Tuesday 16 July 2019
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Observations of the AGM of Association of Cyprus International Investment Firms

On 23rd January the Association of Cyprus International Investment Firms (ACIIF) convened its Annual General Meeting (AGM). The keynote speakers were Mr. Andreas Charalambous on behalf of Mr. Harris Georgiades – Minister of Finance, and Mrs. Demetra Kalogerou – the Chairwoman of CySEC.

Below are the main and most essential points, which were mentioned by Mrs. Kalogerou on the panel discussion after the meeting:

  • Virtual Currencies – CySEC informed, that they already have an inhouse department of experts, who specialize in blockchain, virtual currencies, crypto currencies, Digital Ledger Technology (DLT), platforms for exchange of crypto currencies to flat currencies, etc.

CySEC is open to the public and accepts opinions and suggestions, regarding the prospective regulations, which could be imposed on virtual currencies, any possible threats, which could pose risks for the retail investors, alternative solutions for platforms, blockchain or DLT.

Furthermore, CySEC advised, that they are in the process of drafting a law, which would regulate specifically virtual currencies and blockchain technologies. They did not specify when the law will be published or/and will enter in force.

Moreover, CySEC advised, that if a CIF wishes to provide CFDs and virtual currencies, that will not be possible, as different requirements and regulations would apply to the different services and products. Also, two separate entities should be incorporated – one for the provision of CFDs and the other for the provision of virtual currencies.

  • Crowdfunding – CySEC advised, that they are looking into Crowdfunding as an alternative way of investment, which they plan to popularize. The Regulator did not provide detailed information about this new initiative, but only, that Crowdfunding will fall under the regulations of MiFID II. 
  • Permanent product intervention measures on marketing, distribution or sale of CFDs – Further to the product intervention measures on marketing, distribution or sale of CFDs, which ESMA imposed and keep renewing, CySEC advised, that they intend to apply the product intervention measures on a permanent basis. The reason behind this decision is, that they wish to increase the level of investor protection.

CySEC advised, that by the end of February 2019, they will issue a Consultation Paper asking the public for their opinion. Once a significant number of opinions is gathered, CySEC will decide, if they will proceed with the said decision. Moreover, CySEC confirmed, that they are given the green light by ESMA to proceed, only if they could appropriately justify the said decision.

  • Brexit – CySEC informed the public, that they are one of the few competent authorities (according to their observations), which is in the process of preparing for no-deal Brexit. They also advised, that as the UK will exit the EU on the 29th March 2019, they shall aim to be ready with all measures at or before that date. The main issue, which CySEC considers as vital, is that all Central Counter Parties (CCPs) are from the UK, apart from the majority of the Trade Repositories (TR) located there as well.

In light of the above panel discussion, CySEC has an active role in the elaboration and issuance of Technical Standards, Guidelines, Q&As and other convergence tools. The primary purpose of these are to establish a coherent and effective approach in the supervision of CIFs, which will contribute to the enhancement of investor protection, as mentioned by Mrs. Kalogerou.

Finally, it is noted that the Government of the Republic of Cyprus demonstrates a strong commitment to cooperate with the international community, in all efforts to combat terrorism and terrorist financing and takes any additional measures necessary to strengthen the financial services sector in Cyprus.

By: Krassi Bozhilova, Senior Associate | Regulatory Compliance, AML @ A. G. Paphitis & Co LLC

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