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.

CySEC enforces MiFID II sustainability requirements. Your firm must ensure continuous compliance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.