Impact from the Swiss franc surge to Cypriot regulated entities

On 16ht of Jan CySEC has announced that it requires the Cypriot regulated entities that provide investment services (CIF) to submit a detailed report about the impact from the sharp move of the Swiss franc. The aim was to determine the potential impact on the capital adequacy and their business.

Today CySEC publishes a summary of the reports that are received from the CIFs. After evaluating the collected data CySEC has found out that 158 of the 182 licensed CIFs had no negative effect on capital adequacy and / or in their business. The remaining 24 CIFs have reported to have experienced some losses, however those losses either have no effect on their capital adequacy, or their effect is insignificant. The affected CIFs still have equity and capital adequacy ratio above the minimum allowable limits as per the legislation.

The total loss suffered by the 24 affected CIFs is about € 42,5 million. The losses are a result mainly from the negative balances on the customer accounts due to leverage (margin) and the balances differences with those of liquidity providers to which the trades were forwarded. The CIF endeavor to recover the aforesaid amounts.

CySEC mentions that they have noticed a slight increase in the volumes of Cyprios CIFs. CySEC concludes that his might be a result from the problems that the similar entities are facing in another countries.

CySEC ensures that it is closely monitoring the capital adequacy and is exercising close supervision of CIFs. Regarding the specific situation, CySEC closely monitors and is in constant contact with the CIFs where required.