ESMA highlights CySEC improvements in investment firm oversight

The Cyprus Securities and Exchange Commission (CySEC) has welcomed a follow-up review by the European Securities and Markets Authority (ESMA) that recognised significant improvements in the supervision of cross-border activities by investment firms.

The ESMA Peer Review Committee (PRC) report highlighted progress made by CySEC in strengthening supervisory and enforcement practices following recommendations issued in a 2022 review of cross-border investment firm supervision.

The follow-up report assessed actions taken by several national competent authorities, including CySEC, in areas covering authorisation, supervision, enforcement and cooperation with other supervisory bodies.

The PRC found clear progress in integrating cross-border activities into risk-based supervisory frameworks across national authorities.

CySEC was specifically highlighted for introducing regular and dedicated monitoring of cross-border activities, while ESMA also acknowledged the improved cooperation arrangements established by the Cypriot regulator.

What is more, the report welcomed structural changes introduced by CySEC to ensure requests are handled more promptly and said improvements had been observed in practice.

The PRC also described CySEC’s strengthening of supervisory resources through the recruitment of an additional 32 staff members as “a significant achievement”.

The report further stated that “the increased supervision and enforcement path by CySEC since the peer review is a constructive and encouraging development,” according to the PRC.

CySEC chair George Theocharides said the follow-up report and the improvements it identified reflected the progress achieved in strengthening the regulatory framework for Cyprus Investment Firms (CIFs) operating across borders.

“Today’s follow-up report to the 2022 peer review, and the tangible improvements it highlights, reflect the significant progress that has been achieved,” Theocharides said.

“We welcome the PRC’s recognition of the strengthened framework that has been created in Cyprus to enhance the supervision of Cyprus Investment Firms with cross-border activities,” he added.

Theocharides also said that ESMA’s findings also underlined the need for continued vigilance among regulators as cross-border investment services become more widespread and complex, particularly due to ongoing digitalisation.

“As the ESMA report points out, all national competent authorities must remain vigilant to the risks arising from the continued growth and increasing complexity of cross-border investment services, further driven by ongoing digitalisation,” he said.

“Retail investors are gaining ever greater access to investment opportunities across the European Union and, as a result, investor protection remains at the heart of everything we do,” Theocharides added.

The Cypriot regulator said it would continue building on the progress achieved after implementing the PRC’s recommendations.

“We will continue to closely supervise Cyprus investment firms to ensure a consistently high level of investor protection, while further strengthening our supervisory approach and cooperation with other National Competent Authorities,” Theocharides concluded.