Introduction
The Cyprus Securities and Exchange Commission issued Circular C795 to inform Cyprus Investment Fund Managers about ESMA’s 2026 Common Supervisory Action focusing on the risk management function of UCITS management companies and Alternative Investment Fund Managers across the EU. This is a clarification and involves a thematic review starting late 2026 into early 2027.
CySEC Circular C795 – At a Glance
- Issued date: 12 August 2026
- Applies to: Cyprus UCITS Management Companies, Internally Managed Cyprus UCITS, Cyprus Alternative Investment Fund Managers, Internally Managed AIFs
- Deadline: Late 2026 into early 2027
- Key requirement: Review risk management arrangements
What Does This Circular Require?
What firms must do. CyIFMs must consider if their risk management arrangements remain appropriate and proportionate.
Regulatory objective. Ensure effective, independent, and expert risk management to protect investors and maintain financial stability.
Who Is in Scope?
The CSA focuses on improving risk management for investor protection and financial stability.
- Cyprus UCITS Management Companies
- Internally Managed Cyprus UCITS
- Cyprus Alternative Investment Fund Managers
- Internally Managed AIFs
Key Requirements Breakdown
Reporting / Submission Requirements
Reporting to senior management and governing bodies is a focus area of the CSA.
Technical / System Requirements
Governance and organisation of the risk management function are under review.
Practical Implementation: What Firms Should Do
In practice, you should review your existing risk management functions to ensure efficacy. Evaluate the governance, organisation, and reporting processes for compliance with regulatory expectations.
Common mistakes include insufficient independence of risk management or inadequate reporting to senior management. CySEC expects improvements in these areas to align with the CSA’s objectives.
Key Dates and Deadlines
| Date | What happens |
|---|---|
| Late 2026 | Start of targeted thematic review by CySEC |
How to Apply This Correctly
- Evaluate current risk management arrangements.
- Ensure effectiveness, independence, and expertise in risk management functions.
- Align practices with CSA and regulatory requirements.
- Prepare for thematic reviews conducted by CySEC.
Compliance Officer Checklist
- Review risk management governance
- Assess risk identification and measurement
- Verify reporting mechanisms to senior management
- Ensure regulatory compliance with CSA expectations
Evidence to Retain
- Governance structures
- Risk management policies
- Reporting procedures
- Board meeting minutes
Why This Matters
Non-compliance with the expected standards may lead to regulatory action. The supervisory impact focuses on enhancing investor protection and financial stability through robust risk management practices.
Frequently Asked Questions
What is the focus of the 2026 CSA?
The CSA focuses on the effectiveness, independence, and expertise of the risk management function in UCITS management companies and AIFMs.
Who does this CSA affect?
The CSA affects Cyprus UCITS Management Companies, Internally Managed Cyprus UCITS, Cyprus AIFMs, and Internally Managed AIFs.
What are CyIFMs required to do?
CyIFMs are required to review their existing risk management arrangements to ensure they are appropriate, effective, and proportionate.
When will CySEC conduct its review?
CySEC will conduct a targeted thematic review starting in late 2026 and continuing into early 2027.
Why is risk management important?
Risk management is crucial for investor protection and financial stability, ensuring risks are identified, measured, monitored, and managed.
How CX Financia Can Support You
CX Financia assists with regulatory compliance, risk management, and internal audit. We support CyIFMs in aligning their risk management frameworks with the CSA objectives. Contact us to ensure your firm meets the requirements efficiently.
Read the CySEC Circular C795 (PDF)
Read more news at Regulatory Updates & Compliance Guidance
Disclaimer
General information, not regulatory advice.