March 25, 2021 | AtoZ Markets – The Cyprus Securities and Exchange Commission (CySEC) has published official comments for all financial companies regulated in Cyprus. In a separate circular, the supervisor asked all Cypriot investment firms to comply with the updated Czech rules regarding the provision of investment services to local residents.
EU-regulated firms must have a local physical presence
According to CySEC, the Czech Parliament adopted an updated version of Law 256/2004 Coll and made some changes in the regulation of cross-border services offered under passports under MiFID II.
Among other things, the new regulation concerns the ability of investment firms authorized in other EEA member states to provide services in the Czech Republic either on a cross-border basis or by setting up a branch on its territory.
While in both cases EU regulated companies can still operate without the separate permission of the Czech government, those who provide services on a “permanent basis” must have a physical presence in the country.
However, despite this seemingly rather strict approach of the Czech authorities, companies that serve retail clients and professional clients “from time to time” are allowed not to open a branch.
Providing investment services without proper authorization exposes investment firms to administrative or criminal prosecution, CySEC warns.
Spain Is Fed up with Cypriot Forex Brokers
In general, Cypriot CIFs must notify CySEC when they provide their services in third countries. In addition, they must obtain appropriate approval from local regulatory authorities before offering a product in a particular country.
The Commission issued a new circular a few weeks after the Spanish regulator issued a statement to investment firms.
Last year, Spain's National Commission for Securities Markets (CNMV) issued a circular in which it aggressively threatened some European brokers with expulsion if they did not remedy the violations. In general, this was the case for companies that offer online Forex trading and Contracts for Difference (CFDs) to retail clients in Spain.
The Spanish regulator also added that it pays special attention to CFD brokers registered in Cyprus, as they often use aggressive marketing strategies and tactics.
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