A Brief Overview
The Cyprus Securities and Exchange Commission (CySEC) is an independent public supervisory authority responsible for overseeing the investment services market, transactions in transferable securities, and the collective investment and asset management sector in the Republic of Cyprus. CySEC’s operations are governed by Law 73(I)/2009, which regulates its structure, responsibilities, powers, organization, and other related matters.
Structure and Responsibilities
The CySEC is administered by a five-member Board. The Board consists of a Chairwoman, a Vice-Chairman, and three non-executive members. All Board members are appointed by the Council of Ministers, following a proposal from the Minister of Finance. Their service terms are renewable every five years.
Departments and Roles
CySEC performs various roles and is divided into several departments, including Strategy & international relations, Issuers, Authorizations, Supervision, AML-CFT (Anti Money Laundering – Counter Financing Terrorism), Market surveillance & investigations, Legal, Administration & personnel, Information technology & operations, Risk and statistics department, and Internal audit.
Vision and Mission
CySEC aims to establish the Cyprus securities market as one of the safest, most reliable, and attractive destinations for investment. Its mission is to exercise effective supervision, ensure investor protection, and promote the healthy development of the securities market.
Powers and Duties
As an independent supervisory authority, CySEC holds various responsibilities, including:
- Granting operating licenses to entities under its supervision, as well as suspending and revoking licenses.
- Regulating and supervising the operation of the Cyprus Stock Exchange (CSE) and other organized markets in the Republic of Cyprus.
- Overseeing agencies under its supervision to ensure compliance with relevant laws.
- Conducting necessary investigations on its own behalf and on behalf of foreign competent authorities.
- Requesting and collecting information from individuals and organizations to aid in its duties.
- Imposing administrative and disciplinary sanctions as provided by the law.
- Taking action against practices contrary to securities market laws.
- Applying to a competent court for orders related to asset detention, charges, freezing, prevention of alienation or transactions.
- Issuing regulatory directives and decisions.
- Cooperating and exchanging data and information with other public authorities, foreign supervisory authorities, and organizations.
Entities Under CySEC’s Supervision
CySEC is responsible for supervising and ensuring compliance with relevant legislation by various entities, including:
- Cyprus Investment Firms (CIFs)
- Cyprus branches of Investment Firms (IFs) from other EU Member States
- Tied Agents of CIFs
- Undertakings for Collective Investment in Transferable Securities (UCITS)
- UCITS Management Companies
- UCITS Agents
- Cyprus branches of UCITS Management Companies from other EU member states
- Administrative Services Companies – Trustee and Fiduciary Service Providers
- Variable Capital Investment Companies (VCIC)
- Alternative Investment Fund Managers (AIFMs)
- Regulated Markets (RM)
- Central Counterparty Clearing House (CCPs) of over-the-counter (OTC) derivatives
- Trade depositories of over-the-counter (OTC) derivatives
- Alternative Investment Funds (AIFs)
Laws Empowering CySEC
Apart from its main responsibilities, CySEC also carries powers and duties conferred by the following laws:
- The Public Offer and Prospectus Law of 2005
- The Insider Dealing and Market Manipulation (Market Abuse) Law of 2005
- The Public Takeover Bids Law of 2007
- The Transparency Requirements (Transferable Securities Admitted to Trading on a Regulated Market) Law of 2007
Authorization and Licensing
Entities seeking to provide investment services or perform investment activities on a regular basis must obtain prior authorization from CySEC. The authorizations are granted in accordance with Chapter I of Law 87(I)/2017 – For the Provision of Investment Services, the Exercise of Investment Activities, the Operation of Regulated Markets.
Once authorized, all Cyprus Investment Firms (CIFs) are registered in a publicly accessible register maintained by CySEC. The register contains information about the authorized services and activities of each CIF. CySEC also notifies the European Securities and Market Authorities (ESMA) of every authorization.
CySEC grants licenses to CIFs only if they meet the capital requirements prescribed by Regulation (EU) No. 575/2013. The capital requirements depend on the nature of the investment service or activity offered.
Certifications and Training
Individuals employed by CIFs must possess sufficient knowledge, skills, and experience to perform their duties. CySEC requires that these employees be certified and registered in the public register of certified persons, after passing relevant exams. The certification requirements are specified in Directive R.A.D 22 of 2017, which outlines the minimum academic and professional qualifications.
Registered individuals are obligated to renew their registration and attend continuous professional training (CPT) and seminars related to their certification and the legislation they operate under. CySEC organizes seminars and training sessions for CPT to help maintain certifications and registration.
CySEC actively participates in European and international affairs by:
- Establishing bilateral and multilateral agreements through memoranda of understanding (MOUs) with Competent Foreign Supervisory Authorities.
- Participating in committees and groups of the European Securities and Market Authority (ESMA).
- Engaging with the European Systemic Risk Board (ESRB).
- Participating in the International Organization of Securities Commissions (IOSCO).
- Joining national working groups that contribute to the Council of the European Union’s working groups.
International cooperation is crucial to CySEC, given the increasing globalization of financial markets and the complexity of supervised entities with cross-border activities.
CySEC recognizes the positive impact of Corporate Social Responsibility (CSR) and has integrated various actions and initiatives into its long-term strategy. These initiatives aim to contribute to society and promote social responsibility.
CySEC’s role and responsibilities are essential to the Cypriot economy. The strict and precise oversight provided by CySEC ensures investor protection. While supervised companies face challenges in keeping up with fast-changing regulations, CySEC’s ultimate commitment is to safeguard the interests of investors.
For more information about CySEC and our regulatory services, please visit Garrity Traina.