• FAI Comply

CySEC strengthens its regulatory role

Focusing on the Cyprus Securities and Exchange Commission’s (CySEC) goals for 2022 and the sector’s trends and developments in 2021, CySEC Chairman Dr George Theocharides announced during a press conference on Tuesday, 1 February 2022 that CySEC is enhancing its supervisory capabilities through the implementation of strategies and the adoption of new technologies and other tools.

In a brief overview of the past year, it was stressed that due to investigations, supervisory fines totalling over 1.34m euros were applied, with the vast majority relating to fines and settlements for CIFs that violated the law governing the provision of investment services.

CySEC’s enhanced supervisory approach to increase efficiency and effectiveness includes the use of new technology to monitor and supervise the marketing communications and social media activities of regulated entities. CySEC has acquired a specialized system which can carry out real time monitoring and detect all related mentions from any source globally including social media, news sites, forums, blogs, video sites and ad networks, and covers 187 languages.

Responding to the need of big data management, CySEC is adopting RegTech systems that use Artificial Intelligence and Cloud Computing. These solutions will enable CySEC to quickly screen data from a large volume of trading activity to automatically detect risks and irregularities. Big Data management systems adopted by CySEC include:

Facilitation of Transaction Supervision through Digitalization. CySEC is implementing a transaction data processing, storage and reporting system that can generate business insights and be used for the supervision of entities. This system will connect to the ESMA hub, download and import associated data, allowing CySEC to store data securely. It will generate standardized reports on a schedule, based on the aggregated data. The project will be implemented by June 2022.

Data-driven supervision. CySEC is developing procedures and methodologies with technological infrastructure that will automatically detect potential risks and irregularities at an early stage to ensure regulated entities comply with regulations such as EMIR, MIFIR and SFTR.

Data Governance Framework (DGF). CySEC is designing a Data Governance Framework (DGF) that will provide a comprehensive approach to managing CySEC data. The DGF will address activities under three main pillars: (a) people, roles, and responsibilities, (b) policies and procedures and (c) technology, tools, and infrastructure. CySEC aims to automate many of its internal processes to help simplify procedures and ensure issues can be proactively addressed. The implementation of the action plan will start in 2022.

Enterprise Risk Management Framework (‘ERM-F’). Currently in progress, the ERM-F supports effective risk management as a continuous and evolving procedure and enables CySEC to approach and assess risks which derive from older, current, and future activities. Also, in 2021, the Risk-Based Supervision Framework (RBS-F) was upgraded so that it is continuously updated to take into consideration any new developments or changes that could pose a risk to the market.

The ongoing modernization also includes the regulatory framework of the securities market which remains very high on CySEC’s list of priorities. New legislative developments are expected to take place in 2022.

For assistance in understanding how best to monitor your execution and marketing exposures and ensure your in line with the supervisory enhancements of the CySEC, we remain at your disposal. If you have any questions, do not hesitate to contact us.


Written and updated by Constantinos Constantinides, Director of FAI Comply