Summary of CySEC's Circular C526

Memo #37-2022
CySEC Circular No: C526
Date: 10/08/2022
Subject: Common weaknesses identified during the review of the Recovery Plans (Form 20-01) submitted by CIFs which qualify for the simplified Recovery Plan
Purpose: To inform CIFs which qualify for the preparation of the simplified Recovery Plan about common weaknesses identified during CySEC's sample review of Recovery Plans submitted in 2020.

In Summary:

CySEC has issued the Circular C526 on 10/08/2022 inform the Cyprus Investment Firms, which fulfil the criteria of paragraph 4 of the Directive DI20-01 on the establishment of simplified obligations as to the content and details of their Recovery Plans (qualifying CIFs), about Common weaknesses identified during the review of the Recovery Plans (Form 20-01) submitted by CIFs which qualify for the simplified Recovery Plan.

CySEC informs that during the years 2021-2022, CySEC reviewed a sample of the Recovery Plans (Form 20-01) submitted in 2020 by qualifying CIFs. 

A CIF’s recovery plan should be in place to enable it to deal with for periods of financial distress, recover from financial losses and improve its financial position. 

This Circular C526 refers to the main weaknesses identified regarding:
• Governance arrangements
• Strategic Analysis
• Stress Scenarios
• Recovery Options

This Circular C526 also refers about good practices regarding:
• Planning
• Feasible Stress Test Scenarios
• Clear assignment and accountability
• Communication with the CySEC

CySEC notes that the preparation of the recovery plan is an ongoing process and should be reviewed regularly and updated when the circumstances change in order to have a plausible plan to respond to any periods of financial stress.  

CySEC further notes that expects qualifying CIFs to take into consideration the common weakness identified as well as the comments, clarifications and good practices, while preparing the Form 20-01 for the year ended 31/12/2022, which is due to be submitted to CySEC, via TRS only, by 30/9/2022.

The Directive DI20-01 on the establishment of simplified obligations as to the content and details of the Recovery Plans of CIFs can be found on the following link: https://www.cysec.gov.cy/CMSPages/GetFile.aspx?guid=8e57b587-6e40-4ade-9615-edb160396fbc 

The Form 20-01 can be found on the following link: https://www.cysec.gov.cy/en-GB/legislation/services-markets/brr/
 
Read the CySEC Circular C526

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