Cyprus' investment fund industry has shown remarkable stamina and resilience during the pandemic as it continued to grow at a remarkable pace.
According to the Cyprus Securities and Exchange Commission (CySEC), at the end of the second quarter of 2020, total assets under management increased to almost ?8 billion (a quarterly increase of 5.3 per cent), despite the difficulties and times of great uncertainty the COVID-19 pandemic has brought upon us. Since 2016, assets under management by entities regulated in Cyprus have increased by 196 per cent. What is more, the European Fund and Asset Management Association reported that Cyprus is the fastest-growing European centre in terms of net assets under management. We are confident that this upward trend will persist in the coming years, especially when taking into account the continuous stream of applications pending approval.
The sector's success story can be further demonstrated with the new collaborations with internationally renowned custodians and the acceptance of Cyprus Funds in Clearstream's Vestima platform, Bloomberg and Thomson Reuters. Also, Alternative Investment Funds (AIFs) and Undertakings for the Collective Investment in Transferable Securities (UCITS) can submit their registries for handling to the Central Depository and Central Registry (CSD) of the Cyprus Stock Exchange (CSE).
Cyprus has become a jurisdiction of choice for funds and fund managers because it's a business-friendly European destination that applies common-law rules. Situated at the crossroads of three continents makes Cyprus an ideal location for Middle East funds wanting access to the European market and to international funds looking to invest in the MENA region. Cyprus, though, is not a jurisdiction of choice simply because of its unique geographical position. CySEC prudently regulates the industry, which is comprised of an English-speaking and highly educated workforce. Most importantly, the costs associated with setting up and managing a fund are significantly lower compared to other EU jurisdictions. With more than 60 Double Taxation Avoidance Agreements in place, Cyprus is the ultimate gateway for doing business in the EU. As a European Union Member State, Cyprus offers a harmonized regulatory regime for investment services with the rules established under the UCITS, AIFM, and MiFID Directives. The country also implemented the US Foreign Account Tax Compliance Act (FATCA) and was an early adopter of the Common Reporting Standard (CRS).
Undoubtedly, the Covid-19 pandemic created unprecedented challenges for the economy and even though Cyprus is heavily dependent on external demand, it has shown great resilience. The GDP's contraction for 2020 (approximately six per cent) will be lower than the EU average and significantly lower than the contraction in other Mediterranean countries. Both the public and the private sector adapted swiftly to the new "normal", proving once more the high degree of flexibility in the Cyprus economy. Â
CIFA is a full member of the European Fund and Asset Management Association (EFAMA), the representative association of the investment fund and asset management industry in Europe. We are also an Associate Member of the International Capital Market Association (ICMA) and a member of the International Investment Funds Association (IIFA). To ensure that professionals in the sector keep up to date with international regulatory developments, a Memorandum of Understanding with the Chartered Institute for Securities and Investors (CISI) for collaboration, capacity building and best practice is in place.
CIFA stands ready to assist institutional investors, family offices, wealth and asset managers and other interested parties from the MENA region looking for the ideal base to set up their operations and business structure.
Andreas Yiasemides is President of the Cyprus Investment Funds Association (CIFA)