by Andria Papageorgiou

COMPLIANCE, CYSECFebruary 3, 20250 comments

CySEC’s Circular C680: New ESG Compliance Requirements for Cyprus Investment Firms

The Cyprus Securities and Exchange Commission (CySEC) has issued Circular C680, introducing the Common Supervisory Approach (CSA) for 2024-25, focusing on the integration of sustainability factors into suitability assessments and product governance processes. This aligns with the 2022 amendments to MiFID II Delegated Acts, reinforcing the growing importance of Environmental, Social, and Governance (ESG) considerations in investment services.

Key Compliance Requirements for Cyprus Investment Firms (CIFs)

Under the CSA, CySEC will assess how CIFs integrate sustainability into their investment advice and portfolio management services. The focus areas include:

• Collecting Client ESG Preferences: Firms must gather and document clients’ sustainability preferences during the suitability assessment.
• Understanding ESG Investment Products: Establishing procedures to assess, categorize, and match investment products with ESG factors.
• Ensuring Suitability Compliance: Ensuring that investment recommendations align with clients’ sustainability preferences, potentially applying a portfolio approach where necessary.
• Target Market ESG Assessment: Defining sustainability-related objectives when assessing investment products for a target market definition.

CySEC will conduct on-site inspections and desk-based reviews on selected CIFs from August 2, 2022, to December 31, 2024, to evaluate compliance with these sustainability requirements.

How Andria Papageorgiu Law Firm Can Assist

Navigating the evolving MiFID II sustainability requirements can be complex. Andria Papageorgiou Law Firm is well-positioned to assist Cyprus Investment Firms in ensuring full compliance with the ESG-related obligations outlined in Circular C680.

Our services include:

✔ Regulatory Gap Analysis: Assessing your firm’s current policies and procedures against the new sustainability requirements.
✔ Policy & Documentation Review: Assisting with drafting and updating suitability assessment frameworks and ESG investment policies.
✔ Compliance Training: Providing tailored training sessions for investment professionals on ESG compliance under MiFID II.
✔ Regulatory Filings & Audit Support: Assisting with preparing for CySEC inspections and ensuring robust documentation to withstand regulatory scrutiny.

For further details, refer to the CySEC’s Circular here.

In case you have any questions, please do not hesitate to contact us for further professional assistance.

Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.