CySEC Regulatory Entity

CySEC Regulatory Entity

CySEC, Cyprus Securities and Exchange Commission, is an independent public regulatory authority responsible for regulating and administering asset management and collective investment sector, the investment services sector, and the transaction made in the transferable securities within the republic of Cyprus.

It also deals with those services not regulated by the Cyprus Bar Association and ICPAC.

The Cyprus Securities and Exchange Commission was established under Section 5 of the Securities and Exchange Commission’s establishment and responsibilities Law in 2001. Thus, it came into existence as a public regulatory entity.

Its operations are authorized by the Laws regulating the responsibilities, powers, organizations, and structures of the Cyprus Securities and Exchange Commission.

Cyprus mission and vision

The mission of the Cyprus Securities And Exchange Commission is to promote effective regulation of the securities and investment markets. And to ensure the protection of the investor and sustainable and healthy growth of the market.

CySEC’s vision is to build a more reliable Cyprus securities market, safest, attractive, and efficient for better investment opportunities.

CySEC Regulatory Entity

CySEC history

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CySEC was introduced as a public, corporate authority in 2001 under Section 5 of Securities and Exchange Commission Law.

When Cyprus became part of the European Union in 2004. At the same time, CySEC became a member of the European MiFID regulation. Then CySEC provides access to the registered firms of Cyprus in all of the European markets. As a result, firms entered the European market and started adopting the Euros that significantly changed the tax haven policy. A tax haven is the previously known regulatory framework established by the Cyprus Securities and Exchange Commission.

On 4th May 2012, CySEC introduced a policy change that classified binary options as financial instruments. The policy launched for the regulation of binary options platforms conducting financial services in Cyprus. Because of this, the CySEC became the first globally known financial regulator that regulates binary options as financial instruments.

CySEC roles and responsibilities

In Article 25 of the Securities and Exchange Commission Law, the roles and responsibilities are set for CySEC. The CySEC responsibilities for the Duties, structure, organization, and powers of the Securities and Exchange Commission are as follows:

  • Evaluation of the applications for licensing and providing regulated licenses to the entities under its authorization. Also responsible for revoking the given licenses.
  • Supervise the Cyprus Stock Exchange Market operations and regulate other organized markets in the Republic of Cyprus. Also, monitor the transactions carried out in the markets.
  • Regulation of the agency’s compliance according to their relevant Laws and the supervision of these agencies to ensure the effectiveness of markets.
  • Taking out all necessary investigations to fulfil its roles and responsibilities under the Law and on behalf of other foreign competent regulators.
  • Collecting all the information for conducting its responsibilities set under the Law. And also outsource the collection of information from a legal person or corporation that can provide the required information.
  • Promoting disciplinary and administrative sanctions given by the Law.
  • Ensuring cessation of activities that are against the laws of securities markets.
  • Applying for a competent court for issuing an order to charge for the prevention of transactions involving assets.
  • Issuing regulatory decisions and directives.
  • Exchanging data and information with the other public corporations in the Republic of Cyprus, foreign competent entities, and other organizations.

CySEC Regulated entities    

The Cyprus Securities and Exchange Commission is responsible for regulating and supervising the operations of the following regulatory entities under the relevant jurisdiction. It also ensures the compliance of the following entities:

  • Tied Agents of CIFs
  • Cyprus Branches of Investment Firms of Other European Member-States
  • Administrative Services Companies
  • Regulated Markets
  • Trade Depositories of OTC, over-the-counter Derivatives
  • Alternative Investment Funds Managers (AIFMS)
  • Cyprus Investment Firms (CIFs)
  • Undertakings for Collective Investment in Transferable Securities
  • UCITS Agents
  • UCITS Management Companies
  • Variable Capital Investment Companies
  • Trustee and Fiduciary Services Providers
  • CCPs, Central Counterparty Clearing House of over-the-counter Derivatives

With the enactment of legislation currently undergoing legal vetting, CySEC will be the supervisory authority also for the Alternative Investment Funds (AIFs). Furthermore, the relevant legislation that will govern the Central Securities Depositories (CSDs) supervision is under preparation.

With the relevance of current legislation, the CySEC will also be the regulatory entity for the Alternative Investment Funds (AIFs). However, the relevant jurisdiction for the supervision of Central Securities Depositories (CSDs) is under consideration.

CySEC structure

The five members of the Board administrate Cyprus Securities and Exchange Commission. The Board is composed of a Chairman, Vice-Chairman, and three other full-time employed members. In addition, the non-voting board member selects the governor of the Central Bank of Cyprus. The members of the Board are appointed by the Minister of Finance and serve for five years.

CySEC regulation and processing

The number of registration for conducting specific financial services under the jurisdiction of CySEC is growing at a high rate. The evaluation and regulation requirements of the organizations are continually under administration. And the processing of these organizations has been evaluating by the other CySEC registered Brokerage houses and EU regulators.

Regulation

In 2014 and 2015, the CySEC encountered the criticism of traders and industry regulators that the organizations required an efficient authority to regulate and administrate the high-risk investment corporations. In addition, most of the binary options brokers suggested that fines imposed by the CySEC should be smaller than those of European regulated organizations.

Processing

CySEC is known to be the world’s first regulator of binary options in the market. And the binary options brokers should be registered by the CySEC regulatory entity to conduct financial services in the Eurozone. The prominent binary options brokers have been requesting efficient and fast processing processes and procedures. Because they found that some unregulated brokers were available in the Eurozone since 2008 while the CySEC regulated them in 2012. Traders should investigate the 5 Digit CySEC license number to verify their registration on the CySEC website for conducting the financial services.

Bottom line

The Cyprus Securities and Exchange Commission has implemented efficient changes in the regulation and processing for the regulated entities. It enhances the transparency in its regulatory entity and strict the policies for revoking and operating brokers licenses. The CySEC Corporation has also set a new structure to enhance the administration of investors’ complaints and market efficiency.

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