Collective Investments and Managers (Συλλογικές Επενδύσεις και Διαχειριστές)
Scope
This domain covers Cyprus UCITS and alternative investment funds (AIFs), the authorisation and ongoing obligations of managers, depositaries, investment limits, leverage and marketing passports.
UCITS
UCITS are open-ended funds authorised under the UCITS Directive and the Cyprus open-ended collective investment schemes framework. They may invest in transferable securities on regulated markets, money market instruments, deposits, derivatives and CIS units. Core limits: no more than 5% of NAV in transferable securities or money market instruments of one issuer, except that up to 10% is allowed if all holdings above 5% together do not exceed 40% of NAV (the 5/10/40 rule). Deposits with one credit institution are capped at 20%; exposures to a single OTC derivative counterparty are subject to a 10% limit. UCITS must appoint an independent depositary for safekeeping, cash monitoring and oversight, and produce a KIID/PRIIPs KID for retail investors.
AIFMD
An AIFM must be authorised by CySEC; the fund itself may be an AIF, AIFLNP or registered RAIF. The AIFM's own funds start at €125,000 and rise by 0.02% of AUM above €250m, capped at €10m. AIFMD requires a depositary, leverage disclosure and limits, remuneration policies, risk management, delegation rules and reporting to CySEC. EU AIFMs can market EU AIFs to professional investors under the AIFMD passport; Cyprus RAIFs can be marketed to professional and well-informed investors after registration.
Worked example
A UCITS has NAV €200m. It holds €12m in Bank A (6%) and €9m in Bank B (4.5%). The 6% position breaches the 5% basic limit unless it is within the 10% ceiling and all positions above 5% total no more than €80m (40%). Bank A is under 10% (€20m), so the holding is permitted if the aggregate of >5% positions is within €80m. If that aggregate is €85m, the fund must reduce.
Traps
AIFMD authorises the manager, not each fund. The €10m own-funds cap is not the initial requirement. The 5/10/40 rule is often tested with an aggregate condition. Depositaries are not merely custodians; they have oversight and cash-monitoring duties.