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Cyprus: Capital adequacy calculations changes

Elias Neocleous

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.

Elias Neocleous

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