Cyprus investment firm law is a direct adaptation of the European commissions Markets in Financial instruments Directive (MiFID), which is the core pillar underlying EU financial markets integration. The Directive facilitates harmonized regulation for investment services across thirty European nations. Its main objective is to increase competition and consumer protection in investment services; and is considered the most significant piece of legislation pertaining to financial services hitherto introduced in Europe.
The following discussion intends to underline some of the highlights of the EU Directive. The MiFID classifies clients into retail, professional (accredited) and eligible counterparties. This facilitates the tailoring of regulatory requirements according to the knowledge and experience of clients. Therefore different levels of regulatory protection pertain to each category.
The client categories, emphasizing the level of legal and regulatory protections, are summarized in the following table:
|Retail||HIGH||Retail clients are afforded the most regulatory protection.|
Professional clients are considered to be more experienced, knowledge-able and sophisticated and are able to assess their own risk and are thus afforded fewer regulatory protections.
A client can be classified as professional if he or she meets the following three criteria:
1. The client has carried out transactions, in significant size, on the relevant market at an average frequency of i0 per quarter over the previous four quarters.
2. The size of the client's financial instrument portfolio, defined as including cash deposits and financial instruments exceeds € 500,000.
3. The client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the trans» actions or services envisaged. it is worth mentioning that the above criteria are in line of the industry's definition of an accredited investor [standard Industry convention]. An Accredited investor pertains to an individual that has a Net Worth of at least one million US$, not including the value of ones primary residence, or has income of at least $200,000 each year for the last two years [or $300,000 together with his or her spouse if married] and has the expectation to make the same amount this year.
Counterparties are investment firms, credit institutions, insurance Counterparties companies, UCITS and their management companies, other regulated financial institutions and in certain cases, other undertakings.
MiFlD provides a light-touch regulatory regime when investment firms bring about or enter into transactions with the Cyprus Investment firm (it should be noted that this category does not include pension funds and other employee benefit plans, which enjoy a high degree of regulatory protection).
In addition to the categories in the above table, the EU directive also distinguishes between discretionary and non-discretionary clients (or discretionary verses non-discretionary investment services).
When an investment firm executes transactions for non-discretionary clients, the directive stipulates that the firm should seek "best execution" as opposed to selecting the option that has the lowest transaction costs. More explicitly, in order to ensure a high quality of execution of investors transactions and to uphold the integrity and overall efficiency of the financial system, the EU Directive imposes an effective "best execution" obligation to ensure that investment firms execute clients orders on terms that are most favorable to the clients This obligation applies to firms which owe contractual or agency obligations to their clients.
In assessing best execution the investment manager should consider a number of criteria, such as the availability of pre- and post-trade transparency data, as well as transaction costs. Nevertheless, other information such as the number of orders cancelled prior to execution or the speed of execution can also be relevant.
Beginners guide to Service Level Agreements: important information & Q&A
SLAs are a critical component of any outsourcing and technology vendor contract. Beyond listing expectations of service type and quality, an SLA provides remedies when requirements aren't met.
Crypto currencies becoming increasingly overly regulated as governments impose more guidelines
Crypto currencies have exploded in popularity in recent years, thanks to innovation in block chain, the distributed ledger technology underpinning those virtual tokens such as bitcoin. That has led to a red-hot fundraising trend where start-ups are pulling in millions of dollars in capital by issuing virtual coins to investors in exchange for money.
Initial Coin Offering, definition and regulation
Initial Coin Offerings (“ICO”) have gained increasing attention by crypto currency users, the media and the regulators. The rising price of Bitcoin, one of the most widely known and used crypto currencies, along with fraud scandals in different countries, have raised attention by the public and concern by the regulators. It is important for us that our clients and our professional team understand crypto currencies and ICOs to be able to make intelligent and well-informed decisions.
Seychelles IBC Act 2016: Action for all companies required
The requirement to file and maintain a list of Directors and Beneficial Owners for all Seychelles companies or International Business Companies “IBCs” registered under the International Business Companies Act 2016 has been introduced to as a way to increase the transparency of all Seychelles international businesses for tax and money laundering purposes
Passport schemes: countries that allow foreign nationals to acquire citizenship through investment
There are many factors that influence an investor to obtain a second citizenship in another country. Aspects such as relocation, retirement, security or even long-term plans for future generations are all benefits and considerations in the prospectus for investment. Several countries now offer this option through different investment schemes.
The Tier 1 Investor Visa: are the UK government checking candidates' source of wealth? Evidently not..
One of many legal disputes resulting from the recent infamous Kazakhstan BTA bank fraud case has shed new light on a little-known immigration scheme colloquially known as the golden visa scheme and officially called a Tier 1 Investor visa in the UK; the scheme grants investors residency in exchange for spending £2m in UK bonds or shares through a bank, with applicants eligible for to remain indefinitely, with full citizenship after five years.
EU release list of tax havens & blacklisted jurisdictions for the first time
In an attempt to recover the approximate 600B euros lost within various EU countries to tax evasion schemes each year; the European Union has released its first official blacklist naming 17 jurisdictions that have failed to meet international standards of implementing sufficient regulations and transparency measures.
A beginners guide to filing capital statements in Cyprus
This article details a beginners guide to capital statements; what to include in them, what the figures mean and how to understand and interpret them; avoiding common pitfalls many individuals experience along the way with filing their own.. Capital statements (also referred to as wealth statements) are similar to profit & loss sheets for a company except capital statements are typically used to measure and record an individual’s finances using an official document accumulated on differing dates.