MiFID II sustainability requirements

We would like to bring to your attention the circular (C680) issued by the Cyprus Securities and Exchange Commission (CySEC) on 31 January 2025 concerning the European Securities and Markets Authority’s (ESMA) Common Supervisory Approach (CSA) 2024-25 on MiFID II sustainability requirements.

Key areas of focus include:

• Collection of client information on sustainability preferences.
• Proper categorisation of investment products with sustainability factors.
• Ensuring suitability of investments concerning sustainability.
• Defining sustainability objectives in target market assessments.

CySEC has begun, or will soon begin, conducting on-site visits and desk-based reviews of selected Cyprus Investment Firms (CIFs) that provide investment advice and/or portfolio management services to retail clients. These reviews cover the period from 2 August 2022 to 31 December 2024.

Regardless of whether a formal notification has been received by a firm from CySEC, all investment firms should ensure their processes align with the outlined requirements. This initiative assesses firms' progress in integrating sustainability factors into suitability assessments and product governance.

Those yet to take action should review the circular and implement any necessary adjustments.

Our regulatory advisory team specialises in providing tailored solutions to help investment firms navigate and comply with the latest EU regulatory requirements, including the MiFID II sustainability framework.

We can assist you in understanding and integrating these new sustainability requirements into your investment strategies and compliance frameworks. Specifically, our support includes:

• Assessing the impact of MiFID II sustainability requirements on your business model, including suitability assessments and product governance processes.
• Conducting regulatory gap analyses and assisting with the implementation of necessary compliance measures.
• Supporting regulatory filings, supervisory engagements, and CySEC reviews related to sustainability compliance.
• Providing advisory services on governance, reporting, and operational changes to align with evolving sustainability expectations.

For more information on how we can assist you in meeting these requirements, feel free to reach out to our team.