CySEC Enhances Oversight on Risky Cross-Border Financial Firms

CySEC Intensifies Oversight on CIFs’ Cross-Border Activities

The Cyprus Securities and Exchange Commission (CySEC) has announced a significant tightening of its oversight processes, particularly focusing on the cross-border activities of Cypriot Investment Firms (CIFs). This move comes as part of CySEC’s supervisory priorities for the year 2024, with a special emphasis on the distribution of complex financial products such as Contracts for Differences (CFDs).

Amid growing concerns over potential risks, CySEC is ramping up supervision of high and medium high-risk firms, paying close attention to their operations beyond Cyprus. George Theocharides, Chair of CySEC, underscored the necessity for CIFs to maintain robust governance structures and effective compliance measures. He issued a stark warning that firms lacking adequate governance and control functions are unlikely to withstand the pressures of the current regulatory landscape.

The regulatory authority is renewing its efforts to foster a compliance-oriented culture among CIFs, urging them to reassess their policies and internal controls to ensure they meet regulatory standards. CySEC’s supervisory agenda extends to various sectors, including professional conduct rules, client onboarding, marketing communications, and sustainability requirements compliance.

Furthermore, CySEC is placing enhanced oversight of asset managers high on its priority list. This is to guarantee adherence to sustainability risks and data reporting obligations as per the Alternative Investment Fund Managers Directive (AIFMD). With new regulatory frameworks on the horizon, such as the Markets in Crypto-Assets Regulation (MiCA) and the Digital Operational Resilience Act (DORA), CySEC is gearing up with new strategies and tools to strengthen its supervisory capabilities.

Theocharides also highlighted the importance of integrating technological advancements to enhance business resilience and regulatory compliance in response to changing market conditions. The supervisory priorities set by CySEC are informed by a thorough analysis of market trends, regulatory changes within the EU, and guidelines from the European Securities and Markets Authority (ESMA).

financial products
CySEC is enhancing its regulatory framework by implementing stricter compliance checks, increasing transparency, conducting thorough audits, and imposing significant penalties on high-risk cross-border financial firms to safeguard investor interests.

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