The Cyprus Securities and Exchange Commission (CySEC) has announced today that Cyprus Investment Firms (CIF) are not required to implement rulings on solicitation of overseas or third country (Non EU) clients according to an earlier circular released in July 2013.
The move comes on the back of lobbying by industry practitioners including the Association of Cyprus International Investment Firms (ACIIF), an organisation that intermediates dialogue between firms and regulators on the nation’s island.
Cyprus has developed into becoming a financial centre bridging Asia and the Middle East to mainland Europe. The nation of 1.1 million is part of the EU thus allowing businesses access to strong regulatory proceedings as well as a sound infrastructure to carry out business.
Circular No: CI144-2013-24 was issued today by Demetra Kalogerou, Chairwoman of the Cyprus Securities and Exchange Commission. The English translation states: The European Directive 2004/39/EC on markets in financial instruments does not regulate the provision/performance of investment services/activities in third countries. The issue constitutes discretion of each member state.
A total of five points were mentioned, with the most significant being: “The current circular replaces the circulars of the Commission with numbers CI144-2013-22 and CI144-2013-22A in relation to the above subject, which have been recalled.”
Costas Constantinides, Director of 360 Consulting, a Cyprus based consultancy, said in a comment to Forex Magnates: “We strongly believe, that this is not a particularly unexpected nor isolated miracle of any rescuer from the situation, but a normal outcome of a process of views and communication- exchange between the market participants and the regulator as to what defeats the purpose of existence of the brokers versus what is acceptable policy for both the existence & compliance of the brokers.
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The present possibly ‘softer’ circular language does not mean that any law(s) are presently disregarded, but on the contrary that “time & operating space” are granted to brokers to attend to the matter satisfactorily.
The fact that CySEC has revoked the circular shows that they are serious about addressing legal and compliance issues. As a member of MiFID the main issues raised in the initial circular are matters that can be dealt with on a wide scale in Europe.
“I am happy to see CySEC maintain a pragmatic and business friendly approach whilst a very strong signal is being sent out about CySEC’s commitment to the sector.” said Dr. Stelios Platis, Chair Person of the Association of Cyprus International Investment Firms in a telephone interview.
Over the last five years CySEC has carried out several audits of firms and has gone a far as issuing fines and censures for firms that do not adhere to the regulators compliance guidelines.
Asif Rafique, a Dubai based introducing broker for several brokers, including two Cyprus based firms, welcomes the decision, and said in a comment to Forex Magnates: “Cyprus is an excellent location for my clients do business in, as it follows all the MiFID rules but is only a couple of hours away. The brokers have done well to compete with the London and Wall Street brokers and all we need is a stable platform, low spreads and a timely withdrawal.”
Major European brokers such as Alpari and Saxo Bank set up operations in Cyprus to address different needs of their corporate strategy. There are a total of 140 registered financial services firms in the country.
CySEC, the main financial watchdog has been evolving its operations and viewpoint with regards to derivatives products. The regulator was the first to endorse binary options and maintains a strong position on compliance related matters for financial services firms.