CySEC Sets to Tighten Regulation for Investment Firms

Dimitra Kalogirou, the Chairwoman of the Cyprus Securities and Exchange Commission (CySEC​), has stressed in an interview the commitment to further strengthening supervision and prevention, as in June, the new prudential framework for Cyprus investment firms (CIFs) will be implemented.

On December 2019, CySEC published its new prudential framework for CIFs in accordance with the Investment Firms Regulation (EU) 2019/2033 (IFR) and Investment Firms Directive (EU) 2019/2034 (IFD), effective from June 26, 2021.

IFR and IFD apply to all investment firms authorised and supervised under the European Directive 2014/65/EU (MIFID II). In Cyprus, this Directive was transposed by the Investment Services and Activities and Regulated Markets Law of 2017.

It is noted that IFR and IFD introduce a new classification system for investment firms, based on their activities, systemic importance, size and interconnectedness. Article 9 of the IFD also introduces new initial capital requirements for the authorization of all investment firms required pursuant to Art.15 of Directive 2014/65/EU to provide any of the investment services or perform any of the investment activities listed below:

The initial capital of an Investment Firm shall consist of the Common Equity Tier 1 capital (CET1), Additional Tier 1 capital (AT1) and Tier 2 capital.

In the interview, Ms. Kalogirou also talked a lot about the naturalizations of foreign investors relating to the Cypriot Investment Program, which enables eligible applicants to obtain Cyprus citizenship in just six months through property investment. 

Kalogirou noted that according to the three-member committee responsible for the naturalizations, it is extremely important that commonly accepted rules of due diligence were applied by all those involved in the program. This means investment firms providing services to participants of the program may be required to conduct stricter customer due diligence.