Design and implement an effective and sound ICAAP
As per the Basel II Capital Accord, all Cypriot Investment Firms (CIFs) must ensure compliance with Pillar II regulatory obligations and have in place an effective and sound Internal Adequacy Assessment Process (ICAAP). The ICAAP will be submitted to the regulator only upon request. The regulator then uses the Supervisory Review and Evaluation Process (SREP) to assess the process implemented by the firm and the capital requirement calculations performed against the risks it faces.
Up until the 11th of July 2019, no other regulatory reporting layer was in place to support the regulator on its supervision role in regards to the ICAAP. On that day, the Cyprus Securities and Exchange Commission (CySEC) introduced additional regulatory reporting obligations for all Cyprus Investment Firms (CIFs) with the main objective being to enhance the regulator’s supervision capacity on;
– the assessment of the Internal Capital Adequacy Assessment Process (ICAAP),
– the assessment of the annual audited financial statements,
– the safeguarding of clients’ money.
The new regulatory reporting is named “Prudential Supervision Information” and must be submitted to the regulator by the 31st of July 2019. Further information can be found on SALVUS news page.
Within this commentary, we discuss the importance of establishing an effective ICAAP and the responsibilities of all stakeholders of the CIF in order to ensure compliance with the regulatory requirements.
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