By Hamza Hendawi
SHARE prices continued to drop yesterday, but the crash that some expected as a result of the growing and increasingly bitter row between brokers and the Cyprus Stock Exchange failed to materialise.
The all-share index slipped just 2.14 points to close at 558.94 on a volume of £16.14 million, well over Tuesday’s £9.25 million but still below average. Of nearly 7,000 ordered entered by brokers in the pre-opening trade, 3,107 were matched.
For the second consecutive day, the banking blue-chips took the brunt of the drop, the fourth in as many sessions, with both market heavyweights Bank of Cyprus and Popular Bank finishing in negative territory. They closed at £10.45 and £12.02 respectively.
Hellenic Bank, however, ended a two-session skid, closing slightly up at £4.52.
Yesterday’s slight drop followed reports on Tuesday night of plans by the exchange to banish up to 16 brokerages from the floor yesterday for breaching a new rule penalising brokerages that carry out more than six problematic transactions during a single session.
The suspension of so many brokerages — there are only 23 accredited with the exchange — would have caused the market to take a plunge. But in the event, only one brokerage was barred from yesterday’s session. Ironically, it was the Louis Clappas Brokerage House, the firm of Brokers’s Association Chairman Louis Clappas.
The Brokers’ Association held an emergency meeting on Tuesday night following the suspension of the eight brokerages, a move which most brokers took to be a proof of the exchange’s bullying and heavy-handed policies.
A statement issued later lambasted the exchange’s council for failing to run the exchange smoothly. They also criticised the market’s action against the brokerages, describing it as unacceptable, unfair, humiliating and damaging to the credibility of the market.
The statement, which used unusually strong language, said the exchange had been slow in adopting a new system which would automate ownership transfers and eliminate the mountain of paperwork currently burdening the exchange.
Exchange chairman Dinos Papadopoulos, in remarks made yesterday, served notice that the bourse had no plans to soften its policies.
The exchange must operate according to the law or not operate at all, he said. “The law will be implemented,” he declared.
He also dismissed as nonsense the notion that the exchange was going out of its way to punish brokerages and said preparations were under way to set up an automated central depository, something that brokers believe would be the best solution to the market’s mounting administrative problems.
He said mathematics dictated that if the rules and regulations were not strictly observed by brokerages and public companies alike, the market would undoubtedly have to close its doors again.
The market has closed its doors three times since July to allow brokerages to tackle a mountain of unprocessed transactions, but the blame for the backlog has recently shifter to listed companies, with a decision earlier this week by the exchange to delist the titles of 14 public companies if they failed to clear a backlog of share issues by tomorrow.
The 14 together represent more than 70 per cent of the market’s capitalisation, which, excluding government and corporate bonds, stood at £6.9 billion at the end of August. The 14 include the Bank of Cyprus, Popular Bank, KEO, Cyprus Airways, Orphanides Supermarkets and Nicos Shacolas’ twin giant retailers Woolworth and CTC.
The Shacolas companies, however, issued separate statements yesterday categorically denying they were behind in issuing certificates to shareholders and demanding that the exchange make that clear to investors.
