How is a regulated market authorised and supervised, and when must it alert CySEC?

A regulated market in Cyprus must be authorised by CySEC, which grants it only if it is satisfied that both the market operator and the market's systems meet at least the requirements of the Law. The operator applies, providing all the information CySEC needs, including a programme of operations describing the planned business and organisation. The exam material adds that the operator is responsible for the accuracy of what it submits and that CySEC decides within six months of a complete application. Once authorised, the operator runs the market under CySEC's supervision, is responsible for making sure it complies, and may exercise the market's rights; CySEC reviews compliance regularly.

The operator's board is subject to the same fitness and directorship rules as a CIF's board, described in What rules apply to a CIF's board of directors? People able to exert significant influence over the market's management must be suitable. The operator discloses to CySEC and publishes who owns the market and the size of their interests, and notifies and publishes any transfer of ownership that changes who holds significant influence. CySEC refuses a proposed change where it has objective and verifiable grounds to believe it would threaten sound and prudent management. The exam material expects the change to be reported before the transfer and CySEC to respond within one month; Law 87 itself sets no deadline for CySEC's decision.

A regulated market needs arrangements to identify and manage conflicts between its own, its owners' or its operator's interests and its sound functioning; to manage the risks it faces, including ICT risk under the EU's digital operational resilience rules; transparent and non-discretionary rules for fair and orderly trading, with objective criteria for executing orders efficiently; arrangements for timely settlement of trades; and enough financial resources for orderly functioning. Since 2025 it must also meet EU data quality standards and have at least three materially active members or users. Its operator may not execute clients' orders against its own capital, or engage in matched principal trading, on any regulated market it runs.

CySEC may withdraw the authorisation if the market has not used it within twelve months, has expressly renounced it or has been idle for the previous six months, obtained it through false statements, no longer meets the conditions, has seriously and systematically breached the rules, or falls under another Cypriot law allowing withdrawal. Every withdrawal is notified to ESMA.

A trading venue may suspend or remove an instrument that no longer meets its rules, unless that step would probably cause significant harm to investors' interests or to the orderly working of the market. Such damage is presumed where the step would create systemic risk (for example when a dominant position must be unwound or large settlement obligations would fail), where trading must continue so a clearing house can manage a member's default, or where the issuer's financial viability would be threatened, for example during a capital raising. The venue and CySEC also weigh the market's liquidity, how lasting the action is, knock-on effects on related derivatives and indices, and commercial users who hedge.

Venue operators must inform CySEC of significant infringements of their rules, disorderly trading conditions and major system disruptions, but only significant events that could affect the venue's role as market infrastructure. Signs of disorder include long disruption to price discovery, system capacity reached, repeated claims of erroneous trades and failures of algorithmic trading controls.

They must also report immediately conduct that may indicate market abuse, using a list of signals. Examples: layering or spoofing (large orders away from the best price on one side of the book to trade on the other, then cancelled); quote stuffing (floods of orders and cancellations to slow others and hide a strategy); ping orders (small orders to detect hidden orders); momentum ignition (orders meant to start or speed up a trend to exploit it); marking the close; painting the tape; improper matched orders; smoking; phishing; and cross-product manipulation between related instruments. The operator applies judgement to the signals, looks for deviations from usual trading patterns, and watches for front running.