The Cyprus
Securities and Exchange Commission (CySEC) has taken decisive action against
KMG Capital Markets Ltd, revoking the firm’s license for managing Open-Ended
Undertakings for Collective Investment in Transferable Securities (UCITS). This
is the second time KMG has faced such a penalty, reflecting its consistent lack
of activity in the UCITS sector.
On 9
October, CySEC made the decision to withdraw the operation license for UCITS
management from KMG Capital Markets Ltd. The license was revoked because the
company had failed to utilize it within 12 months after being notified of its
approval.
CySEC’s
actions were in accordance with sections 121(1)(a) and 150(1)(c) of the
Open-Ended Undertakings for Collective Investment Law of 2012. The Commission
made the information public today (Monday), 16 October.
Interestingly,
this isn’t the first time KMG has found itself in hot water for the same
reason. A prior revocation took place on 14 December 2021. Despite this, the
company applied for and obtained a new UCITS management license from CySEC.
Yet, once more, KMG has failed to engage in any activity in the UCITS sector by
23 June 2023, leading to another revocation.
However,
it’s worth noting that KMG Capital Markets continues to hold authorization as
an Alternative Investment Fund Manager (AIFM). This authorization comes under
section 8 of the Alternative Investment Fund Managers Law, providing a silver
lining for the company’s operations.
CySEC decided to withdraw the operation license for UCITS management from KMG Capital Markets Ltd. However, KMG continues to hold authorization as an AIMF. pic.twitter.com/JaPhW0RvPY
— Damian Chmiel (@ChmielDk) October 16, 2023
In the most
recent quarterly report issued by CySEC, noteworthy developments emerged in
Cyprus’ Collective Investments sector for Q2 2023. Over this quarter, CySEC
oversaw 334 Management Companies and Collective Investment Schemes (UCIs), a
marginal dip of 0.30% from the first quarter’s 335 organizations. Yet, when
juxtaposed with the same quarter from the prior year, there was a 1.2% uptick,
illustrating a steady upward trajectory for the sector.
Back in
September, the Commission announced its decision to withdraw another license of
FXBFI Broker Financial Invest Ltd. Few weeks earlier, the regulator confirmed the deletion of Binance Cyprus Ltd from the
Register of Service Providers of Crypto-assets.
Difference between UCITS
and AIFM
UCITS are
European mutual funds that aim to allow for the sale of pooled investment
products across the European Union (EU) under a harmonized regulatory regime.
The structure offers high levels of investor protection and transparency. AIFMs
manage Alternative Investment Funds (AIFs), which include hedge funds, private
equity funds, real estate funds, and other non-traditional investment vehicles.
UCITS are
generally limited to liquid assets like listed equities , bonds, and money
market instruments. Alternative investments such as real estate or commodities
are typically off-limits. At the same time, AIFMs can manage a wide range of
asset types, including illiquid and alternative assets like real estate,
private equity, and commodities.
While UCITS
are aimed at providing a high level of investor protection with stringent
regulations, AIFMs offer more flexibility in investment strategies and asset
types but are primarily designed for professional and institutional investors.
Both have the ability to be marketed across the EU, but the regulatory
frameworks they adhere to are different.
The Cyprus
Securities and Exchange Commission (CySEC) has taken decisive action against
KMG Capital Markets Ltd, revoking the firm’s license for managing Open-Ended
Undertakings for Collective Investment in Transferable Securities (UCITS). This
is the second time KMG has faced such a penalty, reflecting its consistent lack
of activity in the UCITS sector.
On 9
October, CySEC made the decision to withdraw the operation license for UCITS
management from KMG Capital Markets Ltd. The license was revoked because the
company had failed to utilize it within 12 months after being notified of its
approval.
CySEC’s
actions were in accordance with sections 121(1)(a) and 150(1)(c) of the
Open-Ended Undertakings for Collective Investment Law of 2012. The Commission
made the information public today (Monday), 16 October.
Interestingly,
this isn’t the first time KMG has found itself in hot water for the same
reason. A prior revocation took place on 14 December 2021. Despite this, the
company applied for and obtained a new UCITS management license from CySEC.
Yet, once more, KMG has failed to engage in any activity in the UCITS sector by
23 June 2023, leading to another revocation.
However,
it’s worth noting that KMG Capital Markets continues to hold authorization as
an Alternative Investment Fund Manager (AIFM). This authorization comes under
section 8 of the Alternative Investment Fund Managers Law, providing a silver
lining for the company’s operations.
CySEC decided to withdraw the operation license for UCITS management from KMG Capital Markets Ltd. However, KMG continues to hold authorization as an AIMF. pic.twitter.com/JaPhW0RvPY
— Damian Chmiel (@ChmielDk) October 16, 2023
In the most
recent quarterly report issued by CySEC, noteworthy developments emerged in
Cyprus’ Collective Investments sector for Q2 2023. Over this quarter, CySEC
oversaw 334 Management Companies and Collective Investment Schemes (UCIs), a
marginal dip of 0.30% from the first quarter’s 335 organizations. Yet, when
juxtaposed with the same quarter from the prior year, there was a 1.2% uptick,
illustrating a steady upward trajectory for the sector.
Back in
September, the Commission announced its decision to withdraw another license of
FXBFI Broker Financial Invest Ltd. Few weeks earlier, the regulator confirmed the deletion of Binance Cyprus Ltd from the
Register of Service Providers of Crypto-assets.
Difference between UCITS
and AIFM
UCITS are
European mutual funds that aim to allow for the sale of pooled investment
products across the European Union (EU) under a harmonized regulatory regime.
The structure offers high levels of investor protection and transparency. AIFMs
manage Alternative Investment Funds (AIFs), which include hedge funds, private
equity funds, real estate funds, and other non-traditional investment vehicles.
UCITS are
generally limited to liquid assets like listed equities , bonds, and money
market instruments. Alternative investments such as real estate or commodities
are typically off-limits. At the same time, AIFMs can manage a wide range of
asset types, including illiquid and alternative assets like real estate,
private equity, and commodities.
While UCITS
are aimed at providing a high level of investor protection with stringent
regulations, AIFMs offer more flexibility in investment strategies and asset
types but are primarily designed for professional and institutional investors.
Both have the ability to be marketed across the EU, but the regulatory
frameworks they adhere to are different.
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