The first fundamental change to affect investors when the Cyprus Stock Exchange and the Athens Stock Exchange launch their common trading platform in the last quarter of 2005 will be the shift to a euro based transaction system, said CSE Chairman Akis Kleanthous.
Speaking at a news conference to announce details of the deal signed in Greece on Tuesday, Kleanthous explained that while local equity prices will be quoted in Cyprus pounds, but the transactions will be made in euros.
“We have received the backing of the Finance Ministry and the Central Bank to make stock transactions in euros, which will be a good way to bring Cyprus closer to euro-adoption,” said Kleanthous, adding that the Exchange has held talks with the banks to apply very reasonable charges to facilitate the move.
CSE listed companies may also need to change their reporting currency and start reporting in euros.
As part of the drive to launch a common trading platform with the ASE, the CSE has agreed to dump its Australian made trading system and instead adopt the Greek OASIS trading system.
Authorities from both sides have also agreed to facilitate the entry of the members (brokers) from one country to the other. “A Cypriot financial services firm will be given preferential access to the Greek market and vice-versa,” said Kleanthous, revealing that for the first year, both exchanges will waive membership and annual fees.
Kleanthous also revealed that the Greek Capital Markets Commission will rush a bill to the Greek parliament soon to amend the law on the compensation fund, to facilitate Cypriot brokers to join the fund at very reasonable rates, but without giving details.
“I cannot tell you the level of entry reserved for Cypriot brokers, but its very reasonable and will be affordable,” said Kleanthous.
The issue of how Cypriot brokers would join the compensation fund was a major issue, since according to reports, the majority could not afford the EUR 5 mln requested by the Greek authorities to join the fund.
Kleanthous said procedures will be simplified and efforts will intensify to harmonise the rules of the CSE with those of the ASE. For example, the trading time of the Main market stocks may be extended to coincide with that of the ASE, which starts at 11.00 and ends at 16.00 hours daily.
Once the whole process is operational, a Cypriot broker will be able to fill in trades on Greek stocks, while a Greek broker will be able to trade in CSE listed titles, all on the same terminal.
CLEARING
Cyprus will also dump its current pre-validation clearing system and instead shift to the Greek T+3 clearing system, which means the CSE will rush amendments to its laws that among others will allow stock lending and stock shorting to harmonise with the Greek clearing system.
Efforts are under way for Greek institutional investors to open accounts and clear trades on the CSE directly through their SAT clearing system.
“The idea is to have one trading market and make the whole process as easy and investor-friendly as possible.” said Kleanthous, aiming to allow Cyprus listed firms access to Greek and foreign institutional funds.
“We want to change the current mix of 90% private investors and 10% institutional of the CSE into at least 50-50.”
LOTS OF IFS
Kleanthous, flanked by CSE Director General Nontas Metaxas said the CSE has drawn up a realistic timetable as to how the whole process may be implemented, but reminded that it needs the speedy cooperation of the House and the authorities in general.
“We have already informed members of the House Finance Committee who are aware of where we are going and we have their consent that amendments to the laws will be done quickly, to allow us to reach our target of the launch of a common trading platform by the end of the last quarter of 2005,” said Kleanthous.
There are also plans to set up one unified index to comprise the major titles of both exchanges, with CSE officials having proposed the MEDEX name, but as yet no decision has been reached.
Commenting on the dual listing of BOC, Kleanthous said once the common trading platform takes off, then there will be no need for the likes of BOC to maintain a dual listing on both exchanges.
