Criteria for successful application

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Overview

With CySEC being the sole decision maker, we cannot guarantee the outcome of your application. However, with a 100% success ratio of CIF applications and registration, we aim to offer the utmost level of consulting service targeting always at the positive result. We will walk you through all of the criteria for a successful application and make sure to be met.

Criteria for successful application

The main criteria that need to be satisfied by the Commission in order to grant an authorization are:

  • Existence of the minimum capital required under the Investment Firms Law.
  • A minimum of two experienced and reliable executives so that the four eyes principle is satisfied. Both of these two executives should be employed by the company on a full-time basis and live in Cyprus. They both should be accessible and available to appear before the Commission with reasonable notice.
  • “Experienced and reliable persons” to be appointed as Directors of the CIF are not defined in the Law.
  • Possession of the relevant professional competence certificates from CySEC.
  • Adequate technical and financial resources.
  • Adequate IT systems and internal control mechanisms.
  • Adequate structures and mechanisms in order to guarantee the protection of investors’ assets and eliminate any conflict of interest that may arise between the company or the staff and clients’ interests.
  • To maintain adequate and orderly records of its business and internal organization.

Following the granting of the authorization by the Commission, the CIF must comply with the ongoing obligations provided by the law and the relevant Commission directives.

CIF Internal Structure

Depending on the type of selected Core Investment services at first and ancillary services at second the CIF will be expected to structure its departments accordingly. Below are some key elements of some of the most relevant and popular departments.

Trading Desk

The trading desk mainly performs the investment service of receiving and transmitting client orders. This is the case of straight through processing broker (STP) that choose not to execute orders and selected another regulated entity for that purpose. Execution can also be chosen as an investment service and this entails that all relevant agreements and venues are in place for such a service to be offered. Trading desk should be located in Cyprus and the relevant “Chinese Walls” should be in place in order to separate and secure all trading information from other CIF departments.

Dealing on Own Account

When this investment service is chosen then the highest capital requirement applies (€730K) and respective set up should be in place. Most important is the differentiation between client and own accounts for trading purposes which should be separate at all times and never used in conjunction. Due to its high importance this department should also be located in Cyprus.

Investment Advice/Asset Management

Investment advice is also considered as a core investment service and should be provided with outmost care and specific internal procedures. Relevant client profiling and risk and reward expectations should all be documented before providing such a service. Records maintenance as with all other investment services is of outmost importance as in some cases client complaints could arise.
Asset Management service can be offered to clients in a structured way of separate portfolio management strategies (low, medium, high risk) or on an individualized basis according to specific client criteria and profile. This department could also act in co operation with the Own account department if that is also chosen so that the Company’s investment strategy is defined and then executed.

Investment Research & Analysis

Research and Analysis department is responsible in producing some form of financial analysis (fundamental or technical analysis for example) relating to relevant offered financial instruments, in such a way that the recommendations do not constitute the provision of investment advice. This department does not need to be physically located in Cyprus.

Risk Management Department

The responsibilities of the Risk Management Department include the identification and assessment of relevant significant risks that might impact upon the Company’s effective operation, developing risk management strategies to mitigate identified risks and designing and implementing appropriate risk management policies and procedures, and finally monitoring the performance and improving the effectiveness of risk management procedures.
The setup of such a department is required, where appropriate and proportionate in view of nature, scale and complexity of CIF’s business and the nature and range of the investment services and activities undertaken in the course of that business. This department needs to be physically located in Cyprus.

Back Office

This department is in charge of onboarding new client accounts, managing deposits and withdrawals of funds, and the provision of credit facilities (if needed) to clients, in order to facilitate a specific transaction, and support clients’ accounts. Additionally, within the Back Office department responsibilities are the record keeping, maintenance and updating of all clients’ files. This department needs to be physically located in Cyprus.

Compliance department

Compliance department or «Compliance function» means the function within an Investment Firm responsible for identifying, assessing, advising, monitoring and reporting on the investment firm’s compliance risk. «Compliance risk» means the risk that an Investment Firm fails to comply with its obligations under the Law and the Directives issued pursuant to the Law.

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