Cyprus' bid to be established as a financial services centre has gained a new momentum after the signing of a Memorandum of Understanding (ΜοU) between the Cyprus Securities and Exchange Commission (CySec) and the Federal Financial Markets Service of Russia, CySec Chairman Giorgos Charalambous has said.
The MoU was signed in Moscow by the Chairman of the Cyprus Securities and Exchange Commission Georgios Charalambous and his Russian counterpart Vladimir Milovidov, in the presence of the Russian President Demtry Medvedev and Cypriot President Demetris Christofias, during the latter's official visit to Russia between 18-21 November.
In an interview with CNA, Charalambous said that this MoU upgrades the credibility of the Cypriot Commission. ''Cooperation between states, particularly on capital movement, which lies within the competencies of the Securities Commission, relies on the necessary framework of cooperation. This Memorandum secures a more effective supervision of the transactions and therefore upgrades the credibility and the effective operation of our Commission,'' Charalambous noted.
According to Charalambous, the MoU was considered necessary because the CySec is responsible not only for the supervision of Cypriot Licensed Investment Services Companies but also for many international investment companies based on the island and mainly of them are of Russian interest, which operate internationally and not in Cyprus, with turnovers amounting to trillions of dollars.
''Given the significant number and the sizeable volume of transactions for the Russian Companies, we felt that the role of the Commission would be strengthened even further if we had the cooperation of the Russian authorities. The signing of the MoU helps us exercise, to a great degree, better supervision and strengthens our credibility,'' Charalambous explained.
Furthermore, the Cyprus Commission Chairman believes that the MoU signed between the supervising authorities of Russia and Cyprus will pave the way for the implementation of an agreement signed between the Cyprus Stock Exchange (CSE) and Russia's OJSC VTB Bank, which will enable Russian companies to be listed in the Cypriot Bourse which in turn will issue depository receipts to be listed and traded on the Moscow Stock Exchange
The CSE, as Charalambous pointed out, needs to gain recognition from the Federal Financial Services Markets Service of Russia before these depository receipts are listed on the Russian Bourse.
''I believe without the signing of the MoU between the two Commissions, it would have been hard for the agreement between CSE and the OJSC VTB Bank to be implemented,'' he said.
The Cypriot Commission has signed similar memoranda with EU partners, as well as the Authorities of Austria, Israel, Egypt and Dubai, while MoUs are expected to be signed with other countries as well.
The Memorandum signed with Russia aims at creating the framework and procedures for the exchange of information between the two Commissions, the better cooperation on investigation conducted by the two supervising authorities on market abuse, the granting of investment consultation by non-certified consultants, as well as other possible violations of the Securities legislations. However, Charalambous clarified that each Commission reserves the right to deny granting information, if it violates its national law and on the grounds of public interest and national security.
Furthermore, the MoU is considered essential due to the global financial crisis, partly attributed to complex structures and complex investment products, such as the subprime investment products in the US. For this reason, the need for increased cooperation among the supervising authorities is strongly supported internationally by the
International Organisation of Securities Regulators (IOSCO), as well as by the Committee of European Securities Regulators (CESR).
''There are many financial organisations which with the market liberalisation and globalisation have extended their activities to various fields and various countries. The only way to cope with these complex structures is to have effective supervision and to this end it is necessary to secure cooperation between the supervising authorities,'' Charalambous said.
Charalambous said that Russia will benefit from the cooperation with a country which, as an EU member state, has the European regulatory framework. ''We have the impression that through our contacts with the Russian Authorities, which will continue both on the level of Presidents and on the level of senior officials, various questions raised during the drafting of the Russian legal framework will be answered so that Russian legislation will be more harmonised with that of the EU, if the Russian Authorities deem it necessary.''
Concluding, Charalambous pointed out that Cyprus could act as a bridge facilitating cooperation between Russia and other EU member-states in the fields of Securities and Stock Exchange.
