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By Nondas Cl. Metaxas, CEO, Cyprus Stock Exchange
The financial community is facing tough economic times as a result of the crisis which has particularly affected the banking sector, imposing the need for specific measures in order to adjust to the new environment.
The Cyprus Stock Exchange (CSE) main strategy is to constantly promote initiatives in order to upgrade its products and services that are offered to investors, companies and market participants. It has therefore proceeded to offer a series of new services and products in an even more effective, competitive and productive way. The ultimate aim is to implement the most significant new developments of the more advanced markets, thus contributing to develop Cyprus as a regional financial centre.
The CSE has a legal framework that is fully harmonised with the relevant EU Directives and international practices, offering all basic functions of securities trading (i.e. listing, trading, clearing, settlement and registration – central registry / depository operations). It has simple listing procedures, competitive pricing policy and is characterised by flexibility, quick response and effectiveness.
One of the most important projects that have been introduced in recent years is the ECM Market (Emerging Companies Market), as a Multilateral Trading Facility (MTF). This proved to be a success with 15 equity companies already listed and a further two issuers listing their bonds. Also, 33 companies and organisations have been approved as Nominated Advisors. The role of the NomAd is dedicated to the listing process and is extended to the supervision of the continuous obligations of the issuers.
ECM, with a market capitalisation of €691.7 mln, is based on a simplified listing requirement and continuous obligations regime, providing a number of additional important benefits to companies such as:
– Easy access to a secondary market;
– Alternative method for securing financing, at competitive cost;
– Listing of newly established companies without prior history with the submission of an adequate business plan;
– Providing new opportunities to innovative companies dealing with renewable sources of energy, i.e. solar panel manufacturers and operators, wind farms, hydrocarbon exploration and upstream companies, e-commerce, Internet-based technologies, etc.
GDR, UCITS, ISIS
Last year, the CSE also introduced the regulatory framework concerning Depositary Receipts (GDRs). This development provides new opportunities for companies interested to issue and list GDRs abroad, such as the low cost of listing, trading and clearing, the dispersion of investment risk, the increase in their liquidity, as well as an alternative means of raising funds.
The CSE is at present focused on promoting the listing and registration of all types of funds (UCITS, ISIS and all other form of alternative investment funds). Recently (end of 2012), a modification in its legislation has been put into effect, providing for the listing on the CSE of such funds.
The provision of the new instrument of Exchange Traded Funds (ETFs) are also included in this amendment and as a result, a relevant regulatory framework for the listing of ETFs is at present under preparation and will be completed during 2013. Cyprus offers a favourable and competitive environment for attracting collective investment for schemes and an attractive tax regime, thus it can become an important regional funds jurisdiction.
The CSE has also been designated as the Official Appointed Mechanism for the Storage of Regulated Information in Cyprus, known as OAM. This new project was launched in the last quarter of 2012. It operates with the use of electronic / digital signatures. The CSE has also assumed the role of a Local Registration Authority (LRA) of an authorised certification service provider (CSP). The CSE facilitates the issue of qualified digital certificates and the delivery of secure signature creation devices to any interested person. This combination allows any holder to create advanced electronic signatures which is regarded a legal equivalent to handwritten signatures.
NON-LISTED COMPANIES
Moreover, the CSE undertook the initiative to proceed to a relevant modification to its legislation which allows it to undertake and maintain the registries of non–listed companies in its Central Registry / Depository. This new service offers significant advantages to interested organisations/professionals, since the CSE, apart from being the electronic keeper of their registries, offers a remarkable range of other relevant services. In addition, the CSE has introduced the service of undertaking electronic registries and of keeping the registries of unit holders of funds. It also provides ISIN and CFI codes to interested organisations.
The CSE has also been appointed as the Auctioneer of Emission Allowances on behalf of the government (including both industry and airlines allowances), and Auctioneer on the European Energy Exchange (EEX), the platform that had been appointed by the EU on a pan–European basis, for handling the auctions of Emission Allowances in the primary market. These auctions started successfully in the last quarter of 2012 and shortly new auctions will take place in relation to allowances for 2013.
The CSE will intensify its efforts to better serve the investors and the market participants in an even more effective and productive way, in order for its securities market to become even more dynamic and competitive, serving new market needs more adequately.
The CSE, having received the messages of the times, is on its way to assisting the economy by providing new opportunities to raise capital through the listing of companies from the energy sector and from public services and companies that will be privatised, as well as large project companies that want to be listed, such as marinas and casinos.
