The Cyprus Securities and Exchange Commission (‘CySEC’) announced today it has carried out a review of the circumstances that are considered by Cyprus Investment Firms (the ‘CIFs’) when applying inactivity fees to clients (‘the Review’) to ensure compliance with the provisions of Article 25(1) of the Investment Services and Activities and Regulated Markets Law (‘the Law’).
The Review also included an assessment of the ex-ante information disclosed by CIFs to potential clients or clients regarding inactive clients and/or clients’ trading accounts and the relevant fees in order to ensure compliance with the provisions of paragraphs (3)(a) and 4(a) of Article 25 of the Law, according to CySEC.
The Review has shown that almost all CIFs that apply inactivity fees, have set out the circumstances under which a client and/or his trading account may be considered as inactive.
Additionally, it has indicated that a number of CIFs has taken steps to ensure that the ex-ante disclosures made to potential clients or clients regarding the inactivity fees are fair, clear and not misleading and, are provided in good time.
Samples of inactivity fees include:
Next steps
CySec said that all CIFs should consider the issues raised in this circular against their policies and arrangements in place in relation to their application of the inactivity fee as well as to the relevant disclosures made to potential clients or clients. If, when reviewing the policies and arrangements in place, CIFs identify any weaknesses – they must take immediate actions to ensure compliance.
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