Investors Reaffirm Confidence In Cyprus Business Environment

Although Cyprus has been experiencing some difficulties with its banking crisis during the last couple of years, investors on the whole are still confident with the investment environment in the country. This is indicated by the increasing number of application made to the Cyprus financial regulatory authority, the Cyprus Securities and Exchange Commission (CySEC), for licence to be a regulated Cyprus Investment Firms (CIFs). Record shows that there had been a rapid increase of the numbers of CIFs in Cyprus from 50 in 2005 to 167 presently. This number does not even include the 33 pending applications submitted to the CySEC for consideration.

Tighter Enforcement for Cysec has Boosted Credibility

CyprusTighter enforcement actions against errant CIFs since last year have also given the CySEC a much needed credibility boost. Some of the measures taken by the CySEC included increased checks and closer supervision of CIFs onsite. In addition, the CySEC is presently also developing a framework for risk based supervision which is supposed to take effect in 2015. The risk based supervision framework is designed to help the CySEC ferret out those CIFs with higher operational risks and focus its supervisory efforts on these CIFs.

As mentioned earlier, following last year banking crisis, deposits haircut issue as well as the need to meet the conditions set by the Troika of international lenders to get access to bailout funds, Cyprus’s reputation as a safe investment haven took a huge hit. Today, after more of a year, the worse of the crisis is now over as concluded by the IMF’s fifth post-bailout review report on Cyprus in July 2014.

The Long Road to Recovery for Cyprus

Nevertheless, international lenders have warned that although the worse of the crisis might have been over, significant challenges still lay ahead for the country financial sector. And these problems will not be resolved overnight. Sustainable growth for the Cyprus economy will need a focus and strong commitment from the authorities to do what needs to be done.

The long road to recovery also helps to explain why some of the leading online forex establishments have decided their operations away from Cyprus to other locations such as London or at least get themselves regulated by other financial regulatory authorities as such as the UK’s Financial Conduct Authority (FCA).

Even though the relocation exercise will entail higher operational costs for these firms, they are willing to pay it in order to shield themselves from the negative connotations associated with a financial jurisdiction like Cyprus. Hopefully, in due time Cyprus will be able to win back the confidence of these firms back to its shore.

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