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Four CySEC-licensed entities used SVB and Signature Bank for banking.

According to statements made by the commission on Wednesday, Silicon Valley Bank (SVB) and Signature Bank, two American banks that recently collapsed, had accounts with four companies that were licensed by the Cyprus Securities and Exchange Commission (CySEC).

During the annual press conference of the commission to provide updates on its actions and operations as well as any upcoming initiatives and plans, information regarding the effects of the collapse of the two banks was revealed.


Chairman George Theocharides was reassuring while speaking about SVB and Signature Bank and the businesses that had deposits at the two banks, stating that these are the two businesses' own deposits and not funds belonging to their customers and pointing out that the American authorities have stated that all deposits will be protected.


When the problem with the two banks first started, CySEC vice chairman George Karatzias claimed the commission had first asked the supervised entities for information.


"There are four companies with deposits at the two banks, the vast majority of which had been withdrawn due to the rumours of risk surrounding them," Karatzias said.

"When the problem materialised there was a small amount of each company’s own money still with the two banks, but this does not concern their customers’ money," he continued.


Theocharides stressed that these amounts are insignificant and have no impact on the businesses' operations.


"They may seem big to us, but to these companies, it is a small amount of money," he remarked.


"In any event, American authorities have decided to protect all deposits," he continued.


Theocharides also stressed the regulator's continued investment in technical advancements and its preventative supervision methods in order to strengthen investor protection while promoting market growth. He also announced the expansion of the regulator's role.


Theocharides added that at the end of 2022, there were 837 supervised entities, up from 806 in 2021, an increase of 3.9%, and that there are currently about 100 new applications being reviewed and pending to be licensed.


Comparing this to 2019, the start of the pandemic, there has been a 12% increase.


A total of 86 license applications for various types of entities under CySEC's jurisdiction were approved in 2022.


Six license applications for Cyprus Investment Firms (CIFs) were denied by CySEC, while 15 more applications—including those for CIF licenses and collective investments—were withdrawn.


Theocharides explained during the press conference that because two new groups of supervised entities have now come under CySEC's supervision, the organization's supervisory role will be further increased.


The first is that of European Crowdfunding Service Providers (ECSPs), which, in accordance with European Regulation 2020/1503, may offer pan-European services from the Republic of Cyprus.


It is now possible for interested parties to submit their application because both the relevant Directive and the Policy Statement have already been published.


The Providers of Pan-European Personal Pension Products (PEPP), which derives from European Regulation 2019/1238, make up the other category.


The Ministry of Finance designated CySEC as one of the bodies responsible for reviewing, assessing, and approving applications in November 2022.


The Supervision Department conducted 359 remote, thematic, and on-site inspections of CIFs in 2022. It also monitored how well the procedures for reporting transactions and derivatives contracts were being followed.


In addition, 119 remote document inspections were carried out, and requirements for Collective Investment Institutions were monitored.


Via its specialized system, which enables it to gather and analyze data pertaining to CIFs, the Department continues to keep an eye on their internet marketing strategies throughout 2022. After reviewing the promotional materials from more than ten CIFs, the results revealed any potential violations.


The CIFs were instructed to make the necessary adjustments in order to adhere to the rules and regulations that control them. 37 additional CIFs' advertising materials are also under examination.


The Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Department has finished on-site inspections of 14 supervised organizations and is now conducting 15 additional inspections, which may reveal possible violations of current law.


By the end of 2022, the Department of Market Surveillance and Investigations had performed 15 raids, finished 39 investigations, and had 48 further investigations underway.


The supervisory departments of CySEC are closely monitoring developments in the wake of Russia's military intervention in Ukraine and the restrictive actions taken by the Council of the European Union against Russia, and they are requesting information from supervised entities regarding their business dealings with people who are subject to sanctions.


CySEC levied administrative fines of around €2.9 million in 2022, the vast majority of which were related to penalties and settlements for CIFs.


Around €3.6 million of the €4.2 million in administrative fines levied over the last two years came from CIFs. CySEC has levied fines and settlements of a combined €34.2 million over the previous ten years.


"€720 million by Cyprus Investment Services Companies (CIFs) has so far been frozen and another €719 million has also been frozen and held by administrative service providers (ESPs) under the supervision of the Cyprus Securities and Exchange Commission," Theocharides stated.


The procedures for developing a control and management system for license application submissions will be advanced by CySEC in 2023.


"With the completion of the system, all applications for licensing of supervised entities will be submitted electronically, as well as any changes submitted periodically by the supervised entities, such as the members of their Board of Directors," according to the commission.


The creation of an online site for the registration and exam process for getting certification offered by CySEC is also in progress, as was stated during the conference.


With a code, certified individuals will be able to manage all of the information pertaining to their certification through the portal, as well as submit requests for renewal and re-registration in the records for which they are certified.


In order to account for all the advancements and changes that could endanger the market, additional enhancements to the Risk-Based Supervision Framework (RBS-F) system were implemented in 2022 with regard to preventive supervision.


Additionally, a request has been made to The Directorate-General for Structural Reform Support of the European Union (DG REFORM) in the provision of technical assistance program for 2023 as part of the expansion of RBS-F with the integration of risk indicators regarding sustainable investments (ESG factors and climate-related risks) (TSI 2023).


The Enterprise Risk Management Framework (commonly known as "The ERM-F"), which began in 2020, is anticipated to be finished in 2023.


Moreover, CySEC gained access to the reporting and analysis platform Power BI in 2022.


According to Theocharides, by 2023 CySEC will issue a Policy Statement that finalises the rules for the procedure of remote client identification utilizing innovative technology techniques. Theocharides made reference to the new European legislative requirements pertaining to the Sector.


Finally, the commission stated that CySEC places a high value on training and education to help investors assess the risks and returns associated with various investing opportunities.


The commission stated, "The establishment of an annual award for two university students, for which CySEC offers a cash prize of €1000, is also included in the promotion and strengthening of financial education in Cyprus, particularly among young people."

By fLEXI tEAM


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