CySEC Announces Supervisory Priorities for 2024: Targeting CIFs' Cross-border Activities

On March 27, 2024, the Cyprus Securities and Exchange Commission (CySEC) announced that it has set out its supervisory priorities for 2024, indicating increased scrutiny of Cypriot Investment Firms’ (CIFs) cross-border activities when distributing complex financial products.

Enhanced supervision of high and medium high-risk firms, particularly focusing on cross-border activities, is aimed at preventing any investor risks arising from the distribution of complex financial products like CFDs. 

CIFs should expect additional scrutiny of their professional conduct rules, particularly around information addressed to potential clients, including marketing communications, clients’ onboarding processes, and national intervention measures related to the provision, distribution, and sale of CFDs. 

Supervisory priorities for asset managers include ensuring adherence to sustainability risks and relevant disclosure requirements, enhancing the quality and oversight of data pertaining to transactions and derivative contracts as reported in accordance with the AIFMD, and thorough data collection and analysis regarding investment funds’ exposure in Commercial Real Estate. 

Launching CySEC’s 2024 priorities, Dr George Theocharides, Chair of CySEC added: “Regulated entities that do not have adequate governance structure and effective control functions around compliance, internal audit and risk management will not survive in the current regulatory environment. There can be no last chances when investors are being put at risk.” He warned regulated entities they should “review policies, procedures and internal controls to ensure compliance with regulatory requirements.” 

The supervisory priorities rest on a comprehensive assessment of the shifting market landscape, regulatory developments within the EU as well as the ESMA’s priorities in the fields of investment services and asset management.