The Cyprus Securities and Exchange Commission has informed
Cyprus Investment Firms it regulates of a change in the
treatment of contributions to the Investors Compensation Fund
(ICF) for the purposes of calculating capital adequacy. The
Investment Services and Activities and Regulated Markets Law of
2007 to 2016 requires regulated investment firms to be members
of the ICF and to contribute to it.
Up until now, for capital adequacy purposes, the ICF
contribution has been categorised as an 'exposure to public
sector entities' and risk weighted accordingly. With immediate
effect, when calculating capital adequacy, firms must deduct
the ICF contribution from common equity tier 1 capital and must
no longer risk weight the relevant amount in their calculations
of total risk exposure.