Cyprus: Country and Foreign Investment
The Stock Exchange began operations only in March 1996; it is governed by a Stock Exchange Council.
By October 2001, the market was flirting with the 100 level, having fallen precipitously from 800 at the peak of a short-lived boom in 1999. During 2002 and 2003 the market continued a long-term decline, with brief spurts of growth, reaching a level of 80 in late 2003. In 2004 and 2005 the market remained becalmed, with the index unable to break out of the range 80 - 90.
The Government has toyed with various schemes meant to underpin the market, and litigation rumbles on in the courts over compensation for investors caught out when the market crashed, but it's probably still too soon to imagine that the party will start all over again, given the attractions of the real estate market. Alongside its trading problems, and partly as a result of them, the CSE also has major structural and governance problems, with incessant disagreements between stockbrokers, investors' representatives, the government and the CSE itself.
In March 2002 a co-operation agreement was announced between the Cyprus Stock Exchange (CSE) and the Athens Stock Exchange (ASE), which included provision for the setting up of a Cyprus derivatives market. In May, 2003, the CSE announced its participation in the FTSE Med 100 Index which was officially launched in June of that year. It consisted of 100 stocks from the Athens, Tel Aviv and Cyprus stock exchanges (weighted 56.55%, 42.55% and 0.89% respectively). Initially, five Cypriot firms made up the country's representation on the exchange, and the CSE had a guarantee that the number of Cyprus stocks would not fall below this level. The companies represented were Bank of Cyprus, Laiki Bank, Hellenic Bank, Louis Cruise Lines and Tsokkos Hotels.
In June, 2004, the CSE announced a package of new measures that it hoped would revive the fortunes of the institution by bringing it into line with internationally accepted practices and European Union Directives. Under the plan, the bourse split into three separate markets in 2005: the Main, Parallel and Alternative markets; in addition, there are separate markets for government and corporate bonds and mutual funds.
In May, 2006, the CSE and the Athens Stock Exchange (ASE) began the testing of a new common trading platform.
At the end of June 2007, market capitalisation of shares (excluding Investment Companies Market) reached EUR19.49 billion. In February 2010, total capitalisation across all markets was given as just under EUR6.3bn.
In June 2009 the CSE was designated by the UK's tax authority, HM Revenue and Customs, as a recognised stock exchange. Securities admitted to trading and listed on the EU regulated markets of the Cyprus Stock Exchange (those regulated under Title III of the Markets in Financial Instruments Directive (MiFID) will meet the HMRC interpretation of ‘listed’ as set out in section 1005.3a and b Income Tax Act 2007 for tax purposes.
The CSE has been expanding its product offering in recent months, with the launch of the Emerging Companies Market in March 2010, and the commencement of over-the-counter transactions in July that year. The Emerging Companies Market, or NEA, began trading with the listing of four companies, including Executive S.A., Phone Marketing S.A., Cyprus Limni Resorts and Golfcourses plc, and Constantinou Bros Asset Management plc.
CSE Chairman George Koufaris told a press conference in July 2010 that the exchange would continue to play a central role in the development of Cyprus as a financial centre, announcing at the same time that the bourse was working on new initiatives to "become a more dynamic and competitive market" in regional terms.
The combined profits of all companies listed on the Cyprus Stock Exchange (CSE) fell by EUR249m or 39% to EUR388.73m in 2009 (2008: EUR637.74m), according to data compiled by the Financial Mirror.
The Cyprus Stock Exchange in cooperation with the European Central Bank is in the process of implementing the T2S project in Cyprus.
T2S is an initiative of the European Central Bank starting from 2014 and includes the introduction of a technical single service, which will serve the settlement of both the cross-border and the domestic transactions in Central Bank money. Depositories of the euro area as well as depositories of European countries outside the euro area will participate in the service with the support of their Central Bank and will cover all dematerialized securities: shares, bonds, etc, giving access for the settlement of the clearing instructions against any currency available.
The CSE signed the Memorandum of Understanding (signed by 30 Depositories) in July 2008, which covers mostly the preparation and the negotiation of the compatible arrangements that cover the development and the operation of the project.