On February 1, the Cyprus Securities and Exchange Commission (CySEC) announced that it is strengthening its supervisory capabilities through the use of new technologies and other tools. The aim of such a development is to enable the regulator to ensure a stronger investor protection framework and the smooth operation of the financial market. This was the main point of the speech delivered by the CySEC Chairman, Dr George Theocharides at a press conference on Tuesday, 1 February 2022. He said that the development was based on CySEC’s goals for the year 2022 and the sector’s trends and developments in 2021.
Dr Theocharides revealed that CySEC is adopting additional tools and implementing various strategies in order to enhance its efficiency and effectiveness. He said that the watchdog is doing that to strengthen its capability to identify bad practices in a timely manner. Additionally, he identified that CySEC has acquired a specialized technology system to monitor and supervise online marketing and social media activities of regulated entities. This tool will enable CySEC to enhance its ability to collect, analyze and monitor the marketing communications of CIFs. Besides that, Dr Theocharides said that the regulator is expanding its supervisory team to increase the frequency and level of supervision. Since October 2021, a total of 32 new staff members have joined CySEC, of whom 15 have supervisory duties.
According to Dr Theocharides, CySEC has adopted Big Data management systems to quickly screen data from a huge and varied volume of trading activity to automatically detect risks and irregularities at an earlier stage and take proactive action against them. In addition, the regulator is designing a Data Governance Framework (DGF) that will offer a comprehensive approach to managing CySEC data. This will enable the regulator to simplify procedures and ensure issues are proactively addressed with visualization/dashboards and alert systems. Moreover, CySEC is currently developing its Enterprise Risk Management Framework (‘ERM-F’) to enable the watchdog to approach and assess risks that derive from older, current and future activities. Dr Theocharides stated that the ongoing modernization of the regulatory framework of the securities market remains key on CySEC’s list of priorities. New legislative developments are expected to take place in 2022.
Addressing Risks in Capital Markets
Over the past several years, several high-profile financial scandals involving large publicly-traded companies appeared to create doubts in the minds of investors throughout the world about the integrity of global capital markets. Although major scandals seemed limited to the US, other scandals in various jurisdictions demonstrated that such a phenomenon was not specific to a particular market. These showed that financial scandals are truly global in nature. Regulators across the world including the UK’s FCA, the US' SEC, among others are working to address risks facing investors in capital markets to ensure that financial stability and economic prosperity are maintained.
