By Christina Panayiotou
K. Treppides & Co Ltd
The financial markets regulatory authority; i.e. the Cyprus Securities and Exchange Commission (CySEC and/or the Commission) made an extraordinary effort to discipline the market in Cyprus, especially the CFD providers. The European Securities and Markets Authority (ESMA) and a number of national competent authorities of Member States have expressed their concerns about the Cypriot CFD providers’ practices adopted. Responding to the relevant concerns raised and for restoring the reputation of the Cypriot financial market, CySEC took a number of preventing and remedial measures to address the challenges faced, including the enhancement of its supervisory activities.
Relevant measures mainly targeted the enhancement of supervisory activities and the resolution of a number of common bad practices adopted by Cypriot CFD providers when offering services on a cross border basis, threatening the investors’ protection. Among the measures taken, CySEC has imposed historically hefty fines and imposed additional regulatory expectations, which further increase the leady high financial needs for financial market participants.
Beyond the surface though there are hidden issues that undermine the market integrity. Considering the increasingly demanding market and in an attempt to maintain financial viability, sacrifices are made in the selection of key services providers. Undoubtedly, this leads to diverged approaches across the scope and quality of services offered, skewing also the conclusions presented to the investment firms themselves and the regulatory authority; the Cyprus Securities and Exchange Commission.
Indicatively, market inconsistencies were observed in terms of CASS audit reports; the reports by the external auditors for which Article 8 of the Delegated Directive (EU) 2017/593 provides for; the commonly called ''Suitability Report'' in Cyprus. Such market inconsistencies significantly expose the safety of clients’ funds and actually threaten the investors protection.
Regulatory bodies (ICPAC and CySEC) had to collaborate, aiming to eliminate those inconsistencies and to achieve that a fair indication of the actual exposure is reflected within the corresponding reports. Such information is vital both for the Board of Directors of investment firms for promptly tackling issues identified but also for the regulatory body (CySEC) for having a better understanding of the hidden dangers for investor.
Considering the above, it is quite interesting whether we are leading towards the recovery of the Cyprus financial market or an impending closure for a number of market participants. An impended closure is what we are actually looking for or shall we focus on uncovering hidden risks?
K. Treppides & Co Ltd is the largest independent consulting firm in Cyprus with an established international presence and offices in Cyprus, United Kingdom, and Malta. The Company was established in 1985 and employs approximately 200 professionals. A full range of consulting, assurance, tax, accounting, and fund services are provided to groups, companies and investors operating internationally in a wide range of financial and business sectors. The Company has decades of proven track record of delivering high-quality services and solutions to our clients and through this experience, investors and businesses are guided and assisted during the establishment process and subsequent investment activity in Cyprus and internationally.
Nicosia: Treppides Tower, Kafkasou 9, Aglantzia, CY 2112, Nicosia, Cyprus
Limassol: Andrea Kariolou 38, Ayios Athanasios, CY 4102, Limassol Cyprus
London: 7 Milner Street, London SW3 2QA
Malta: Level 1, Somnium, Tower Road, Swatar, Birkirkara BKR 4012