The Cyprus Securities and Exchange Commission (CSE) has outlined its supervisory priorities for 2024.
The supervisory agenda for 2024 remains focused on the following key priorities:
- Strengthen supervision of high and medium-high risk companies, with a particular focus on cross-border activities to prevent any harm to consumers arising from the distribution of complex financial products such as CFDs.
- Promoting a compliance-oriented culture among management bodies and key function holders within companies, with the aim of promoting sustainable compliant behavior by companies.
- Preventive treatment and management of any adverse events in a timely and effective manner to minimize their impact.
In 2024, CySEC’s main focus areas include ensuring compliance with rules of professional conduct, which include information directed at (potential) clients, including marketing communications, client onboarding processes, including categorization, suitability and assessment of target market, staff remuneration, conflicts of interest. product monitoring, national intervention measures in relation to the provision, distribution and sale of CFDs, as well as the cross-border provision of services.
The regulator will also carefully assess practices that may have a negative impact on investors and markets, such as: servicing fractional shares, informing investors about costs and fees, communicating through affiliates and influencers, implementing sustainability requirements, implementing pre-trades controls, and the use of copy negotiation.
CySEC will also assess the resilience of CIFs’ business models, focusing on the arrangements in place to monitor their capital adequacy (Pillars I and II). It will consider compliance with reporting requirements and disclosure of relevant information (pillar III).
Another priority is the introduction and implementation of measures by CIFs where there are early signs of financial distress to ensure their viability.
The regulator will also assess the adequacy of CIFs’ governance framework with a focus on effective procedures for identifying, monitoring and managing the risks to which they are or could be exposed, as well as remuneration policies.
The Commission will assess the implementation of measures to address risks in the ICT sector and the preparation for the implementation of DORA.
Further, the regulator will consider the preparation for the implementation of MiCA.
Evaluation of the foregoing will be conducted using a variety of supervisory tools using a risk-based supervisory approach, including but not limited to daily monitoring, on-site inspections, off-site/office reviews, thematic reviews, supervisory meetings or other actions as required.