Investor Compensation Fund Notice
Trek Labs Europe Ltd. dba Backpack EU
INVESTOR COMPENSATION FUND NOTICE
1. Purpose of the Investor Compensation Fund (ICF)
Pursuant to section 15 of the Investment Services and Activities and Regulated Markets Law of 2017 (the “Law”), Trek Lab Europe Ltd (referred to as the “Company”) is a member of the Investor Compensation Fund (the “ICF”).
The purpose of the ICF is to secure the claims of Covered Clients (as defined in the applicable legislation) against the Company, in case the Company is unable to meet any of its obligations that arise as a result of a Covered Client’s claim regarding the provision of investment or ancillary service(s) and the Company’s financial position is unlikely to change in the foreseeable future, provided that the criteria set out in the applicable legislation have been fulfilled. The provisions of the present Policy in relation to the operation of the ICF are in accordance with the provisions of Directive DI87-07 of 2019 and Directive DI87-07(A) of 2022 of “CySEC for the operation of the Investors Compensation Fund” (the “ICF Directive”).
The ICF pays compensation to Covered Clients for a successful claim brought in relation to a covered service provided by the Company given that the Company’s failure to fulfil its obligations is established.
Failure by the Company to fulfil its obligations to a Covered Client consists of the following:
(a) either failure to return funds owed to a Covered Client or funds which belong to a Covered Client but are held by the Company, on the Covered Client’s behalf, in relation to investment services; or
(b) failure to hand over to a Covered Client financial instruments that belong to a Covered Client and which the Company holds, manages, or administers on the Covered Client’s behalf, in relation to investment services.
2. Covered Clients
The ICF covers only Retail Clients of the Company. It does not cover Professional Clients nor Eligible Counterparties.
3. Non-covered Clients
Subject to the provisions of CySEC Directive DI 87-07, the ICF shall not compensate the following investor categories:
(a) The following categories of institutional and professional investors:
(i) IFs;
(ii) legal entities associated with the Company and generally belonging to the same group of companies;
(iii) banks;
(iv) cooperative credit institutions;
(v) insurance companies;
(vi) collective investment undertakings in transferable securities and their management companies;
(vii) social insurance institutions and funds;
(viii) investors characterized by the member as professionals upon their request, pursuant to the provisions of paragraph Β of the Second Schedule of the Law.
(b) Supranational institutions, government and central administrative authorities.
(c) Provincial, regional, local and municipal authorities.
(d) Enterprises that have close ties with the Company as the term «close ties» is construed in Article 2(1) of the Law.
(e) Managerial and administrative staff of the Company.
(f) Shareholders of the Company whose participation directly or indirectly in the capital of the Company amounts to at least 5% of its share capital, or its partners who are personally liable for the obligations of the Company as well as persons responsible for the carrying out of the financial audit of the Company as provided by the Law, such as its qualified auditors.
(g) Investors having investments in enterprises connected with the Company and, in general, with the group of companies to which the Company belongs, positions or duties corresponding to those listed in sub-paragraphs (e) and (f).
(h) Up to second-degree relatives and spouses of the persons listed in sub-paragraphs (e), (f) and (g), as well as third parties acting for the account of such persons.
(i) Investors-clients of the Company responsible for facts pertaining to the Company that have caused its financial difficulties or have contributed to the worsening of its financial situation or have profited from these facts.
(j) Other firms in the same group.
(k) Investors in the form of a company, which due to its size, are not allowed to draw a summary balance sheet in accordance with the Companies Law or a corresponding law of a Member State.
In the cases of sub-paragraphs (e), (f), (g), (h), and (j) the ICF shall suspend the payment of compensation informing the interested parties accordingly until it reaches a final decision as to whether such cases apply.
4. Covered Services
ICF shall compensate any Covered Client of the Company in respect of a claim arising out of a covered service, meaning any investment or ancillary service(s) provided at the time by the Company and presented on the CySEC’s website and presented on: https://www.cysec.gov.cy/en-GB/entities/investment-firms/cypriot/72591/
The ICF covers claims due to the Company’s failure:
to repay the funds owed to covered clients or belonging to them and held on their behalf in connection with investment operations; or
to return to covered clients any financial instruments belonging to them and held, managed or administered on their behalf in connection with investment operations; in accordance with the legal and contractual conditions applicable.
It should be noted that the ICF shall pay no compensation to an individual who has been convicted of a criminal offence related to the Prevention and Suppression of Money Laundering Activities Law.
5. Procedure
The ICF shall initiate the compensation payment procedure when:
(a) the Cyprus Securities and Exchange Commission (hereinafter “the CySEC”) has determined that a member of the ICF appears, for the time being, for reasons directly related to its financial circumstances, to be unable to meet its obligations arising out of investors' claims and has no early prospect of being able to do so.
(b) a Court of the Republic, has made a ruling, for reasons directly related to a member's financial circumstances, which has the effect of suspending investors' ability to make claims against it.
CySEC shall issue its decision for the initiation of the compensation payment procedure by the ICF within a reasonable time, and publish the relevant information on its website.
Upon initiation of the compensation payment procedure, the ICF shall publish as soon as possible in at least two national newspapers, an invitation to submit applications for compensation, designating the procedure for the submission of the relevant applications, the deadline for their submission as well as their content as defined specifically in this paragraph
The publication provided above shall include at least:
(a) the name and address of the headquarters and the trade name of the involved ICF member;
(b) the deadline for the submission of the compensation applications, which cannot be less than five months or more than nine months from the date of initiation of the compensation payment procedure, or from the date of its publication;
(c) the mode of submission of applications;
(d) the address and/or website through which Covered Clients may obtain the relevant claim form provided by the ICF, as provided for in Paragraph 22 of the CySEC Directive DI 87-07.
The said publication shall be communicated immediately to CySEC, which shall post the publication on its website.
The ICF shall issue a claim form setting out the information and supporting evidence required in order to evaluate the claims of covered investors. Without prejudice to this, the ICF may request additional information where deemed necessary. A claim must be submitted by completing the claim form issued by the Fund.
The ICF may record and assess the submitted claims, either internally or by designating at least one expert in capital market issues and at least one lawyer with knowledge on capital market issues, who after initially reviewing the “compensation payment conditions” as described below, shall evaluate the said applications and recommend to the Administrative Committee their acceptance or rejection, in whole or in part.
The Administrative Committee shall examine the applications before it and decide whether the compensation payment conditions are fulfilled or not.
The Administrative Committee shall reject the application if the claimant has used false or misleading means in order to secure the payment of the compensation.
Upon completion of the procedure before the Administrative Committee, the ICF shall:
(a) issue a decision listing the clients of the ICF member, determining the amount of money each one of them is entitled to receive, and communicate it to CySEC and the ICF member within five working days from its issue. The said decision shall also list those clients to whom no compensation shall be paid, and the reasons for this.
(b) communicate to each affected client its decision the soonest possible from its issue.
The claimant to whom the ICF communicates its decision, may, in case of disagreement, submit an objection in writing to CySEC, within one month from the date on which the decision was notified, justifying its objection sufficiently. The objection shall be submitted at info@cysec.gov.cy and entitled “Objection to the decision of the ICF”.
CySEC shall conclude the examination of the objection within forty-five (45) days and in case that it identifies an error/mistake in the evaluation made by the ICF, CySEC shall require the Fund to rectify the mistake and pay to the claimant the correct amount of compensation.
6. Compensation Payment Conditions
The payment of compensation by the ICF shall entail the following:
(a) the initiation of the compensation payment procedure;
(b) the existence of a valid claim by a Covered Client against the ICF member, which derives from an investment operation;
(c) the submission of an application form as prescribed in the CySEC Directive DI 87-07;
(d) that the claims do not arise from transactions for which there has been a criminal conviction for money laundering as defined in the Prevention and Suppression of Money Laundering Activities Law of 2007
(e) there are no pending criminal proceedings against the said Covered Client for money laundering as defined in the Prevention and Suppression of Money Laundering Activities Law of 2007,;
(f) the right of a covered client has not been extinguished under the Limitation of Offences Act.
Upon submission of a compensation application, the Administrative Committee examines whether the conditions of points (a) - (f) above are fulfilled.
As also stated above, the Administrative Committee rejects the compensation application in case the claimant-client used false or misleading means in order to secure the payment of the compensation by the Fund.
7. Amount of Compensation
(a) The amount of the claim of a Covered Client shall be calculated based on legal and contractual conditions and terms governing the relation of the covered client with the members of the Fund, in particular those relating to offsetting and counterclaims, that are applicable to the assessment on the date of the initiation of the compensation payment procedure, of the amount of the funds or value determined with reference to the market value, where possible, of the financial instruments belonging to the Covered Client and which such funds or instruments, the ICF member fails to repay or return, respectively.
(b) The calculation of the compensation payable shall arise from the sum of the total established claims of the Covered Client against the ICF member, arising from all covered services provided by the member and regardless of the number of accounts
(c) The ICF shall provide coverage for the claims referred to in Paragraph 19 of the CySEC Directive DI 87-07, which applies for the total claims of the Covered Client against a ICF member and shall be defined as the lower of 90% of the cumulative covered claims of the Covered Client and €20.000.
(d) In the case of joint investment business:
(i) in the calculation of the coverage provided for in subparagraph (b), the share attributable to each covered investor shall be taken into account;
(ii) the claims shall be allocated equally amongst covered investors, unless there exist special provisions, and without prejudice to point
(iii), each investor is provided with separate coverage pursuant to the provisions of subparagraph (b); claims relating to joint investment business to which two or more persons are entitled as members of a business partnership, association or grouping of a similar nature, which has no legal personality, shall, for the purpose of calculating the coverage provided for in subparagraph (a), be aggregated and treated as if arising from an investment made by a single investor.
(e) Where a covered client is not the ultimate beneficiary of the funds or financial instruments held by the member:
(i) compensation shall be paid to the ultimate beneficiary if his identity is or may be established prior to the date of the determination or ruling referred to in paragraph 18(1) of the CySEC Directive DI 87-07.
(ii) if the ultimate beneficiaries are more than one, in the calculation of the coverage provided for, the share attributable to each one of them according to the arrangements regulating the management of the funds or financial instruments shall be taken into account. This section shall not apply to undertakings for collective investments.
(f) Compensation shall be paid in Euro, and, where the funds and/or financial instruments are expressed in a currency other than the Euro, the exchange reference rate of the said currency against the Euro fixed by the European Central Bank at the end of the day on which the compensation payment procedure was activated, shall be used.
Risk warning: Our products are traded on margin and carry a high level of risk and it is possible to lose all of your capital. Please consider our Risk Disclosure.
Legal: This website is operated by Trek Labs Europe Ltd (formerly FTX EU Ltd), registration number HE335683, with registered address at Aiolou & Panagioti Diomidous 9, Katholiki, 3020 Limassol, Cyprus. Trek Labs Europe Ltd (formerly FTX EU Ltd) is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) under license number 273/15.
The company operates through https://eu.backpack.exchange (formerly http://www.ftx.com/eu and https://ftxeurope.eu) and uses the trade name Backpack EU (formerly FTX EU).
Last updated