The Cyprus Securities and Exchange (CySEC) on Friday announced its plans to conduct on-site visits and desk-based reviews of regulated companies offering investment services to retail clients. The visits will be conducted on a sample of Cyprus Investment Firms (CIFs) during the second half of 2023.

"This action will allow CySEC to assess how the CIFs apply the MiFID II requirements on marketing communications, and it will also enhance the protection of investors in line with ESMA's objectives," CySEC wrote.

CySEC Is Following ESMA's Guidelines

The Cypriot regulator's decision came in response to the European Securities and Markets Authority's common supervisory action campaign, allowing the regulator to evaluate the application of MiFID II disclosure rules on marketing communications across the European Union (EU).

ESMA is focused on reviewing whether marketing communications, including advertisements, are fair, clear, and non-misleading. In addition, it will determine how companies select the target audience for marketing communications, especially for riskier and more complex investment products.

On top of that, the review will consider marketing and advertising by firms through distribution channels, including apps, websites, social media, and collaborations with affiliates such as influencers. Further, ESMA wants to collect information on possible 'greenwashing practices' in marketing communications and advertisements.

"ESMA is also aware that younger, less experienced investors, are particularly vulnerable when they operate online," the European regulator highlighted, which pushed it to evaluate marketing practices.

An EU-Wide Campaign

Along with CySEC, other national competent authorities (NCAs) in the European Economic Area (EEA) will be responsible for conducting these reviews on companies offering investment services.

"ESMA believes this initiative and the related sharing of practices across NCAs, will help ensure consistent implementation and application of EU rules and enhance the protection of investors in line with ESMA's objectives," ESMA stated in its announcement earlier this week.

"The CSA contributes to fulfilling ESMA's mandate on building a common supervisory culture among NCAs to promote sound, efficient, and consistent supervision throughout the EU. ESMA's promotion of supervisory convergence is done in close cooperation with NCAs."