CySEC imposed nearly EUR 3 million in fines on investment entities in 2022

At the end of 2022 Cyprus Securities and Exchange Commission (CySEC) has already supervised 837 regulated entities. Summing up the year, the committee also set itself new, ambitious goals. In addition to supervision, it will be education, but not for investors, but for young people and students, even before they enter the financial market for good. University students will be able to win up to 1 each. euro if they show above-average knowledge of financial markets.

The number of supervised companies in Cyprus is growing

According to the CySEC annual summary published in March 2023, the Cypriot regulator currently monitors 837 companies, which means an increase of 3,9% compared to the end of 2021 (then there were 806 companies). Moreover, about 100 new applications are under consideration for licensing.

– In 2022, a total of 86 applications for licenses for all types of entities subject to CySEC supervision were approved. CySEC rejected 6 applications for Cypriot Investment Firm licenses and another 15 applications were withdrawn, including applications for Cypriot Investment Firm licenses and group investments – we read in the CySEC communiqué.

What does CySEC do?

In 2022, the CySEC Supervisory Department conducted a number of inspections of Cypriot Investment Firms. They were carried out mainly at the headquarters of enterprises, but 359  of them were conducted remotely. The Department also monitored the implementation of the reporting requirements for all transactions and derivative contracts.

Marketing practices, which often raise a lot of objections, were also checked. A proprietary, specialized system was used for this purpose, which enables the collection and analysis of relevant information.

Penalties from CySEC in millions of euros

In 2022, CySEC imposed administrative penalties totaling €2,9 million. This is more or less the same as last year and the amount corresponding to the average of the last 10 years. Over the past decade, the Cypriot regulator imposed fines of €34,2 million.

New types of companies under the supervision of CySEC

CySEC Chairman Dr. George Theocharides announced during a press conference summarizing the regulator's year-long activity that the oversight role will be extended to two new groups of companies. These are companies involved in crowdfunding, i.e. fundraising, for example, for the activities of various social organizations, as well as companies offering pension products. This is important because such entities can be registered in Cyprus, but at the same time provide services throughout Europe.

– In 2023, CySEC will accelerate the processes of creating a system for controlling and managing license applications. With the completion of the system, all applications for licenses of supervised entities will be submitted electronically, as will any changes submitted periodically by supervised entities, such as information about changes in the members of their management boards – we read in the statement of the regulator.

There will be education of (future) investors

This year, CySEC plans to put more emphasis on educating investors, or rather young people who want and can become investors.

To this end, an award will be given each year to two university students who demonstrate above-average financial literacy. Young people interested in capital markets will be able to win 1000 euros each.

Competitions with prizes and emphasis on education are to translate primarily into investors' understanding of market risk. It is also about future players in this difficult market making conscious decisions about investing their own funds.

To put it mildly, this is not always the case. A recent study by CySEC found that one in three investors rely on influencers and their recommendations when making investment decisions. Moreover, 26% of Cypriot investors also do not understand financial risk, having invested more money than they could lose.