CSE’s President reveals future plans

The Cyprus Stock Exchange (CSE) seeks to play a regional role in the Eastern Mediterranean, CSE’s President George Koufaris has said, pledging to continue efforts to make the most of challenges ahead to the benefit of investors, public companies, the establishment itself and the Cypriot economy at large.
The stock market has succeeded in restoring its credibility, Koufaris has told CNA in an interview.
He revealed that CSE is examining the possibility to expand the Common Trading Platform of CSE and Athens Stock Exchange to include the stock markets of neighbouring countries, which have expressed an interest in joining in.
Furthermore, Koufaris said that the Cyprus Stock Exchange in cooperation with Athens is examining the possibility to introduce derivative product in the banking sector, adding that the semi regulated market soon to be implemented would offer investors and companies additional advantages.
CSE’s President also points out that international trends, observed in the world economy as well as new European Union directives, lead to overwhelming changes in the international markets.
Koufaris notes that the CSE will continue to be an important pillar of the Cyprus economy.
Commenting on the image of the CSE, seven years after the mini crash it has suffered, Koufaris said that it has overcome to a large extent the credibility problems it was facing and this positive development can be attributed to the efforts of its Council, the management and the state in general.
“The CSE is in a better position today than in the years that followed 2000, due to the increase of the market index, improved regulation of the market in line with new legislation and the new initiatives undertaken” by the Council and management, Koufaris said.
The market is in a more rational phase as evident by the elements that constitute our stock exchange (indexes, volume, foreign investors, number of financial services companies etc) and this creates a climate of confidence among investors and public companies, he added.
However, Koufaris admits that not all problems have been solved, noting “we cannot claim that our market has reached the level of the developed and sophisticated foreign stock exchanges but we are on the right track, having set the necessary foundations and we can be optimistic about SCE’s future”. As he mentioned, the CSE looks up to Luxemburg and Ireland stock exchanges for an example.
“CSE’s image directly reflects on the local economy”, he said adding that the Cyprus Sock Exchange will continue to be one of the economy’s important pillars.
Responding to a question about new problems and challenges the CSE is called to face, such as the European directive MiFID, the increasingly competitive environment as well as the preference the investing community shows to Athens Stock Exchange, Koufaris stressed that the Cyprus stock market takes new initiatives and makes new plans with a view to strengthen its competitiveness.
“World stock markets are going through a phase full of new challenges such as the trend for mergers, restrain of cost, attraction of institutional funds, simplification of procedures and the enrichment of the products they offer”, CSE’s President said.

“We operate in the common market of the united Europe and therefore our aims and goals are much alike with the ones pursued by other stock markets of the region”, he added.
Referring to their initiatives and new plans, Koufaris said that in November CSE invited British experts to Cyprus to consult with the Cypriot stock market in the preparation of its new strategic plan. “We believe we are on the right track and soon we will announce more details regarding the development plan,” he said.
Asked about new products, Koufaris said that the first initiative towards that direction is the promotion of the semi regulated market which will function under CSE’s legislation and in line with the new EU directive on investment services (MiFID).
The competent authority to set up the accession prerequisites and define companies and directors’ liabilities would be CSE itself, which will also have the responsibility to impose penalties in case of the violation of its rules and regulations.
According to Koufaris, the semi regulated market will address non listed companies seeking financing and easy access to the secondary market, to investors looking for new forms of investment knowing the high risk presented and to listed companies that cannot or do not wish to shoulder the burden of higher cost the listing in an organized market involves.
Regarding the advantages of the new market, he made particular reference to the following: (1) Further development of CSE’s activities and increase of competitiveness to the benefit of all market participants; 2) Utilisation of existing expertise and the markets infrastructure; 3) Creation of conditions for the smooth and gradual transfer of the stock exchange and participants to the new environment created by the introduction of the MiFID directive.
Asked whether the new market will offer any benefits to companies and investors, Koufaris said the semi regulated market will provide alternative methods of financing on a competitive cost, it will promote the level of recognition of the companies reputation and also present them the opportunity to be prepared for transfer to the organised market if they wish to do so by increasing the free float and marketability of their share titles.
On the other hand, the semi regulating market will create new investing opportunities for the investors wishing to place their funds on companies of high development potential accompanied by higher level of risk.
Koufaris was also invited to comment on the revised pricing policy the CSE applied since January 2, 2008. He first outlined the main aim of the new pricing policy which is to make the CSE more competitive and enhance its role and mission in the new environment created by the implementation of the new European directive MiFid. Furthermore, Koufaris noted that the general aim is, through a new pricing policy and improved cost management, to maintain the CSE as a robust organisation, creating added value for all market participants.
He noted that the new rates are in line with those of the Athens Stock Exchange. They include, inter alia, a reduction in trading fees for Main Market shares, the replacement of the membership fee with the introduction of an annual fee based on the transactions, the introduction of an annual operator tag for the use of liquidation and settlement infrastructure.
Koufaris said that the CSE has drafted a plan for the return of part of the revenue of Cypriot financial services companies (KEPEY), when the revenue exceeds certain levels, adding that this plan would be a motive for the providers to increase the volume of transactions with the CSE.

“We consider that the new pricing policy, which has been the result of negotiations with all market participants, will contribute to the effort to attract more foreign institutional investments to Cyprus”, he underlined.
Asked about the Common Trading Platform between CSE and ASE and the assessment of its operation a year after it was launched, Koufaris said that the platform proved to be a very successful venture and both the CSE and ASE gained benefits out of their cooperation.
Koufaris said that the daily volume of transactions of CSE increased from 10.296.203 euro during the period 2/1/06 until 25/10/06 to 17.530.957 (+70.2%) during the period from 30/10/06 until 29/12/06. During the period 2/1/07 until 9/11/07 volume increased to 16.352.839 euro.
The number of remote members also increased to ten, while total value of CSE reached in November 9, 2007 to 27,5 billion euro from 16,4 billion euro in October 25, 2006.
The market participation of foreign investors from 6.61% during the period 2/1/06 until 25/10/06 increased to 6.82% during the period 30/10/06 until 26/12/06 and 9,9% between 2/1/07 and 9/11/07.