CySEC Comments on Recent Peer Review Made by ESMA

CySEC welcomes the peer review of NCA's supervision of cross-border activities.

ESMA made two recommendations to CySEC under Article 16.

“CySEC welcomes the Peer Review on NCA‘s supervision of cross-border activities of investment firms. CySEC has long observed the shared risks these activities can present and has been at the forefront of developing specific policies and initiatives to ensure that investors across the EU are adequately protected, as well as drive innovation in the sector. However, while the report is extremely valuable and useful, the reviews that form the basis of the Peer Review cover the period August 2018 – August 2020 and therefore do not fully reflect CySEC’s current status or the significant changes that have taken place since then,” the Cypriot authority commented in a statement sent to Finance Magnates.

In the area of cross-border activities, the EU supervisor reviewed the supervision of six National Competent Authorities (NCAs). They are the financial market regulators in the Netherlands, Germany, Czech Republic, Luxembourg, Cyprus, and Malta.

The review covered seven subjects: authorizations, passport notifications, ongoing supervision, daily supervision, investigations and inspections, exchanges and cooperation with NCAs, and enforcement/sanctioning.

Moreover, CySEC, which oversees the financial services companies in Cyprus, was provided with two recommendations by the EU regulator. NCAs are the first to receive ESMAs Article 16 recommendations.

Specific Instructions

CySEC aims to increase the human resources needed to supervise cross-border services provided by Cypriot investment firms. In addition, CySECs supervisory activities, including keeping track of and enforcing compliance measures, should be strengthened, according to the EU regulator.

“Since the review, CySEC has developed additional policies and initiatives to enhance the efficiency and effectiveness of supervision, and taken a bolder approach to tackling serious misconduct. To drive a sustainable culture of compliance, CySEC has significantly expanded its supervisory team, and invested heavily in new technology and data-driven systems that further enhance our ability to supervise the activities of regulated entities,” CySEC said in the statement.

They added: “In addition, CySEC has acquired a specialized system for monitoring supervised entities online marketing activities that is able to identify and analyze relevant material from any source globally including social media channels, news sites, forums, blogs, video sites and ad networks, covering 187 languages. This allows CySEC to identify and address aggressive marketing practices and proactively identify intelligence on incoming/outgoing cross-border activities of firms.”