George Theocharides, the current Vice-Chairman, is expected to succeed Demetra Kalogerou this week to head the Cyprus Securities and Exchange Commission.
Theocharides’ appointment as Chairman was locked almost a year ago when he agreed to serve first as a Vice-Chairman for 14 months alongside Kalogerou, whose term ends on September 14 after serving two terms.
She was appointed in 2011, only months before the banking crisis erupted that forced the securities agency to launch investigations against banks for violating securities laws and devastating thousands of investors and depositors.
Nearly all of the investigations resulted in millions of euros in fines.
Theocharides, 49, will become the second academic to take the helm at CySEC. The first was Marios Clerides.
A long-time professor of finance at the prestigious Cyprus International Institute of Management (CIIM), Theocharides joined CySEC last year as Vice-Chairman.
Before that, he also served on the board of the commission for one term.
His strong finance background and experience make him an ideal candidate to steer the agency in the increasingly competitive European marketplace.
CySEC is considered a preferred financial jurisdiction for many financial services firms that want to tap into the lucrative European market.
The European directive known as MiFid II requires all firms that want to do business in the single market to obtain a licence in any member state.
Cyprus, under Kalogerou, became an ideal place to set up shop because of its geographic location, living conditions, taxation, and abundance of educated people, particularly in accounting and finance.
The agency’s strong reputation was also a major factor.
CySEC was often accused of taking a tougher stance than some of its counterparts in Europe, but that is more of a compliment in the world of financial regulation.
For example, CySEC was among the first jurisdictions to require leverage to come down considerably to help minimise risk and potential losses for investors trading on margin.
Many firms licenced in Cyprus threatened to leave and move to the UK or elsewhere.
Kalogerou stuck to her guns.
She fired back that investor protection and market integrity had priority over risky practices.
Within days, other jurisdictions followed suit.
Although that did not affect the attractiveness of Cyprus as a jurisdiction, countries outside the EU gained business for offering higher leverage for trading.
However, those investors who chose to do business with such jurisdictions do not benefit from the higher level of protection afforded in the EU area. It is always the small investors who need it the most.
At CySEC, Theocharides will see the management of nearly 200 employees and the rapid development of the fund industry, a legacy of Kalogerou.
According to our sources, he has proven himself with the management of people, and many industry insiders think very highly of him.
This is a business where being respected is the most valuable asset.
However, Theocharides’ appointment leaves empty the seat of Vice-Chairman.
Although nothing has been announced officially, sources told the Financial Mirror that George Karatzias, a Cyprus Investment Fund Association board member, is likely to be appointed to that position.
Government officials have already met with Karatzias, and he is expected to be confirmed next week unless new developments occur in the meantime.