Cyprus Investment Firms (CIF)
With the entrance into the European Union as per 1 May 2004, Cyprus has become one of the most interesting countries from where to set up and operate Investment and Financial Services activities.The main reasons are that Investment Services Companies (brokerage and trading), Mutual Fund Management Companies and Collective Investment Schemes can benefit from the “European Passport” (i.e. the license to render similar services in all the other 27 EU countries).
How can we help you set-up a Cyprus Investment Firm? The company can undertake as a turn key project the formation of a Cyprus Investment Firm which is regulated by the Cyprus Securities and Exchange Commission. We have significant experience in the preparation of applications for the purpose of obtaining an authorization for a Cyprus Investment Firm.
We can help in obtaining a CIF authorisation by assisting in one or more of the following areas:
- The preparation and the ongoing administration of the application for obtaining the CIF authorisation
- The design and implementation of an appropriate corporate and organisational structure
- The preparation of the business plan, internal operations manual and due diligence manual
- The preparation of the internal regulation placing emphasis on the appropriate control mechanisms that should be in place
- The outsourcing or assistance with selected non-core functions of the company (accounting and internal audit functions)
- Bank account opening
The Commission must, within six months from the submission of a duly completed application for the granting of a CIF authorisation, reach a decision and inform the applicant for the granting of authorisation or the rejection of the application.
Read more about the advantages of registering a Cyprus Investment Firm
About the regulation The Cyprus Investment firms Act of 2007 (the “Act”) provides the legal framework for the provision of investment services as well as for the registration, regulation of operations and supervision of Cyprus Investment Firms (CIFs). It governs the provision of investment and non-core services in Cyprus, as well as the provision of investment and non-core services from within Cyprus (i.e. services to Cyprus based clients instead of foreign clients).Investment services include any of the following services:
- Reception and transmission, on behalf of investors, of orders in relation to one or more financial instruments1 as these are defined in the Act.
- Execution of such orders, other than for own account.
- Dealing in financial instruments for own account.
- Managing of investment portfolios in accordance with mandates given by investors where such portfolios include one or more financial instruments.
- Underwriting in respect of issues of financial instruments as these are defined in the Act.
Financial instruments include:
- Transferable securities and units in collective investment schemes.
- Money-market instruments.
- Financial futures contracts, including equivalent cash-settled instruments.
- Forward rate agreements (FRAs).
- Interest-rate, currency and equity swaps.
- Options to acquire or dispose in the future of any financial instrument, including equivalent cash-settled instruments and, in particular, currency and interest-rate options.
Licence in Malta
The Malta Financial Services Authority governs the licensing, regulation and supervision of all Investment Services; it also licenses, regulates and supervises banks, insurance companies, Collective Investment Schemes or Funds and bodies authorised to regulate securities trading.
A Licensed Maltese Investment Services Company holds a passport to operate in any country of the European Union. In other words, the Company may set a branch in any European country without having to obtain another license from the country in which the branch will be established. The Investment Services Act does not include a definition of ‘Investment’. Instead it includes a list of ‘Investment Services’ as well as a list of ‘Instruments’. The provision of an Investment Service in relation to an Instrument triggers a requirement for the obtainment of an Investment Services Licence from the MFSA.
- Reception and Transmission of Orders in relation to one or more instruments;
- Execution of orders on behalf of other persons;
- Dealing on own account;
- Management of Investments;
- Trustee, Custodian or Nominee Services;
- Investment Advice;
- Underwriting of instruments and, or placing of instruments on a firm commitment basis;
- Placing of Instruments without a firm commitment basis;
- Operation of a Multilateral Trading Facility;
Investment Services Instruments
- Transferable Securities;
- Money Market Instruments;
- Units in collective investment schemes;
- Derivative instruments for the transfer of credit risk;
- Rights under a contract for differences or under any other contract the purpose or intended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in the value or price for property of any description or in an index or other factor designated for that purpose in the contract;
- Certificates or other instruments which confer property rights in respect of any instrument falling within this Schedule;
- Foreign exchange acquired or held for investment purposes;
- Various Types of Derivatives;
The application process usually commences with a formal meeting with the MFSA in order to discuss the projected application before the formal submission of the application documents. The Application process and the ongoing requirements to which licences issued under the ISA are subject can be divided into three stages:
- The Preparatory Stage – including a meeting with the Authority, submission of a draft Application Form & supporting documentation, review by the MFSA, delineation of the Standard License Conditions to be applied to that particular Applicant by the Authority.
- The Pre-Licensing Stage – issuance of an ‘in principle’ approval for the license by the Authority, incorporation of the corporate vehicle, submission of final & signed application form & supporting documentation, other documents arising during the application process.
- The Post-Licensing/Pre-Commencement of Business Stage – satisfaction of ad hoc requirements arising post licensing but pre-commencement of business.
Types of licenses
- Category 1a Licence Holders authorised to receive and transmit orders in relation to one or more instruments and, or provide investment advice and, or place instruments without a firm commitment basis but not to hold or control Clients Money or Customers Assets (This Category does not include managers of Collective Investment Schemes)
- Category 1b Licence Holders authorised to receive and transmit orders, and, or provide investment advice in relation to one or more instrument and, or place instruments without a firm commitment basis solely for professional clients and, or eligible counterparties but not to hold or control Clients Money or Customers Assets.
- Category 2 Licence Holders authorised to provide any Investment Service and to hold or control Clients Money or Customers assets, but not to operate a multilateral trading facility or deal for their own account or underwrite or place instruments on a firm commitment basis.
- Category 3 Licence Holders authorised to provide any investment service and to hold and control Clients Money or Customers Assets.
- Category 4 Licence Holders authorised to act as trustees or custodians of Collective Investment Schemes