CySEC toughens oversight on cross-border activities

Cyprus Securities and Exchange Commission (CySEC) revealed on Wednesday it would go tough on scrutinising the cross-border activities of Cypriot Investment Firms (CIFs) involved in distributing complex financial products.

In a press release detailing its supervisory priorities for 2024, CySEC pointed out concerns over potential risks associated with the distribution of complex financial products such as Contract for Differences (CFDs), saying that it is ramping up supervision of high and medium high-risk firms, directing special attention towards their cross-border operations.

Chair of CySEC, George Theocharides,stressed the importance of robust governance structures and effective compliance measures for regulated entities.

“Regulated entities that do not have adequate governance structure and effective control functions around compliance, internal audit and risk management will not survive in the current regulatory environment. There can be no last chances when investors are being put at risk,” he cautioned.

CySEC said it was renewing its commitment to promote a compliance-oriented culture among management bodies and key function holders and to proactively address adverse events to minimise their impact.

The regulatory body urged CIFs to review their policies, procedures, and internal control arrangements to align with regulatory requirements.

CySEC’s supervisory priorities for 2024 encompass a wide array of areas including professional conduct rules, client onboarding processes, marketing communications, and adherence to sustainability requirements.

The regulatory body is also prioritising enhanced oversight of asset managers to ensure compliance with sustainability risks and data reporting obligations outlined in the Alternative Investment Fund Managers Directive (AIFMD).

In light of upcoming regulatory frameworks such as the Markets in Crypto-Assets Regulation (MiCA) and the Digital Operational Resilience Act (DORA), CySEC is in the process of adopting new strategies and tools to bolster its supervisory capabilities. Theocharides stressed the importance of embracing technological advancements to bolster business resilience and regulatory compliance in the face of evolving market dynamics.

The supervisory priorities outlined by CySEC are underpinned by a comprehensive assessment of market trends, regulatory developments within the EU, and priorities set forth by the European Securities and Markets Authority (ESMA), it said.Geor