CySEC strengthens supervisory powers

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The Cyprus Securities and Exchange Commission will bolster its supervisory framework with new technology to keep check of developments in the market, CySEC Chair George Theocharides said.

“The pandemic has acted as a catalyst for huge changes in the financial services sector, while the enlarged use of technology has created opportunities and challenges rendering the need for initiatives enabling CySEC to follow market developments as imperative,” Theocharides told a press conference.

CySEC enhanced supervisory approach includes using 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/materials.

This tool will enhance CySEC’s ability to collect, analyse and monitor the marketing communications of CIFs, to be 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 perform real-time monitoring with an instant alert trigger on any related keyword combination.

CySEC is implementing a transaction data processing, storage, and reporting system that can generate business insights and supervise market entities.

It is developing procedures and methodologies, which, with the appropriate technological infrastructure, will enhance its capacity to ensure regulated entities’ compliance with 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 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.

CySEC’s Risk-Based Supervision Framework (RBS-F) has been upgraded, so it is continuously updated to consider any new developments or changes that could pose a risk to the market.

At the end of 2021, CySEC had 806 entities under its supervision, compared to 788 in 2020, recording an increase of 2.28%, with interest in the sector remaining steady.

The number of Cyprus Investment Firms (CIFs) remained steady, totalling 243 supervised entities in 2021.

Administrative Service Providers marked a continuous declining trend with 140 entities supervised by CySEC in 2021 from 146 the year before and 164 in 2017, 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 sector recording a steady growth is collective investments with 296 supervised entities in 2021 from 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 bln, of which €2.5 bln are invested in the local economy.