MONTHLY REGULATORY updates
C526 - Common weaknesses identified during the review of the Recovery Plans (Form 20-01) submitted by CIFs which qualify for the simplified Recovery Plan (link)
On 10 August 2022, CySEC issued Circular C526 to inform Cyprus Investment Firms (CIFs) with Initial capital requirement of €750,000, which fulfil the criteria of simplified obligations, i.e.
- They are not determined as "other systemically important institutions", and
- They do not meet all three of the criteria below:
- Total assets > € 1 billion
- Total liabilities > € 1 billion
- Total income < € 100 million
as to the content and details of their Recovery Plans about Common weaknesses identified during the review of the Recovery Plans (Form 20-01) submitted by CIFs.
CySEC informs that during the years 2021-2022, reviewed a sample of the Recovery Plans (Form 20-01) submitted in 2020 by qualifying CIFs and identified main weaknesses regarding:
- Governance arrangements
- Strategic Analysis
- Stress Scenarios
- Recovery Options
- Good practises
as well as further comments and clarifications that must be considered while preparing the Form 20-01 for the year ended 31.12.2022, which is due to be submitted via TRS only by 30 September 2022.
CySEC also notes that the preparation of the recovery plan is an ongoing process and must be reviewed regularly and updated when the circumstances change to have a plausible plan to respond to any periods of financial stress.
C527 - EU Council's Restrictive Measures against Russia due to its military aggression against Ukraine - "maintenance and alignment" sanctions package (link)
On 19 August 2022, CySEC issued Circular C527 to draw the attention of the Regulated Entities to the amendment of Article 9 of Council Regulation (EU) 2022/1273 of 21 July 2022 implementing Regulation (EU) No. 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, as published in the Official Journal of the European Union, dated 21 July 2022.
Article 9 has been enhanced by the following:
"2. Natural or legal persons, entities or bodies listed in Annex I of EU Council regulation No 269/2014, shall:
- report before 1 September 2022 or within 6 weeks from the date of listing in Annex I, whichever is latest, funds or economic resources within the jurisdiction of a Member State belonging to, owned, held or controlled by them, to the competent authority of the Member State where those funds or economic resources are located; and
- cooperate with the competent authority in any verification of such information.
3. Failure to comply with paragraph 2 shall be considered as participation, as referred to in paragraph 1, in activities the object or effect of which is to circumvent the measures referred to in Article 2 of EU Council regulation No 269/2014."
CySEC also informs that the Ministry of Finance issued a relevant announcement including guidelines regarding the disclosure of funds or economic resources of designated persons as well as the relevant disclosure form.
Investment Services & Regulated Markets
MiFIR & MiFID
ESMA makes new bond liquidity data available and publishes data for the systematic internaliser calculations (link)
On 1 August 2022, the European Securities and Markets Authority (ESMA) published the new quarterly liquidity assessment for bonds as well as the data for the systematic internaliser quarterly calculations for equity, equity-like instruments and bonds under MiFID II and MiFIR.
There are currently 838 liquid bonds subject to MiFID II transparency requirements for this period.
The complete list of assessed bonds will be available through Financial Instruments Transparency System (FITRS) in the XML files with publication date from 1 August 2022 and through the Register web interface.
ESMA will also publish two completeness indicators related to bond liquidity data.
The transparency requirements for bonds deemed liquid today will apply from 16 August 2022 to 15 November 2022.
Anti-Money Laundering (AML) & Financial Crime
Money Laundering and terrorist financing risks (link)
On 1 August 2022, the Financial Action Task Force (FATF) issued a publication to inform countries that a risk-based approach is central to the effective implementation of the FATF Standards and that it applies to financial institutions and designated non-financial businesses and professions.
Many countries chose to publish information about the ML/TF risks to their financial system in the form of a national money laundering and terrorist financing risks assessment. This publication of information although is not a mandatory requirement of the FATF Standards, it will increase global understanding of ML/TF risks and will most probably help countries to identify, assess and understand their own vulnerabilities.
In order for FATF to assist in this process, it has developed guidance explaining the general principles and stages of a risk assessment, including practices that serve as examples and are not specific actions that a country must take.
FATF will assess these approaches based on the Methodology for assessing technical compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems and will look closely at a country's evaluation of its risks during the assessment of Recommendation 1 and Immediate Outcome 1.
ESMA issues opinion on accepted market practice by Portuguese CMVM (link)
On 10 August 2022, the European Securities and Markets Authority (ESMA) issued an opinion supporting a revised Accepted Market Practice (AMP) on liquidity contracts notified by the Portuguese market regulator, the CMVM.
ESMA considers that the revised AMP of CMVM is compatible with Article 13(2) of the Market Abuse Regulation (MAR) and with the Commission Delegated Regulation 2016/908 and contains various mechanisms to limit the threat to market confidence with respect to liquidity contracts and therefore maintains its previous positive opinion.