ESMA released a report on cross-border supervision and found that CySEC has specifically failed to monitor foreign entities adequately. The regulator is still operating according to the old regulatory regime because EU law does not set any concrete rules for how this should be done, leaving it up to each member state as an independent entity.
The European Securities and Markets Authority (ESMA) has raised concerns about potential inadequacies in the supervision of cross-border investments in the European Union by the Cyprus Securities and Exchange Commission (CySEC).
The efforts of CySEC are “too little or too slow.”
When it comes to dealing with aggressive marketing conduct in the area, ESMA believes CySEC’s action is either too little or too late. Cyprus has traditionally been a desirable commercial location for Russian companies. Other investment and foreign exchange enterprises from other areas have recently been drawn to the nation. After evaluating cross-border activity by investment businesses in Cyprus, Luxembourg, Germany, the Netherlands, Malta, and the Czech Republic, ESMA has issued a statement.
However, as a result of the review’s findings, it was determined that a huge number of Cypriot-based enterprises pose significant investment risks. According to ESMA, corporations routinely use aggressive marketing tactics to promote services involving speculative items. As a consequence, investors are more susceptible and are exposed to very high market risks.
The supervision provided by CySEC is insufficient.
The European Commission has proposed a set of measures to help authorities monitor and implement the bloc’s securities regulations. This will be the first time ESMA collaborates with a national authority in this way.
According to ESMA, CySEC has not done enough to address the risks posed by Cyprus enterprises’ cross-border services. Due to a shortage of manpower and other concerns, the Cyprus regulator, according to ESMA, is taking an ineffective approach to oversight.
In response to the advice, CySEC said that it had made significant measures to remedy the problem. Over the previous 18 months, the agency has boosted its employees by 28% and strengthened its efforts to regulate cross-border enterprises. The evaluation, according to CySEC, will last just two years, ending in August 2021. As a consequence, it does not reflect any changes made by the firm since the last time the review was updated.
