CySEC Promotes Participation in EU Consultation on Major Financial Regulatory Reforms

The Cyprus Securities and Exchange Commission (CySEC) announced this week the launch of a targeted consultation initiated by the European Commission, focused on sweeping proposed reforms to the regulation and supervision of the financial services sector. The consultation was officially published on April 15, 2025, and forms part of the broader strategy of the European Union’s Savings and Investments Union (SIU), which was first presented on March 19, 2025.

The European Commission aims to gather detailed feedback from financial institutions and other market participants to gain a better understanding of the obstacles that continue to hinder the full integration of EU capital markets. CySEC is urging all relevant stakeholders to take an active role in the process, emphasizing the importance of collective input in forming a comprehensive perspective on the state of EU financial markets and shaping the future regulatory landscape.

The consultation spans a wide scope of subject areas, divided into seven primary sections. The first section is centered on simplification and burden reduction, particularly in relation to the current regulatory framework governing trading, post-trade processes, and asset management. The Commission is seeking ways to streamline requirements to ease operational burdens for market participants.

The second section addresses issues surrounding trading, with the European Commission soliciting opinions on potential measures to strengthen liquidity consolidation across various trading venues. This section also invites input on improving access to trading venues and market infrastructures, as well as strategies for enhancing execution quality.

For post-trading, the European Commission has identified three core concerns: the persistence of cross-border settlement barriers, impediments to the adoption of emerging technologies and market practices, and inefficiencies caused by unharmonised or outdated market operations. Stakeholders are encouraged to provide concrete examples to help the Commission understand and assess these issues.

A related section tackles horizontal barriers to trading and post-trading infrastructures. Here, the focus lies on cross-border operational synergies between financial entities, the issuance of financial instruments, regulatory approaches to innovation, and the supervision of outsourcing arrangements. This part of the consultation also includes inquiries on the treatment of group structures, the implementation of the DLT Pilot Regime, and challenges linked to asset tokenisation.

Asset management and investment funds are also under review. The Commission aims to identify ongoing barriers that prevent full access to the single market, particularly in the context of cross-border fund management. The section invites feedback on whether the current authorisation and passporting regimes are effective or in need of simplification.

Supervisory authority is another area the European Commission is evaluating, with proposals to centralise supervision for certain entities. Specifically, the Commission is suggesting that oversight responsibilities for central counterparties, central securities depositories, trading venues, asset managers, and crypto-asset service providers be transferred from national regulators to the European Supervisory Authorities.

The final section addresses horizontal questions about the supervisory framework. It calls for feedback on the governance models of the European Supervisory Authorities—namely ESMA, EBA, EIOPA, and AMLA—and their potential direct supervisory mandates. The Commission is also reviewing existing supervisory convergence tools and considering an expanded role for the ESAs, including discussions around how these bodies should be funded.

CySEC has strongly encouraged all market participants and stakeholders to contribute their views. Responses can be submitted directly to the European Commission through an online questionnaire, with the deadline set for June 10, 2025. Additionally, entities regulated by CySEC are urged to share a copy of their submission with CySEC’s policy department at policy@cysec.gov.cy.

By fLEXI tEAM