Cyprus Investment Firms (CIFs) – RSM Cyprus Financial Services
With a continuous upgrade of its legislative and regulatory regime, Cyprus has evolved into an ideal destination to conduct business. (Why invest in Cyprus)
CySEC, the Competent authority that regulates CIFs in Cyprus, ensures investors' protection and safeguards the healthy development of the securities market, in the Republic.
If you seek an independent opinion on your CIF’s financial statements and regulatory reporting, and/or if you wish to establish a CIF or you need advice on your reporting requirements throughout the financial year, contact us to discuss and arrange your personal consultation at one of our Cyprus locations.
Key contact: Nicole Stavrinidou, Quality Assurance Director, with significant auditing experience in CIFs and other CySEC regulated entities, and member of the financial services committee of the Institute of Certified Public Accountants of Cyprus (ICPAC).
What is an Investment Firm?
An Investment Firm is an entity that pools funds from sources and invests either based on its own discretion or on the instructions received from the investors themselves.
In the first scenario, the investor benefits from the professional investment advice and experience of the Investment Firm's experts, while in both cases, the investor gets easy access to markets and products to transact with.
Usually, most investment firms are technologically advanced companies that invest hugely in providing a user-friendly experience to their clients while they are offering innovative products that can prove profitable.
One who plans to invest money into an investment firm should acknowledge that trading activities on financial markets may result in both winning and losing.
What is a Regulated Investment Firm?
Cypriot Investment Firms (CIFs) are those regulated firms that provide investment services on a professional basis to individuals or entities within or outside Cyprus.
A regulated Investment Firm is one which adheres to certain regulations under the local regulator of the country it operates. There are different types of specific provisions they need to follow, which are mandated by Law 87(I)/2017 – the Investment Services and Activities and Regulated Markets Law of 2017 (the "Law").
The Law regulates, amongst others, the conditions that the CIFs need to meet to be licensed to operate, the authorisation and operation of regulated markets within Cyprus (the Cyprus Stock Exchange), and examines how the supervision and enforcement of the competent authorities shall be exercised. The Competent authority that regulates CIFs in Cyprus is CySEC.
Who is CySEC?
The local regulator in Cyprus is the "Cyprus Securities and Exchange Commission" – CySEC.
CySEC examines the applications and grants licenses to entities to operate in the Republic, imposes fines, suspense activities or revokes licenses from authorised firms. Also, CySEC ensures that the CIF has a head office situated in Cyprus and meets the organisational structure and other requirements set out in the legislation.
What are the initial capital requirements?
The CIF authorisation will explicitly state which investment services the entity is licensed to provide. In addition to those, one can get authorisation to provide certain ancillary services as set out in the Law, but in no case, one can solely provide ancillary services without the authorisation for the provision of investment services.
There are three different initial capital requirements introduced by the new Investment Firm Regulation/Investment Firms Directive (IFR/IFD) framework:
- One who does not hold client funds and acts as a portfolio manager or investment advisor with an initial capital requirement of €75.000.
- One who holds client funds and employs the Straight Through Processing (STP) model with a minimum initial capital requirement of €150.000.
- A market maker who holds client funds and is licensed for dealing on its own account with a minimum initial capital requirement of €750.000.
An investment firm licensed in a country member of the European Union (EU) can provide services in any country member of the Union with their regulated authorisation.
No additional local licenses need to be obtained for the provision of these cross-border investment services or the establishment of any branch in another country member of the EU.
The CIF authorisation is valid for the entire European Union. It allows a CIF to provide the services or perform the activities for which it has been authorised, throughout the European Union, either via the right of establishment or via a branch.
What is MiFiD, and how does it make CIFs attractive?
All regulated investment firms in the European Union adhere to the requirements of Markets in Financial Instruments Directive – MiFiD.
This regulation aims at transparency, protecting the investors and their client funds, and it standardises the disclosures required by the Investment Firms.
How can RSM Cyprus help you?
Our teams of experts can assist you all the way through establishing a CIF or redomiciling one to Cyprus, applying and obtaining the CIF authorisation that fits your requirements and advising you on the reporting requirements throughout the financial year.
In addition, we can be your external auditors to independently express an opinion over your financial statements and regulatory reporting:
- Capital adequacy report,
- Adequacy of procedures over the safeguarding of financial instruments and funds belonging to clients,
- Statement of Eligible Funds for Investor Compensation Fund purposes,
- Country-by-country reporting.
RSM Cyprus is part of RSM International, the 6th largest audit, tax and consulting network worldwide, with firms in 123 countries, including the world's top 40 major business centres.
As RSM, we have a workforce of over 51.000 people and 860 offices across Europe, Africa, Asia Pacific, MENA, Latin and North America.