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Law N.87(I)/2017 on the Investment Services, the exercise Investment Activities, the review of regulated Market and other relevant issues, has only just recently been adopted by the Republic of Cyprus introducing MiFID II into Cyprus law for the purpose of implementing a more strict supervision of the Market through the addition of complimentary authorities. Cyprus Investment Services Firms (CIS) will benefit from the implementation of MiFID II provisions in terms of market transparency and investor protection.

The aforementioned legislation regulates the necessary terms and procedures for the licensing operation, and the regulation of Cyprus Investment Services Firms (CIF) and investment Services Firms (IF), the regulated markets of the Republic of Cyprus and data reporting service providers.

Updated CIF’ Staff Training Standards

The newly introduced legislation aims in furthering the primary obligation of CIFs to act in the best interests of their clients through their proper training and assessment for staff who is involved in providing information to clients in relation to investment and ancillary services that a CIF provides. A licensed CIF shall provide investment services and activities through its authorised and qualified employees. CIFs must ensure that their employees possess the necessary knowledge and competence to meet relevant regulatory and legal requirements and business ethics standards. The level and intensity of knowledge and competence expected of the Staff should be determined by CIFs, reflecting the scope and degree of the relevant services provided.

The provisions of N.87 (I)/2017 will apply in a wider range of investment services activities as per the inclusion of supplementary services and financial instruments such as emissions allowances and new investment products such as structured deposits.

New ‘Passporting’ Regime

A significant new inclusion is the provision regarding the cross-border services whereby corporate entities will be obliged to submit a passport notification for each Member State which the corporate entities intend to conduct their cross-border investment activities and provide their services on a cross-border basis. CIFs will have to comply with more rigorous compliance obligations due to the changes regarding the ‘passporting’ regime. Thus, the new regime extends reporting obligation to all MiFID financial instruments. Under the old legislative regime, IFs are allowed to submit one service passport notification for all EEA countries. Instead, IFs will be required to submit one passport notification for each country in which they intend to provide cross-border services.

IFs that want to include Cypriot established tied agents to one of their service passports will have to confirm, for each tied agent, the activities and financial instruments that the agent will passport cross border. Firms will have to submit one notification for each country in which the tied agents intend to provide cross border services.

Managing Body of CIF

New focus on the CIF’s managing body which is now accountable for implementing governance that ensures effective and prudent management. The managing body of CIFs is obliged to notify Cyprus Securities and Exchange Commission regarding the execution of their duties.

Record Keeping Requirements
All CIFs need to keep records for 5-7 years regarding their services and transactions, recorded telephone conversations and electronic communications.

Investment Firms must provide information for each trading platform, including:

  • A short description of the appropriate arrangements to be in place and the date from which these arrangements will be provided in the host Member State;
  • A short description of the business model, including the type of the financial instruments traded, the type of participants, and the marketing approach of the MTF or OTF to target remote users, members or participants in the host member state.

Enforcement Date

  • Law N.87 (I)/2017 will enter into force on the 3rd day of January 2018. However, the procedure regarding the approval of the issuance of operating license set out in Article 66 will be enforced on the 3rd day of September 2019.


  • All CIFs should ensure that their existing passport licenses and/or authorisations need to be amended to ensure compliance with the Law 87(I)/2017 and submit the new Passport notifications using the newly revised Forms.
  • CIFs that wish to appoint a tied agent are urged to submit the relevant notification Forms as of 3 November 2017.

The new processes will apply equally to new investment firms who wish to passport and to existing investment firms who either want to passport for the first time or amend existing passports.

Our network of companies has the experience and expertise in provide advice and assistance on all matters relating to the new legislation.

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