The Cyprus Securities and Exchange Commission (‘CySEC’) has recently issued a circular (C217 dated 26 June 2017) to Cyprus Investment Firms (‘CIFs’) it regulates regarding commercial collaboration with third parties, for example to promote the CIF online, to use the third party’s website as a portal for displaying promotional and advertising content or to host marketing material and generate traffic for the CIF’s website.
CIFs should exercise due skill, care and diligence when entering into, managing or terminating any such arrangements, having regard to the provisions of Part V (Outsourcing) of CySEC Directive DI144-2007-01 of 2012. Before entering into an agreement with a third party the CIF should ensure that the third party holds any authorisation or registration required in its jurisdiction in order to undertake the activities proposed. CIFs should ensure that any marketing material distributed by third parties on their behalf is clear, fair and not misleading, in accordance with the requirements of article 36 of the Investment Services and Activities and Regulated Markets Law of 2007. The material must either be prepared by the CIF for distribution by the third party, or, if it is prepared by the third party, must be subject to prior approval and continuous monitoring by the CIF.
CIFs should ensure that there are adequate internal control procedures in place to monitor the activities of third parties with which they collaborate and to gather all data published by the third party that relates to the CIF. The arrangement should be terminated and appropriate measures should be taken in the event of any deviation from the agreement by the third party. In addition, the CIF must notify CySEC of all the facts so that CySEC can warn other CIFs.