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CySEC has presided over the vast expansion of the Cyprus securities market; new crypto regulations — Chairwoman

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“Today, the Cyprus Securities and Exchange Commission (CySEC) oversees 790 entities and 9 trillion transactions by Cyprus Investment Firms, placing it among the first markets in Europe in 2020,” noted CySEC Chairwoman Demetra Kalogerou. “This is an expansion of more than 200 per cent since 2011 and we have 100 applications for licences awaiting approval decisions.”

Speaking at a conference on Wednesday to celebrate CySEC’s 25th anniversary, Kalogerou announced new developments underway which include the registration of cryptocurrency asset service providers. “Supervision will be mainly concerned with money laundering. Recently, we have issued our directive concerning cryptocurrencies, and we will prepare the relevant applications by September of this year.”

“A draft law is currently being prepared in parliament regarding fund administrators, that is, the supervision of companies that undertake the administration of alternative investment funds. The target is for the House of Representatives to enact a new national law by next year. CySEC is also reviewing the permissible investment strategies for fund managers and the applicable rules focusing on the area of loan origination and loan participation.”

CySEC is also responsible for the creation and maintenance of the Trust Register which includes all information regarding these entities, she continued. CySEC has simplified access to the registry which is expected to be operational in the last quarter of this year.

CySEC strives to actively support new financial technology products, services and infrastructure projects, particularly those that can help finance real economic growth, but with the appropriate protection for investors, Kalogerou insisted.

CySEC has established an innovation hub in September 2018 to explore the growth and uses of fintech developments like blockchain, virtual currencies, and reg tech solutions that may help the market participants to be compliant. “Currently, we are looking into the possibility of transforming this innovation hub into regulatory sandbox. In this controlled environment, fintech startups and other entities can test their innovative products or services in real conditions under supervision.

“And CySEC is working  to develop procedures and the methodology to conduct data driven supervision, which will allow it to identify any regulatory risks in the market at an early stage in order to be more proactive,” she added.

Further, prospectus regulation has mobilized greater access to financial markets for companies and especially the SMEs. As we are building and promoting SME growth markets, the existing rules allow for more proportionate treatment of SMEs without impairing market integrity and investor protection, Kalogerou noted. “A listing on stock exchanges can give a significant boost to small and medium enterprises, including a reduced dependence on bank funding. A stock market listing provides better brand recognition, and access to equity capital for SMEs. Cyprus’ new growth market will provide all of that.”

Kalogerou pointed out that the ministry of finance has supported the increase in personnel at CySEC, because the value of good oversight is understood. CySEC has been able to vastly expand its size.

Finance Minister Constantinos Petrides confirmed this view in his speech at the conference.

“The legal framework without strong supervision and enforcement, is of no use.  It is almost counterintuitive but, a strong capital market can only exist where everybody plays by the same rules, investors are protected, and fraudulent or illegal activity is thwarted promptly and decisively.  It is this vital role that CySEC has been called upon to fulfil, a task that is not easy at all.  For this reason, CySEC was one of a few organisations in the broader public sector, where the moratorium on hirings and job creation was not applied,” the minister explained.

“I envision CySEC to continue its open-door policy with the regulated entities, so that there is a good understanding of the evolving market but also opportunity to provide the appropriate guidance. The introduction of the Innovation Hub is a demonstration of this forward-looking approach by CySEC.

At the same time, the Cyprus Securities and Exchange Commission should strive to enhance its abilities and methods so that it serves in the best possible way its primary role, that of the supervisor of the financial sector.  This can only be achieved, with efforts for supervisory excellence and no tolerance to illegal and fraudulent activity,” the minister commented.

Kalogerou noted that, “in support of enhanced supervision, CySEC puts great emphasis on financial education, professionalism, innovation, as well as the standard of services offered by the entities we supervise and their employees. All compliance officers and traders at Cyprus Investment Funds have been obliged to pass specialised exams and to be continuously educated on regulatory matters in 2020.”

Thanks to CySEC, the regulatory and supervisory landscape in Cyprus now mirrors that of the rest of the EU.

“New groups of entities are today included under CySEC supervision. These marked an important step to fulfill the vision and mission of CySEC: To establish the Cyprus securities market is one of the safest, most reliable destinations for investment and effective supervision to ensure investor protection.”

 

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