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Cyprus Investment Firms (CIF)

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Cyprus Investment Firms (CIF) – One of the best choices for the provision of Investment Services in the EU and globally

Cyprus established itself as an EU jurisdiction of preference for companies from other EU countries and for companies from outside of the EU, for the provision of Investment Services such as Payment and E-Money services, Asset and Wealth Management, Brokers and Dealers, Financial Advisors, Fund Management and Regulated Funds, and Insurances. The Cyprus Securities Commission CySEC is the regulating body of Cyprus issuing licences to Cyprus Investment Firms (CIF) for legally offering and carrying out various financial services, as per MiFID II, MiFIR and other relevant EU Directives.

Cyprus Investment Firm (CIF) for EU-wide licence passporting

 

Cyprus – Specialised on Investment Services

Cyprus and its regulating bodies are specialised on attracting and serving Cyprus Companies that offer and carry out investment-related services.

Cyprus has fully adopted all EU Directives and Regulations that effect investment services and financial markets. The advantage of Cyprus is that, unlike many other EU countries, it has implemented respective EU Directives directly into national law, almost without any changes or modifications. While many other EU countries, such as France, Italy or Germany, for example, modified the provisions of respective EU directives as per their national needs, Cyprus transferred EU legislation into national legislation. This provides Cyprus Investment Firms (CFI) with utmost freedom as provided by EU legislation, and ensures full compliance of Cyprus Investment Firms (CFI) with EU legislation at the same time.

The straight-forward approach of Cyprus by directly applying the provisions of respective EU Directives makes Cyprus one of the most attractive EU jurisdictions for Payment and E-Money services, Asset and Wealth Management, Brokers and Dealers, Financial Advisors, Fund Management and Regulated Funds, and Insurances.

Cyprus Investment Firms (CFI) - Scope of Licensable Investment Services in Cyprus

Investment Services

The following Investment Services and activities are regulated and subject to granting of a licence prior to commence business. A Cyprus Investment Firm (CFI) has to apply for at least one of the below services:

  1. Reception and transmission of orders;

  2. Execution of orders on behalf of clients;

  3. Dealing on own account;

  4. Portfolio management;

  5. Investment advice;

  6. Underwriting and/or placing of financial instruments on a firm commitment basis;

  7. Placing of financial instruments without a firm commitment basis;

  8. Operation of Multilateral Trading Facilities.

Ancillary Services

In addition to the above, Cyprus Investment Firms (CFI) may apply for the following non-core services and activities. A Cyprus Investment Firm (CFI) may apply for below ancillary services only in combination with one of the above main services or activities.

  1. Safekeeping and administration of financial instruments;

  2. Safe custody services;

  3. Granting credits or loans to an investor for transaction purposes;

  4. Advice on capital structure, industrial strategy and related matters;

  5. Foreign exchange services;

  6. Investments research and financial analysis;

  7. Services related to underwriting.

Scope of Financial Instruments

Financial Instruments in the sense of respective laws include:

  1. Transferable securities;

  2. Money-market instruments;

  3. Units in collective investment undertakings;

  4. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash;

  5. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event);

  6. Options, futures, swaps, and any other derivative contract relating to commodities that can be physically settled provided that they are traded on a regulated market or/and Multilateral Trading Facilities;

  7. Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in point 6 and not being for commercial purposes, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and settled through recognised clearing houses or are subject to regular margin calls;

  8. Derivative instruments for the transfer of credit risk;

  9. Financial contracts for differences;

  10. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates, emission allowances or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event), as well as any other derivative contract relating to assets, rights, obligations, indices and measures not otherwise mentioned in this Part, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market or an MTF, are cleared and settled through recognised clearing houses or are subject to regular margin calls;

  11. Binary Options;

  12. Foreign Exchange trade.

 

Cyprus Investment Firms (CFI) - Requirements for the Granting of a Licence

Only companies registered in Cyprus may apply for a Cyprus Investment Firm (CFI) Licence. Acquiring a Cyprus Investment Firm (CFI) Licence is a bit more complicated then setting up a Cyprus company. The preparation of the licence application takes usually one to two months, client’s smooth and swift cooperation provided. The reviewing of the licence application by the regulator CySEC may take up to six months. If additional requirements of CySEC have to be satisfied, this period may take longer.

Cyprus Investment Firms (CIF) Requirements

 

Cyprus Investment Firms (CFI) – Minimum Capital

The minimum paid-up share capital of a Cyprus Company applying for a Cyprus Investment Firm (CFI) licence depends on the services and activities that shall be offered and provided. The required minimum paid-up capital must be retained at the Cyprus Investment Firms (CFI) at all times. The required minimum paid-up capital may increase as per the business volume of the Cyprus Investment Firms (CFI).

  1. For a Cyprus Investment Firm (CFI) that holds clients’ assets and/or financial instruments the minimum paid-up capital is EUR 125.000. The - - following services may be offered or provided:
    - Reception and transmission of orders;
    - Execution of orders on behalf of clients;
    - Portfolio management;
    - Investment advice.

  2. For a Cyprus Investment Firm (CFI) that offers or provides the above mentioned services without holding clients’ assets and/or financial instruments, the minimum paid-up capital requirement is EUR 50.000.

  3. For a Cyprus Investment Firm (CFI) that offers or provides the following services, the minimum paid-up capital is EUR 730.000

    - Dealing on own account;
    - Underwriting/placing of financial instruments on a firm commitment basis;
    - Operation of Multilateral Trading Facilities;
    - Placing of financial instruments without a firm commitment basis.

Cyprus Investment Firms (CFI) – Transparent Ownership

In order to grant a Cyprus Investment Firm (CFI) licence, the ownership of an applying Cyprus Company must be fully disclosed. In case no shareholder holds at least 10% of the company shares, those shareholders must be fully disclosed that exercise significant influence on the management of the company and its operations.

In case that the shareholder(s) of an applying company are legal persons, the natural persons that manage the shareholding company must be identified and disclosed, as well as the shareholders of the shareholding company. If the shareholders of the shareholding company are legal persons again, the aforementioned procedure repeats until the ultimate beneficial owners (natural persons) are reached. Information regarding beneficial owners is not made public anywhere.

Cyprus Investment Firms (CFI) – Board of Directors and Management

The Board of Directors of a Cyprus Investment Firm (CFI) must consist of at least two executive directors and two independent non-executive directors.

The executive directors that effectively manage the Cyprus Investment Firm (CFI) must provide necessary knowledge, experience and integrity, satisfying CySEC prior to the granting of the licence. The directors of the company must dedicate appropriate time for the execution of their duties, be of good reputation and must have the knowledge, experience and capabilities to manage a Cyprus Investment Firm (CFI) and to clearly understand its activities and the risks of the Cyprus Investment Firm (CFI).

The management of a Cyprus Investment Firm (CFI) must be undertaken of at least two persons – the four-eye principle; they must be of good reputation and experiences and acknowledged enough to ensure professional, safe and prudent management of the company.

Cyprus Investment Firms (CFI) – Head Office and Organisation

The head office of a Cyprus Investment Firm (CFI) must be located in the Republic of Cyprus. It must be fully staffed, and employed persons performing any of the licenced investment services must be holder of a respective certificate issued by the Ministry of Finance after successful examination.

Cyprus Investment Firms (CFI) are required to comply with a number of organisational provisions. Some of them are:

  • A Cyprus Investment Firm (CFI) has to establish defined policies and procedures that ensure company’s compliance with all legal obligations. The CFI must have an independent compliance unit staffed with eligible persons.

  • The organisation and administration of a Cyprus Investment Firm (CFI) must be designed in such way that it prevents conflicts of interest.

  • A Cyprus Investment Firm (CFI) must have a clear risk policy which must be implemented and controlled by a separate risk management unit.

  • A Cyprus Investment Firm (CFI) must be member of the Investment Compensation Fund for Clients and must comply with its obligations.

  • A Cyprus Investment Firm (CFI) must always safeguard its clients’ ownership rights and must develop and define adequate procedures accordingly.

 

Shanda Consult, being itself licenced by CySEC as an Administrative Service Provider, can assist you with its own and external experts for legal advice, formation of a Cyprus Company, preparation of the Cyprus Investment Firm (CFI) Licence application, liaising with CySEC, assisting in localisation procedures (setup of office and recruitment), and other. Please contact us.

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