The Annual MiFID Compliance Report

Compliance professionals working at Investment Firms, are well aware that the Annual Compliance Report is a mandatory reporting obligation and one of the most important reports to the Board members of regulated entities licensed to offer investment services. It serves as an overview of each firm's adherence to the requirements outlined in the Markets in Financial Instruments Directive (MiFID).

In this blog post, IforPE instructor Evdokia Pitsillidou delves into the analysis of Circular C553 which is dedicated to providing guidance on certain aspects of the compliance function requirements. As part of this discussion, the blog introduces an inclusive course titled "How to Prepare the MiFID Compliance Report in 2024" available on the IforPE platform.

Towards the conclusion of the post, we provide details about the insights gained from participating in the course and how they can assist in crafting the corresponding report effectively.

 

CySEC’s Circular C553

The Cyprus Securities and Exchange Commission (CySEC) published Circular C553 with which it provided direction on how to apply certain aspects of the compliance function requirements. Through this Circular 12 Guidelines are introduced as presented below:

Compliance Function responsibilities

     - Guideline 1: Compliance risk assessment

     - Guideline 2: Monitoring obligations of the compliance function

     - Guideline 3: Reporting obligations of the compliance function

     - Guideline 4: Advisory and assistance obligations of the compliance function

Compliance Function organisational requirements

     - Guideline 5: Effectiveness of the compliance function

     - Guideline 6: Skills, knowledge, expertise and authority of the compliance function

     - Guideline 7: Permanence of the compliance function

     - Guideline 8: Independence of the compliance function
     - Guideline 9: Proportionality with regard to the effectiveness of the compliance function

     - Guideline 10: Combining the compliance function with other internal control functions

     - Guideline 11: Outsourcing of the compliance function

Competent authority review of the Compliance Function

      - Guideline 12: Review of the compliance function by the competent authorities

The Guideline that focuses on the reporting obligations of the Company in regard to compliance matters, is considered to be Guideline 3. Through this guideline, the regulator reminds the obliged under MiFID entities of their responsibility to submit on an annual basis the Compliance Report. It also clarifies that this is a responsibility of every company’s Compliance Function and shall include a thorough review of all business units participating in the provision of investment and ancillary services. 

As part of the Compliance Monitoring Program (CMP), the Compliance Officer shall present the major findings from the review of the firm’s policies and procedures, along with the risks arisen from its compliance monitoring activities. To that end, actions to be taken to mitigate the findings shall be included within the review of each department.