CySEC Intensifies Oversight on CIFs
The Cyprus Securities and Exchange Commission (CySEC) has announced a stringent approach towards monitoring the cross-border activities of Cypriot Investment Firms (CIFs), particularly those dealing with complex financial products. This move comes as part of CySEC’s supervisory priorities for the upcoming year, which were detailed in a recent press release.
With a focus on Contract for Differences (CFDs), CySEC is ramping up supervision of high and medium high-risk firms, zeroing in on their operations beyond Cyprus’s borders. George Theocharides, Chair of CySEC, underscored the necessity for CIFs to maintain robust governance structures and effective compliance measures. He issued a stark warning: “Regulated entities that do not have adequate governance structure and effective control functions around compliance, internal audit and risk management will not survive in the current regulatory environment.”
CySEC is advocating for a compliance-oriented culture among management and key function holders, aiming to proactively mitigate adverse events. CIFs are encouraged to reassess their policies and internal controls to ensure they meet regulatory standards.
The regulatory body’s agenda for 2024 covers various areas, including professional conduct rules, client onboarding, marketing communications, and sustainability requirements. A spotlight is also being cast on enhanced oversight of asset managers, with a particular emphasis on adherence to sustainability risks and data reporting as per the Alternative Investment Fund Managers Directive (AIFMD).
As the financial landscape evolves, CySEC is preparing for new regulatory frameworks such as the Markets in Crypto-Assets Regulation (MiCA) and the Digital Operational Resilience Act (DORA). Theocharides highlighted the importance of leveraging technology to improve business resilience and compliance. CySEC’s supervisory plans are informed by an analysis of market trends, EU regulatory changes, and guidelines from the European Securities and Markets Authority (ESMA).
