Enhancement of Procedures regarding the Safeguarding of Client Funds held by CIFs

Date:                     27 November 2020

Circular:               CySEC CIRCULAR: C418

Scope:                  Cyprus Investment Firms

CySEC released a new circular in regards to enhancing the procedures regarding safeguarding of client funds held by CIFs. The procedures are outlined below.

Α. Regulatory framework

1. According to section 17 (9) of the Investment Services and Activities and Regulated Markets Law of 2017 Law (‘the Law’) “A CIF must, when holding funds belonging to clients, make adequate arrangements to safeguard the rights of clients and, except in the case of credit institutions, to prevent the use of client funds for its own account”.
2. According to section 17 (10) of the Law “A CIF shall not conclude title transfer financial collateral arrangements with retail clients for the purpose of securing or covering present or future, actual or contingent or prospective obligations of clients”
3. The requirements for the safeguarding of client’s assets are further specified in Part II of CySEC’s Directive DI87-01 (the ‘Directive’).

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