CSE demands fee reduction to 0.15%

The government and the majority of the members of the House Finance Committee are backing a request submitted by the Chairman of the Cyprus Stock Exchange (CSE) Akis Kleanthous seeking to reduce the transaction tax on stock trades to 0.15%, in order to make the CSE competitive and bring its fee scales and charges close to the level prevailing for the Athens Stock Exchange (ASE).

During the HFC meeting on Monday, Kleanthous and CSE Director Nontas Metaxas explained that the current fee scale of 0.60% on individual trades and 1% on legal entities is very high and should be reduced to the 0.15% level of Greece, with which the CSE wishes to establish a common trading platform by the end of the year.

Kleanthous said that based on the current volume of trade, the government revenue from the CSE tax in 2003 and 2004 amounted to CYP 1.63 mln and CYP 1.31 mln respectively.

“Based on the 2004 levels, a reduction in the tax to 0.15% would mean a loss of CYP 1 mln in annual revenue for the state,” said Kleanthous who quickly added that an increase in traded volume would more than cover the shortfall.

Kleanthous maintained that the future survival and prosperity of the CSE depends to a large scale on the ability of the Exchange to attract institutional investors, mostly foreign, which is why he believes that the transaction tax should be immediately reduced.

The CSE and the ASE plan to start their common trading platform from December 31, 2005, though there are concerns that due to legislative work needed to bring the regulations of the CSE close to those of the ASE, there may be a delay of at least six months.

The CSE has also received support from the Ministry of Finance and the Central Bank to become the first institution to quote local equity prices in euros, and very soon may also oblige listed companies to publish their accounts in euros.