, and no one is sure when or if the ban would be lifted.
CONSOB has full rights to block access
The Decreto Crescita gives the Italian regulator the rights to order ISPs to block investment’s access to brokers it finds wanting in their service delivery. CONSOB has also revealed that its decision was in line with the provision of the decree. In view of this, the banned brokers may little option to appeal against the ban.
CONSOB has also told investors to make the right investment choices whenever they are ready to invest. According to the regulator, individual investors should make their investment choices in a well informed and cautious way.
They should do the necessary research and findings before choosing any investment vehicle or firm to invest their money. Prospective investors should adopt common sense, such as finding out that the identified operator is completely authorized to do such business in the country.
CONSOB stated that such precautions will keep them away from scams and unscrupulous investment firms and minimize their financial risks.
The regulator has also advised prospective investors to go through the “Beware of Fraud” section on its website to get more details about avoiding investment scams and fraud.