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1. Circular C239 (Latvian Financial and Capital Market Commission (“FCMC”))

10/08/2018
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MNK Risk Consulting > Regulatory Developments > 1. Circular C239 (Latvian Financial and Capital Market Commission (“FCMC”))

Through the Circular, CySEC informs the Cypriot Investment Firms (“CIFs”) that provide investment and ancillary services and / or perform investment activities in accordance with Section 79 of Law144(I)/2007 in the territory of Latvian Regulator, the FCMC, regarding the following:

  1. Regulator’s legislation:   Financial Instruments Market Law dated 01.11.17;
  2. Enforcement date:   from 04.10.17 onwards;
  3. Restriction applicable:   Pursuant to Sections 101, 103 and 112(5) regarding the offering of services via a Tied Agent, and pursuant to Sections 101, 103, 107, 112, 119, 139, 140, 144 regarding the offering of services via a Branch; any investment services and / or activities may be provided and / or performed in the territory of Latvia, on behalf of a CIF, only through the establishment of a Branch or only by the CIF’s registered Tied Agents (that incurs civil liability on the CIF by acting on its behalf), which requires the prior notification of the FCMC. Furthermore, CIFs must ensure that:
  • the information provided to their clients or prospective clients, including marketing communications, is fair, clear and not misleading, and that it is subject to the CIF’s approval prior its publication and / or dissemination, and is further monitored and reviewed on an ongoing basis;
  • the Tied Agent does not use the CIF’s website information in order to encourage visitors of its website and / or prospective clients of the CIF to entrust the Tied Agent with funds for management, or does not in any way offer investment advisory services to prospective clients on behalf of the CIF;
  • any marketing communications will be clearly identifiable as such (i.e. they may include direct promotion / marketing and person-to-person selling, direct telephone calling, general advice or introduction provided to clients or prospective clients of the CIF in relation to the CIF’s investment and / or ancillary services and / or activities), and that any third party performing direct promotion / marketing activities to be registered or notified with the FCMC for the purpose of offering the services on behalf of the CIF to the public of the Republic of Latvia. Note: The only exception to that rule is in respect to third parties employed by the CIF, that act only as a media platform or disseminator of indirect promotion (e.g. newspaper, TV channel, magazine, website or advertising agency through which the CIF’s own advertising or promotional / marketing materials are distributed to the public). Such third parties are not considered to be Tied Agents or promoters of investment services and / or activities within the meaning of the FCMC’s Law and there is no need to notify their engagement with the CIF to the FCMC.

CySEC’s expects that: CIFs that intend to market, promote, and / or provide investment and ancillary services and / or perform investment activities in the territory of Latvia, should consult with their legal consultants regarding the necessary legal actions required to ensure compliance with FCMC’s Laws.