What does Law 87(I)/2017 cover, and who must follow it?

Law 87(I)/2017, the Investment Services and Activities and Regulated Markets Law, transposes MiFID II, Directive 2014/65/EU, and two governance articles of the Capital Requirements Directive. It has applied since 3 January 2018, when MiFID II took effect across the EU and MiFID I, Directive 2004/39/EC, was repealed. It replaced Law 144(I)/2007, apart from a few articles it keeps in force, including the basis of the Investor Compensation Fund. Nine amending laws followed between 2020 and 2025; none had been published in 2026 when this note was reviewed.

MiFIR, Regulation (EU) No 600/2014, and Delegated Regulation (EU) 2017/565 apply directly beside the Law, with no transposition. The exam material says Law 87 also transposes 'EU/2017/565, MiFID II'. That has never been right. MiFID II is Directive 2014/65/EU, adopted on 15 May 2014. Regulation 2017/565 is a Commission regulation that has bound firms directly since 3 January 2018, with no Cyprus law needed. Under MiFID II Article 94, references to MiFID I are read as references to MiFID II or MiFIR.

The Law applies to investment firms, market operators, and third-country firms operating in Cyprus through a branch. Without a branch here, a third-country firm is outside the Law, but it needs an authorised branch to serve retail or elective professional clients in Cyprus, unless the client starts the service on its own exclusive initiative. The Law regulates CIF authorisation and the operation of investment firms, third-country branches, the authorisation and operation of Cyprus regulated markets, and supervision, cooperation and enforcement by the competent authorities. Authorisation is explained in How does a firm become a Cypriot Investment Firm, and what must it keep doing?.

The exam material lists data reporting service providers (DRSPs) among the entities in scope, and their authorisation among the matters the Law regulates. Since 1 January 2022, Law 159(I)/2021, following Directive (EU) 2019/2177, has removed both. ESMA now authorises and supervises approved publication arrangements (APAs), approved reporting mechanisms (ARMs) and consolidated tape providers (CTPs) under MiFIR. APAs and ARMs with a MiFIR derogation stay with CySEC. DRSPs never became exempt: they moved to a different supervisor. See What are APAs, ARMs and CTPs, and who supervises them today?.

A credit institution providing investment services must meet selected provisions: governance, membership of a compensation scheme, organisational and algorithmic-trading requirements, the MTF and OTF rules, investor protection, and firms' rights other than the passport notification procedures. The provisions on the competent authorities, their powers, sanctions and redress, cooperation in on-site checks, host-state powers, precautionary measures and persons employed by CIFs also apply. For these banks the Central Bank of Cyprus exercises the powers the Law gives CySEC.

The exam material limits this to credit institutions authorised in another Member State. Since the Law applied on 3 January 2018, it has covered banks authorised by the Central Bank of Cyprus as well. The exam material also refers to banks that sell or advise on 'structured products'. Since 3 January 2018 the Law, like MiFID II, has said structured deposits, and it binds CIFs as well as banks when they sell them or advise on them. Those firms follow the governance, compensation-scheme and organisational rules, the conflicts, conduct and order-handling rules, the tied-agent and eligible-counterparty rules, and the authority provisions.

Regulated-market and MTF members or participants that need no authorisation, because they are exempt as insurers, collective investment undertakings, pension funds, emission-allowance operators or commodity dealers, must still meet the algorithmic-trading rules; see How do regulated markets admit instruments and members, and control algorithmic trading?. Every exempt person also stays subject to commodity position limits and position reporting, as explained in Which firms and activities does Law 87(I)/2017 exempt?.

The exam material places in Law 87 the rule that every multilateral system must operate as a regulated market, MTF or OTF, and that execution outside them must follow the transparency rules for systematic internalisers and OTC trading. Since 17 October 2025, when Law 183(I)/2025 deleted that provision, the rule has sat only in MiFIR Article 1(5b), which has applied since 28 March 2024. Systematic internalisers follow MiFIR's Title III, and other OTC trades by investment firms follow MiFIR Articles 20 and 21.