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CySEC to further strengthen supervisory framework utilising technology

cysec chief
CySEC chairman George Theocharides

The Cyprus Securities and Exchange Commission (CySEC) will further bolster its supervisory framework in a bid to go along with technological developments in the market, CySEC chairman George Theocharides said on Tuesday.

“The pandemic has acted as a catalyst for huge changes in the financial services sector, while the expanded use of technology has created opportunities and challenges rendering the need for initiatives enabling CySEC to go along with market developments as imperative,” Theocharides told a press conference on the Commission’s goals for 2022 and the sector’s trends and developments in 2021.

Among other things, CySEC’s enhanced supervisory approach includes the use of new technology to monitor and supervise the marketing and social media activities of regulated entities, namely utilising a specialised system for monitoring supervised entities’ online marketing activities and materials.

This tool will enhance CySEC’s ability to collect, analyse and monitor the marketing communications of CIFs, being able to detect all related mentions from any source globally including social media, news sites, forums, blogs, video sites and ad networks, and covers 187 languages.

It will also be able to carry out real-time monitoring with an instant alert trigger on any related keyword combination.

Furthermore, as Theocharides noted, CySEC is implementing a transaction data processing, storage and reporting system that is able to generate business insights and can be used for the supervision of market entities, while the commission is developing procedures and methodologies, which, with the appropriate technological infrastructure, will enhance its capacity to ensure regulated entities’ compliance with regulations such as EMIR, MIFIR and SFTR, by automatically detecting potential risks and irregularities at an early stage.

“In this constantly changing environment, CySEC invests in prudential regulation, developing a series of systems, enabling the Commission to go along with the rapid digitisation, ensuring a strong investor protection framework and smooth market function,” Theocharides said.

Furthermore, CySEC is designing a Data Governance Framework (DGF) that will provide a comprehensive approach to managing CySEC data, automating many of the Commission’s processes by utilising the right technology and skillsets, along with robust procedures that govern every stage of the data life cycle.

Furthermore, in 2021, CySEC’s Risk-Based Supervision Framework (RBS-F) has been upgraded so that it can continuously take into consideration any new developments or changes that could pose a risk to the market.

With regard to market size, the CySEC chairman referred to the continued growth of the investment sector, noting that by the end of the year, CySEC had 806 entities under its supervision, compared to 788 at the end of 2020, recording an increase of 2.28 per cent, with interest in the sector remaining steady.

The number of Cyprus Investment Firms (CIFs) also remained steady, totalling 243 supervised entities by end-2021 from 42 the year before, with 47 new applications pending in the end of 2021.

Administrative Service Provides marked a continued declining trend with 140 entities supervised by CySEC in end-2021 from 146 the year before and 164 in 2017, with the decline associated with the fact that fiduciary services providers are also supervised by the Cyprus Bar Association and the Institute of Certified Public Accounts of Cyprus (ICPAC).

The primary sector recording a steady growth is the one associated with collective investments with 296 supervised entities in end-2021 compared with 266 the year before and 145 in 2017.

“The sector of collective investments has a healthy growth with assets under management amounting to €11.6 billion of which €2.5 are invested in the local economy”, Theocharides said, estimating that the sector will record further growth.


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