Cyprus Capital Market Positioned for Stability and Growth Amid Global Volatility, CySEC Vice-Chairman Says

The Cyprus capital market is expected to maintain a stable growth trajectory in 2026, underpinned by regulatory upgrades, technological progress and enhanced supervisory practices, according to Panikkos Vakkou, Vice-Chairman of the Cyprus Securities and Exchange Commission (CySEC).

Writing in an article originally published by Stockwatch, Vakkou noted that the domestic capital market is moving through a pivotal period of transformation, influenced by European and international regulatory developments, rapid technological evolution and ongoing geopolitical and macroeconomic uncertainty. He observed that these dynamics “are increasing both the demands placed on market participants and the complexity of supervision for regulators across Europe”.

Vakkou emphasised that “one of the most pressing challenges for the Cypriot capital market is the implementation of a more demanding institutional and regulatory framework”. In this regard, he referred to upcoming and revised European legislation, including changes to MiFID II and MiFIR, AIFMD II and UCITS, alongside the rollout of MiCA and DORA. According to him, these initiatives will play a crucial role in enhancing market transparency, reinforcing investor protection and strengthening digital operational resilience.

At the same time, he drew attention to emerging thematic areas such as artificial intelligence, FinFluencers and copy trading, pointing out that these new practices necessitate rigorous oversight and highly specialised supervisory expertise. Vakkou described “technology as both a catalyst for growth and a source of risk”, cautioning that the increasing prevalence of technology-driven investment products—many of which carry elevated risk—makes the modernisation of supervisory frameworks indispensable.

He also warned that “increased digitalisation has led to a rise in investor fraud”, stressing that effective supervision must be accompanied by ongoing investor education. Within this framework, he explained that CySEC is implementing its own financial literacy programmes while simultaneously collaborating with the European Securities and Markets Authority (ESMA) and other European supervisory bodies on coordinated public awareness initiatives.

Addressing the wider economic and geopolitical backdrop, Vakkou said that “geopolitical tensions, inflationary pressures and potential interest rate changes are likely to continue shaping investor sentiment in 2026”. He added that energy prices, in particular, remain highly sensitive and are expected to continue exerting a strong influence on markets.

On a broader European scale, he underlined that the sound development of sustainable investments and the prevention of greenwashing are now non-negotiable priorities. Achieving these goals, he said, requires high levels of transparency, dependable data and the substantive integration of environmental, social and governance (ESG) criteria into investment processes.

Despite the array of challenges facing the market, Vakkou expressed confidence in the outlook for Cyprus. He noted that prospects remain favourable, supported by consistent economic growth driven by key sectors such as services, technology and energy.

Concluding his analysis, Vakkou stated that “by investing in human capital, cybersecurity and digital resilience, and by leveraging technologies such as artificial intelligence and blockchain, the commission is reinforcing investor protection and market confidence for the benefit of the Cypriot economy”.

By fLEXI tEAM