CySEC Announces New Guidelines To Reinforce Oversight Of Investment Firm Capital
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The Cyprus Securities and Exchange Commission (CySEC) has announced new rules that will affect FX/CFD brokers working as Cyprus Investment Firms (CIFs). These guidelines, set to start in early 2025, follow the European Banking Authority recommendations.
CySEC’s recent announcement explains capital requirements for investment firms. This is part of Article 8 of the Investment Firms Regulation (IFR). Under this article, investment firms must follow the same capital rules as banks. This helps keep the financial system safe.
The Rules Require Cyprus Investment Firms To Manage Capital And Risks As A Group
The new rules require Cyprus Investment Firms to manage their capital, risks, and governance as a group. This means all parts of the group must follow strict rules. It is not just about individual firms anymore. They must work together to stay safe and strong.
Dr. George Theocharides, the Chairman of the Cyprus Securities and Exchange Commission spoke about the latest update. He said the regulator has adopted the guidelines to improve supervision. The guidelines will help officials apply Article 8(1) and Article 8(4) of the IFR. This allows firms to apply for a group capital test or hold less capital.
The rules also explain how some firms may be seen as simple and low-risk. This includes Cypriot Investment Firms and FX/CFD brokers. If they are seen this way, they can ask for special permission about their capital needs. This could help them operate more easily.
CySEC Aims To Understand Firms’ Operations Better With The New Requirements
According to the update, FX/CFD brokers in Cyprus must give clear details to the Cyprus Securities and Exchange Commission. They have to explain how their businesses run and what type of trading they do. They also need to show the right amounts of money they need. This helps the regulators see what the brokers are up to.
A big part of the new rules is a limit on how much money firms can hold. The Cyprus Securities and Exchange Commission might allow a company to hold more money if it needs 125% more funds than others. This helps keep the firms safe with enough money. It also helps them follow the rules better.
The regulator said there is a deadline for companies that provide crypto services. New rules from the European Union will be in place soon. CySEC announced that it will not accept any notifications from businesses in the EEA for crypto services after October 30 this year. This means that businesses must move fast to keep running.
The Cyprus Securities and Exchange Commission can take away permissions if companies do not follow the rules. This means that these companies might be watched more closely. Groups may need to follow Article 7 of the IFR, which helps keep everyone safe and responsible.
