CySEC Settles with FXNET for €225,000 Over Retail CFD Rule Breaches

The Cyprus Securities and Exchange Commission (CySEC) has reached a €225,000 settlement with FXNET Limited, the Cypriot investment firm behind EMS Brokers and NessFX, over multiple compliance shortcomings found during supervisory reviews between 2021 and 2022.

CySEC’s board approved the settlement in March 2025 and published it on 11 November. The regulator clarified that all settlement proceeds are paid to the Treasury of the Republic, not retained by CySEC.

The investigation found that FXNET had weaknesses in several key areas of compliance under the Investment Services Law and EU Regulation 600/2014. These included deficiencies in organisational structure, product governance, record-keeping, client-fund protection, and suitability assessments. CySEC also noted lapses related to Directive DI87-09, which implements MiFIR Article 42 restrictions on contracts for difference (CFDs) in Cyprus.

These restrictions, originally introduced by ESMA in 2018 and made permanent by CySEC in 2019, impose leverage limits, mandatory margin close-out rules, negative balance protection, and bans on bonuses or other trading incentives. The directive was updated again in 2025, tightening leverage on commodity CFDs.

FXNET, licensed since 2012 under CIF number 182/12, has previously faced regulatory scrutiny. In 2019, the firm paid €60,000 in an earlier settlement for similar compliance issues. The latest case marks a continuation of CySEC’s stricter stance toward retail-CFD brokers that fall short of consumer-protection standards.

Since 2023, CySEC has increased enforcement activity against non-compliant firms in the retail trading sector. Recent settlements, including a €200,000 agreement with Colmex Pro, highlight the regulator’s effort to ensure consistent implementation of EU-wide investor safeguards.

For FXNET, the settlement underscores the importance of strong internal controls, transparent client communications, and ongoing supervision of product governance frameworks. It also serves as a reminder to other brokers that CySEC expects full adherence to retail-protection rules and will continue to enforce them vigorously.

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