**Cyprus Regulator Gains ESMA Backing After Progress in Investment Firm Supervision**
The Cyprus Securities and Exchange Commission (CySEC) has received positive feedback from the European Securities and Markets Authority (ESMA) following a recent follow-up review. The review acknowledged significant advancements made by CySEC in overseeing cross-border activities of investment firms, marking a notable step forward for the regulatory body.
The ESMA Peer Review Committee (PRC) conducted a thorough assessment of various national competent authorities, including CySEC, focusing on areas such as authorisation, supervision, enforcement, and inter-agency cooperation. The findings from the PRC report indicated that CySEC has made considerable progress in integrating cross-border activities into its risk-based supervisory frameworks.
Key improvements highlighted in the report include the introduction of regular and dedicated monitoring of cross-border activities by CySEC. The regulator has also enhanced its cooperation arrangements, which have contributed to more effective oversight. Additionally, structural changes implemented by CySEC have led to more prompt handling of requests, demonstrating a commitment to improving operational efficiency.
One of the significant achievements noted by the PRC was the recruitment of 32 additional staff members, which has bolstered CySEC's supervisory resources. This expansion is seen as a crucial step in enhancing the regulator's capacity to oversee investment firms effectively. The PRC characterized CySEC’s strengthened supervisory and enforcement practices as a “constructive and encouraging development,” reflecting the regulator's dedication to improving its oversight capabilities.
CySEC Chair George Theocharides expressed satisfaction with the findings of the follow-up report, stating that they signify the progress made in fortifying the regulatory framework for Cyprus Investment Firms (CIFs) that operate across borders. “Today’s follow-up report to the 2022 peer review, and the tangible improvements it highlights, reflect the significant progress that has been achieved,” Theocharides remarked. He emphasized the importance of the strengthened framework in enhancing the supervision of CIFs involved in cross-border activities.
Theocharides also underscored the need for ongoing vigilance among regulators, particularly as cross-border investment services become increasingly prevalent and complex. He pointed out that the ongoing digitalisation of financial services amplifies these complexities, necessitating a proactive approach to risk management. “As the ESMA report points out, all national competent authorities must remain vigilant to the risks arising from the continued growth and increasing complexity of cross-border investment services,” he stated.
The chair further noted that retail investors are gaining greater access to investment opportunities across the European Union, which places investor protection at the forefront of regulatory efforts. “Investor protection remains at the heart of everything we do,” Theocharides added, reaffirming CySEC's commitment to safeguarding the interests of investors.
Looking ahead, CySEC plans to build on the progress achieved through the implementation of the PRC’s recommendations. The regulator aims to ensure a consistently high level of investor protection while further enhancing its supervisory approach and collaboration with other National Competent Authorities.
In conclusion, the recognition from ESMA serves as a validation of CySEC's efforts to improve its regulatory framework and oversight capabilities. The advancements highlighted in the PRC report not only reflect CySEC's commitment to effective supervision but also underscore the importance of maintaining robust regulatory practices in an evolving financial landscape.