The Cyprus Securities and Exchange Commission (CySEC) has outlined its supervisory priorities for 2024, with a strong emphasis on scrutinizing the cross-border activities of Cypriot Investment Firms (CIFs) and the distribution of complex financial products.

In a recent press release, CySEC expressed concerns about the potential risks associated with complex financial products like Contracts for Differences. As a response, the commission is intensifying its supervision of high and medium-high risk firms, particularly focusing on their cross-border operations.

CySEC has also reaffirmed its commitment to fostering a culture of compliance within the management bodies and key function holders of CIFs. This proactive approach aims to address adverse events effectively and minimize their impact.

The regulatory body is advising CIFs to thoroughly review and align their policies, procedures, and internal controls with the regulatory requirements. George Theocharides, the Chair of CySEC, emphasized the crucial need for robust governance structures and effective compliance measures in regulated entities. He warned that entities lacking adequate governance and effective control functions in compliance, internal audit, and risk management are unlikely to thrive in the current regulatory landscape, especially when investor risks are involved.

The supervisory plan for 2024 covers various areas, including professional conduct rules, client onboarding processes, marketing communications, and adherence to sustainability requirements. A significant focus is also being placed on heightened oversight of asset managers to ensure they comply with sustainability risks and data reporting obligations as per the Alternative Investment Fund Managers Directive.

In anticipation of new regulatory frameworks such as the Markets in Crypto-Assets Regulation (MiCA) and the Digital Operational Resilience Act (DORA), CySEC is adapting its strategies and tools to enhance its supervisory capabilities. Theocharides highlighted the necessity of embracing technological advancements to improve business resilience and regulatory compliance amidst evolving market conditions.

CySEC’s supervisory directions for 2024 derive from an extensive evaluation of market trends, evolving regulatory developments within the EU, and the objectives set by the European Securities and Markets Authority (ESMA).