Cyprus fund industry, growing fast, seeks changes – CIFA head

The Cyprus fund industry is maintaining steady growth right through lockdowns and the pandemic, and is seeking changes to its legal framework to harmonise with competitive jurisdictions.

“We continue to see a major increase in assets under management,” Cyprus Investment Fund Association President Andreas Yiasemides told the Cyprus Mail in an interview.

Brexit has also driven UK fund managers to seek a base in the EU, and a good number are choosing Cyprus. “We’ve had interest from 10 to 15 managers over the past few months, and about 20 funds are actively considering moves to Cyprus,” Yiasemides said.

There have been some important developments for the funds industry.

One important change that is already being implemented is the listing of funds in a separate category on the Cyprus stock exchange. “It is always prestigious to have a fund listed, and it increases assurance of compliance,” Yiasemides points out.

Similarly, CIFA has convinced Bloomberg, Thomson Reuters and Clearstream to allow Cyprus funds to be uploaded in their platforms. This permits easy access to international investors.

The association is also seeking several changes which would permit it to become more competitive . There was a significant increase in the number of funds licensed in Cyprus and a remarkable growth in the assets under management reaching a total €8 billion.

“We have identified that there is a market for non-performing loans in Cyprus in Greece, however, based on our legislation, funds cannot acquire a loan portfolio. This is not the case in Luxembourg. We have prepared a report to the regulator explaining the legal context in Luxembourg, and seeking to enable it here.”

“Although the tax framework for funds is already quite favourable, we are trying to improve it even more. There are two specific proposals that will simplify tax calculation for Cyprus funds and make us as competitive as the Luxembourg industry. These changes will, of course, need to be ratified by our parliament.

We are close to finalising this, actually, we’re in the process of sending these to the Ministry of Finance This will be a milestone for the for the fund industry that we’ve managed to achieve,” Yiasemides comments.

Furthermore we are in the process to have another two pieces of legislation implemented.

The first one is legislation that would monitor fund administration services. In this way all stakeholders of the fund industry will be regulated, providing additional comfort and protection to both the investors and fund managers.

The second one is the implementation of partnership structure with legal personality. The addition of this legal structure will bring Cyprus in line with other fund jurisdiction in the essence that all legal structures that exist in other established fund jurisdictions will exist in Cyprus as well.

“We are in talks with the finance ministry about all these changes, and look forward to the results,” Yiasemides adds.

‘We believe that Cyprus has all the ingredients in place to continue growing as a reputable EU fund hub’, he concluded.