By Hamza Hendawi
BROKERS were up in arms yesterday against a decision by the Cyprus Stock Exchange to fine them for delays in processing transactions during the boom months of the summer.
One broker, Christodoulos Ellinas of Share Link Securities, said the brokers would take the exchange to court over the issue, and described the bourse’s decision to fine them as vindictive.
Other brokers, however, said Ellinas’ threat to take the exchange to court may not reflect the intention of all brokers.
His warning, however, plunged relations between the island’s 50-plus brokers and the exchange to a new low, only days before the market was scheduled to reopen on Monday after a four-week closure.
The closure, the third since late July, was agreed by the exchange to allow brokerages to deal with thousands of unprocessed transactions. Brokers have said the backlog was threatening to cause the market’s collapse.
Dinos Papadopoulos, the exchange’s chairman, was quoted as saying yesterday that he could not rule out the market not reopening on October 4 as scheduled.
The government says that reopening the market on October 4 is imperative.
The exchange said after a meeting on Monday night that it would fine brokers for delayed paperwork retroactively from September 20. Money owed to the exchange in such fines currently stands at £2.5 million, according to one estimate.
The brokers, who have been accused by small investors in recent weeks of being arrogant and inaccessible, say they cannot be held solely responsible for the backlog and accuse the exchange of exaggerating the size of the problem.
The backlog was created in part by the introduction of a fully-automated trading system in May and the arrival of thousands of new investors seeking to make a quick profit in a bullish market. The market’s gains on the year stand at a staggering 360 per cent, placing it among the world’s best performing bourses this year.
“The stock exchange’s great tolerance was eclipsed by the brokers, who refuse to observe the law,” said Nicholas Karydas, a member of the exchange’s council. “Imposing the fines was the least we could have done in response to the brokers not honouring their end of the deal,” he said.
The exchange’s tough stand on the delays was swiftly welcomed by the association of stock exchange investors. They also gave a warm reception to the exchange’s proposal for investors to do away with brokers’ services and trade among themselves. The proposal, which the exchange inconclusively discussed on Monday night, already enjoys the support of several House deputies.
