CySEC Initiates Thematic Review on Handling of Uninvested Funds by Cyprus Investment Firms

The Cyprus Securities and Exchange Commission (CySEC) has initiated a comprehensive thematic review concerning the management of uninvested funds held by Cyprus investment firms (CIFs) on behalf of their clients. This regulatory exercise aims to scrutinize CIFs' operational practices, particularly focusing on the handling of uninvested client funds and ensuring adherence to relevant regulatory frameworks.

Under the provisions of Law 87(I)/2017 and MiFID II Delegated Regulation 565, CySEC aims to enhance transparency and investor protection by evaluating CIFs' methodologies in managing uninvested funds. The review will encompass various critical aspects, including the methods and arrangements employed by CIFs, the clarity and adequacy of client communications regarding uninvested funds, and the effectiveness of internal controls implemented to ensure compliance with regulatory requirements.

Selected CIFs will participate in the review process through a desk-based assessment facilitated by a detailed questionnaire, which CySEC intends to distribute shortly. CIFs will be required to furnish comprehensive responses accompanied by supporting documentation within a stipulated timeframe.

CySEC's proactive stance underscores its commitment to reinforcing regulatory oversight and safeguarding investor interests within Cyprus' financial markets. The outcome of this thematic review is expected to provide valuable insights into industry practices and contribute towards further refining regulatory standards governing CIFs' operations in handling uninvested client funds.