Cyprus has now passed the necessary legislation to implement Directive 2004/39/EC of the European Parliament and of the Council on Markets in Financial Instruments, and Directive 2006/31/EC of the European Parliament and of the Council of April 5 2006. Together, these directives establish a comprehensive regulatory framework for the execution of transactions on behalf of investors by stock markets, alternative trading systems and investment firms. Their objective is to protect investors, develop a single market in investment services across the EU, and promote fair and transparent integrated financial markets.
The new Investment Services and Activities and Regulated Markets Law of 2007, number 144(1) of 2007, which was passed on October 25 2007, replaces the Investment Firms Law of 2002 with effect from November 1 2007. As well as implementing Mifid, it harmonises domestic law with relevant European directives regarding investor compensation schemes, capital adequacy of investment firms and credit institutions and organisational requirements. It does the same for operating conditions for investment firms and recordkeeping obligations for investment firms, transaction reporting, market transparency and admission of financial instruments to trading.
The Cyprus Securities and Exchange Commission is responsible for the authorisation and supervision of Cyprus investment firms and third-country investment firms. Investment firms regulated by the competent authorities of other EU member states are entitled to operate in Cyprus under the supervision of their home authority.