Cyprus Investment Firm (CIF) – CySEC
What is CySEC and what does it do?
The Cyprus Securities and Exchange Commission (CySEC) is the independent public authority responsible for the supervision of the investment services market, the collective investment and asset management sector, and the crypto-asset activities conducted in and out of the Republic of Cyprus. CySEC’s vision is to establish the Cyprus securities market as one of the safest, most reliable, and most attractive investment destinations.
Why establish an Investment Firm in Cyprus?
An established Cyprus Investment Firm (CIF) benefits from:
- Cyprus’s unique combination of memberships (e.g. European Union, Eurozone, Council of Europe, United Nations, World Bank, World Trade Organisation, International Monetary Fund, British Commonwealth).
- Cyprus’s proximity to 3 continents.
- Providing its investment services within the European Economic Area (EEA) through the European Union (EU) passporting framework.
- Cyprus’s attractive tax regime, which is one of the lowest among the EU member states, and includes more than 60 double tax treaties.
- A cost-efficient plan of administrative, operating, and living expenses.
Investment & Ancillary Services
Cyprus Investment Firms have the opportunity to operate through varying business models. Each model is achieved using a combination of investment and ancillary services, offered for different financial instruments, based on the company’s business plan and objectives.
| Type of service | Included services |
|---|---|
| Investment Services | 1. Reception and transmission of orders relating to one or more financial instruments 2. Execution of orders on behalf of clients 3. Dealing on own account 4. Portfolio management 5. Investment Advice 6. Underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis 7. Placing of financial instruments without a firm commitment basis 8. Operation of a Multilateral Trading Facility (MTF) 9. Operation of an Organised Trading Facility (OTF) |
| Ancillary Services | 1. Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management and excluding maintaining securities accounts at the top tier level 2. Granting credits or loans to an investor to allow them to carry out a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction 3. Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings 4. Foreign exchange services where these are connected to the provision of investment services 5. Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments 6. Services related to underwriting 7. Investment services and activities as well as ancillary services of the type included under Section A or B of Annex 1 related to the underlying of derivatives included under points (5), (6), (7) and (10) of Section C of the MiFID II Directive where these are connected to the provision of investment or ancillary services |
Regulatory Capital Requirements
Minimum regulatory capital requirements vary based on the combination of investment and ancillary services to be included within the license, as per the below table.
| Investment Services | Capital Requirements |
|---|---|
| Any of the below: 1. Reception and transmission of orders concerning one or more financial instruments, 2. Execution of orders on behalf of clients, 4. Portfolio management, 5. Investment advice, 7. Placing of financial instruments without a firm commitment basis. Without holding client funds. | €75,000 |
| Any of the below: 1. Reception and transmission of orders concerning one or more financial instruments, 2. Execution of orders on behalf of clients, 4. Portfolio management, 5. Investment advice, 7. Placing of financial instruments without a firm commitment basis. With holding client funds. | €150,000 |
| Any of the below: 3. Dealing on own Account 6. Underwriting of financial instruments and/or placing financial instruments on a firm commitment basis. Plus any of the below: 1. Reception and transmission of orders concerning one or more financial instruments, 2. Execution of orders on behalf of clients, 4. Portfolio management, 5. Investment advice, 7. Placing of financial instruments without a firm commitment basis. With holding client funds | €750,000 |
Application Fees
Fees payable to CySEC for the examination of the application depend on the selection of investment services, the number of ancillary services and specific additional services for which the potential CIF applies to be licensed for.
Annual Fees
The annual fees payable to CySEC for the extension of the investment services license are a combination of
- a fixed charge, depending on the investment services,
- a variable charge, depending on the entity’s turnover or income, and
- other additional fees, depending on whether the entity offers services related to Contracts for Differences and/or is engaged in algorithmic trading.
Investor Compensation Fund (ICF)
Licensed CIF entities are required to join and contribute to the ICF, whose main purpose is to compensate covered clients for claims against its members and to enhance investor protection.
Initial contribution depends on the number of investment services and whether its licensed for safekeeping and administration of client funds and financial instruments.
Annual contributions depend on the amount of clients’ eligible funds and financial instruments as calculated in the relevant statement and the opinion expressed by the entity’s external auditor about the correctness of the statement.
Extraordinary contributions may occur whenever required by the ICF to cover material excessive claims.
Licensing Timeframe
In our experience, the CySEC licensing procedure takes on average 8 months, yet this is also subject to the varying workload of CySEC and the applicant’s preparedness on reverting promptly with the required information and/or documentation.
Obtaining a CIF license with SALVUS
The SALVUS Investment Firms Licensing team employs a project management approach for selecting the investment and ancillary services that suit each client’s business model and vision. Throughout the entire licensing process, we act on your behalf for collecting and submitting all the necessary information and documentation to CySEC.
Once you are granted the CIF license, our Regulatory Compliance team is ready to support your regulatory obligations, providing a wide range of post-licensing services.
If you are interested in establishing a Cyprus Investment Firm, please contact us at info@salvusfunds.com; our Investment Firms Licensing team is ready to answer your questions.