The Cyprus capital market continues to grow despite tougher conditions, and with it, the regulator is expanding to cope with the additional burden.
Demetra Kalogerou, Chairwoman of the Cyprus Securities and Exchange Commission, said that 88 new financial entities were approved for licensing last year, 69 are active in collective investments, 14 provide investment services, and five are in the business of administration services.
Briefing reporters on CySEC’s work in 2020 and objectives for 2021, Kalogerou said four financial services companies from the UK were licensed to operate in Cyprus following Brexit.
With the regulator currently supervising 779 entities, up 33 from 2019, CySEC’s workforce has also grown, nearly tripling from the 58 staff it had in 2011 to 130 today.
Another 22 jobs are currently being filled across the board to satisfy growing needs in all fields of activity, including supervisory, legal and administration.
Kalogerou said that a new regulatory category, ‘Mini-Managers’, came under its supervision last year, while a new investment product, crowdfunding, was launched following the implementation of the relevant laws.
CySEC has received its first application for the licensing of a Mini Manager, as well as a crowdfunding platform.
Kalogerou said: “The continuous upgrade and simplification of CySEC’s operations and procedures is still our priority, in order to turn Cyprus into one of the safest, most reliable and attractive investment destinations”.
CySEC launched two of its major projects last year, designing a data governance framework for optimal organisation of its vast database and creating a framework for the timely identification, proper assessment, and management of potential dangers/risks (Risk Assessment Framework).
Both projects are expected to be finalised in mid-2021.
In addition to collective investment funds (CIFs), the option to digitally submit company data was also extended to fund managers.
The Commission has also moved ahead with creating an electronic platform for the digital submission of applications, starting from licensing applications of CIFs, to simplify such procedures.
CySEC will create a digital registry for Crypto Assets Services Providers, as stipulated in the Amending Law on anti-money laundering and combating the financing of terrorism (AML/CFT), which was passed in February.
The establishment of a system for the operation of a Central Trusts Registry is expected by the end of the year, which will retain information concerning the beneficial owners of express trusts and relevant legal entities based in the Republic.
“CySEC’s main goal in 2021 is to develop procedures and a methodology to conduct data-driven supervision, to identify any irregularities and risks in the market at an early stage, while it is looking into the possibility to transform the Innovation Hub into a Regulatory Sandbox,” Kalogerou said.
€3.2 mln in fines
Last year, CySEC imposed a total of €3.19 mln in administrative fines, €2.02 mln was linked to CIFs.
It also suspended the operating licence of eight CIFs, revoked the operating licence of three and notified more than 93 regulated entities to take certain measures within a specific timeframe after identifying weaknesses or omissions as part of its oversight checks.
Kalogerou said, “one of the most important changes will be the new framework for prudential regulation that exclusively concerns IFR/IFDs, which will come into force next June.”
These will be classified based on their activities, systemic importance, size, and connections, while new, higher requirements will be introduced to provide a licence of operation.
Another significant change in the CIFs sector is implementing regulations on sustainable investments, incorporating the Paris Agreement for tackling climate change and the EU’s action plan on financing sustainable growth.
The package comprises three regulations on sustainability‐related disclosures in the financial services (SFDR), which entered into force on March 10.
Kalogerou said CySEC would assist the asset managers in going through these options.
“Through the Innovation Hub, we will actively support businesses and business people who develop green FinTech solutions.
“CySEC actively supports new FinTech-based products, services and infrastructure projects, especially those that can contribute to financing the real economy”.