CySEC issues updated reporting instructions to Cyprus investment firms

The Cyprus Securities and Exchange Commission (CySEC) has issued a new circular addressed to all Cyprus Investment Firms (CIFs) regarding the updated procedure for reporting cross-border investment activity within the European Economic Area (EEA) for the year 2024.

The circular is issued pursuant to section 25(1)(c)(ii) and (iii) of the CySEC Law and builds upon Circular C694.

It forms part of a broader European initiative coordinated by the European Securities and Markets Authority (ESMA).

The exercise targets investment firms that offered investment services outside their home member state, including Norway, Iceland, and Liechtenstein, over the course of 2024.

CIFs that meet the criteria outlined in Circular C694 are required to complete an online questionnaire via the EU’s official platform.

The reporting period covers January 1, 2024 to December 31, 2024, with a reference date of December 31, 2024.

According to the instructions, CIFs must report cross-border investment services offered to more than 50 retail clients—this includes clients treated as professionals according to Section II of Annex II of MiFID II.

Notably, only services provided under the “freedom to provide services” regime must be reported, while services rendered through a local branch under the “freedom of establishment” are excluded.

Inactive clients must also be excluded from reporting, provided they meet all of the following conditions: the client has been inactive for at least a year; no investment or ancillary services were rendered; and the CIF receives no ongoing revenues from them.

If a CIF still earns revenue from an inactive client (for example, through an open securities account that is charged despite holding no securities), such clients must still be included.

Client residence may be used to determine the cross-border nature of services.

Furthermore, unlike in previous years, CIFs are now required to submit a separate questionnaire for each host member state where more than 50 retail clients were served.

No submission is required for Cyprus as the home member state.

CIFs meeting the conditions will receive an email containing a link and password to access the platform. The deadline for submitting all contributions is May 26, 2025.

Upon successful submission, a confirmation message and a contribution ID will appear on screen.

CIFs are encouraged to print or save their contributions and retain their contribution IDs for reference.

The questionnaire also offers a “Save as Draft” feature, enabling CIFs to save progress before submission.

However, CySEC stressed that draft saving does not equate to submission.

Corrections can be made prior to the deadline, including entering “0” (zero) for the number of active clients if a host state was mistakenly included.

Any questions about completing the form must be submitted to CySEC via email no later than May 19, 2025.

What is more, it should be noted that the reporting template comprises two sections.

The first concerns the firm’s details and contact person.

The second requires data on the provision of MiFID investment services to relevant clients.

For each submission, CIFs must specify the relevant host member state in point 7 of the form and must report total net turnover in point 12 using specific formatting rules.

These include no commas, full stops or spaces as thousands separators, and only full stops allowed for decimal points (up to two decimals).

Validation checks are embedded in the form, and CIFs are advised to refer to on-screen guidance marked with a question mark to ensure accuracy.

CySEC warned that failure to comply with these instructions may lead to administrative penalties.

Finally, the commission also cautioned that no reminders will be sent to firms that fail to comply.