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Now that the dust seems to have settled with tougher controls from the Securities and Exchange Commission regarding forex companies trading in third countries, it’s time that our stock exchange retakes the lead in efforts to revive Cyprus as a premium financial services centre.
So far, we have been subjected to harsh and often humiliating criticism from fellow EU jurisdictions that want to pounce on any opportunity for some Cyprus-bashing. The banking sector is one we should not be too proud of as what befell upon us was in great part of our own doing.
CySEC has issued a new decree calling for all of the 140-or-so Cyprus Investment Firms to stop soliciting clients from other non-EU jurisdictions and ensure they apply to the local authorities if they plan to have a presence there. Some say this is good, others call it anathema. Whatever the outcome, the forex business will continue to thrive with some operators finding ingenious ways to interpret regulations and get business from the lucrative and often unregulated markets where some big spenders are based. After all, what’s good for a Cyprus forex company is good for the economy. Isn’t it?
But we should not rest on our laurels as the forex industry is a rapidly developing one where the rules of the game change by the day if not hour or minute.
Offering stability and long-term prospects, the Cyprus Stock Exchange should come out of hibernation and look to attract major institutionals based on our reliability, clarity of regulations and simplicity in taxation.
The best and fastest way to become competitive is for the CSE to implement its plans to introduce derivatives, as soon as possible.
The competent people at the Exchange have a plan in place that could prepare the platform by November and the first derivatives listed as early as January 2014.
To begin with, the best candidate is the Bank of Cyprus, whose new stocks should be listed some time in early October. By offering Exchange-traded derivatives (ETDs) such as forwards, futures, options, binary options, warrants, swaps, etc., the CSE could join the ranks of some of the ‘big boys’ in the market, such as Korea, Eurex, Chicago that account for the lion’s share of the global turnover estimated at about 600-700 trln dollars.
Once the government also gets off its back side and moves on with the privatisation of some of its biggest state-owned utilities and enterprises, then they too could offer derivatives which would make them far more attractive to foreign investors.
So, where do we start from?
