How Cyprus, Germany, and Sweden Command 75% of EU's Cross-Border Retail Trading

<p>The
European Securities and Markets Authority (<a href="https://www.financemagnates.com/terms/e/esma/">ESMA</a>) and National Competent
Authorities (NCAs) recently completed an analysis of cross-border investment services
in 2022. The study revealed a growing trend towards cross-border financial
services, illuminating the benefits and challenges these services bring to
consumers, firms, and regulators.</p><p>The study showed
that Cyprus is currently the main hub for firms offering services to retail
investors across the Old Continent. Companies licensed by the Cypriot
Securities and Exchange Commission (CySEC) under ESMA regulations can reach
clients from many other jurisdictions within the European Union (EU) and the
European Economic Area (EEA).</p><p>ESMA Overviews Cross-Border
Investment Services in 2022</p><p>ESMA and
NCAs collected data across 29 jurisdictions, providing a comprehensive view of
the market for retail investors receiving investment services from institutions
outside their home country. Around 380 firms delivered services to retail
clients on a cross-border basis, with 59% being investment firms and the
remaining 41% being credit institutions.</p><p>In 2022,
about 7.6 million clients in the EU were the beneficiaries of investment
services from firms located in other member states. Cyprus emerged as the
primary provider of cross-border investment services, housing 23% of all firms
involved in such operations. Following Cyprus, Luxembourg and Germany accounted
for 16% and 13% of all firms, respectively.</p><p>Firms in Cyprus,
Germany, and Sweden served significantly more than 75% of EU retail
clients receiving cross-border investment services. These firms reached out to
millions of cross-border retail clients, with the remaining quarter of retail
clients served by firms in other jurisdictions.</p><p>As for
complaints, about 5,700 complaints related to cross-border investment services
were recorded in 2022. The primary discontent areas revolved around contract
terms, fees, charges and customer services.</p><p>ESMA has
expressed its commitment to continue the data collection exercise annually,
with plans to publish a report on the findings in 2024. According to the
regulator, this will aid in maintaining transparency and ensuring the necessary
regulations are in place to support the growing cross-border investment
services sector.</p><p>The
pan-European regulator <a href="https://www.financemagnates.com/institutional-forex/esma-lauds-national-regulators-for-improving-oversight-roles/" target="_blank" rel="follow">also mentioned Cyprus and Germany</a> in its report from
last week. As suggested, local financial oversight commissions have made
progress in improving their supervisory frameworks and conducting
investigations.</p><p>CySEC’s Growing Importance
as a Global Player</p><p>Finance
Magnates conducted
<a href="https://www.financemagnates.com/forex/regulation/exclusive-investors-arent-doing-their-homework-says-cysec-chair/" target="_blank" rel="follow">an exclusive interview this year with Dr George Theocharides</a>, who has served
as the Chairman of CySEC since 2021. The discussion covered the growing
importance of Cyprus and CySEC as global players in the FX/CFD and financial
regulatory market.</p><p>As Dr Theocharides noted, <a href="https://www.financemagnates.com/terms/c/cysec/">CySEC</a> currently <a href="https://www.financemagnates.com/forex/cysec-supervised-837-entities-and-imposed-29-million-fines-in-2022/" target="_blank" rel="follow">regulates 840 entities</a>, 32 of which have joined
those bodies since October 2021. The regulator is currently hiring 42 new
people to bolster its supervision departments. Finance Magnates reported last
week that <a href="https://www.financemagnates.com/forex/exclusive-cysec-offers-140000-for-investigating-cypriot-investment-firms/" target="_blank" rel="follow">CySEC is seeking an investigation expert</a>, among others, who would be
responsible for detecting potential violations of regulations by investment
companies registered in the country.</p><p>“There was
substantial growth in the investment firm sector in Cyprus after 2013. We have
reached a stable level of around 240 CIFs. The latest data was 247, at the end
of 2022 it was 248, at the end of 2021 it was 243,” Dr Theocharides commented.</p><p>Furthermore,
the Cypriot collective investment fund sector has seen healthy growth, with
over 330 entities and an increase of 200% in managed assets since 2016. Currently, this sector
manages nearly 10 billion euros, demonstrating significant growth
potential and positioning Cyprus as a potential regional fund hub.</p>

This article was written by Damian Chmiel at www.financemagnates.com.