By Hamza Hendawi
LIVING up to its reputation of never a dull day, the Cyprus Stock Exchange wrote a new chapter in its crisis-filled history yesterday, slapping one-day suspensions on eight brokerages for their failure to meet deadlines for processing transactions.
Brokers from the eight firms, out of a total of 22 officially accredited to the market, only found out about the exchange’s action when their pre-opening orders were rejected by the system.
The suspensions, which covered such powerhouses as CISCO and CLR, were part of the exchange’s drive to discipline the market and avoid a repeat of the three closures it was forced to order since July in the face of a backlog of unfinished paperwork. But traders have consistently complained that the punitive measure was too harsh, applied too frequently, hurt their income, and undermined investor confidence.
They took particular exception to the exchange’s failure yesterday to give advance warning of the suspensions, and at least one broker — Louis Klappas of the brokerage of the same name — chose to make it known that he had had enough.
“They cannot continue to do this to us, they cannot!” he shouted on the floor upon learning of his firm’s surprise suspension.
A veteran trader whose firm is possibly the most frequently suspended, Klappas shouted scathing criticism of the exchange’s policies and his outburst of frustration and anger was received with obvious sympathy on the floor.
However, his heat-of-the-moment call for an impromptu strike in protest at the exchange’s action fell on deaf ears. Tension remained visible throughout the 60-minute session, though, and there was even talk that some brokers were considering legal action against the exchange.
Suspending brokerages for flouting paperwork deadlines has been a common occurrence on the Cyprus Stock Exchange for months now, but barring as many as eight firms on a single day is unusual.
Brokers have repeatedly accused the exchange of heavy-handedness and of not acknowledging its share of the blame for the market’s administrative crisis. Yesterday’s suspensions contributed to their frustration since they coincided with the absence from the floor, through suspension or voluntary withdrawal, of 18 companies.
The 18 are out to have time to update their share registers and to catch up on issuing share deeds. When announcing their suspension, the exchange had said that its action was linked to the introduction on November 29 of a new settlement system.
The Mondays target date passed with no sign of the new system, and brokers now say that the exchange may have had second thoughts about it and was looking at February for an entirely automated settlement system.
The suspension of brokerages and companies took its toll on trade yesterday, with volume at a lowly £20.28 million, well below the average since the market reopened for business on October 4 after a four-week closure.
The all-share index was off Monday’s all-time high, sliding by 1.39 points, or 0.16 per cent, to close at 847.91.
Bank shares, the dominant force of the market, fell and the sub-index of their key sector was down 1.66 per cent. Industrials and tourism companies also finished down, while insurance, investment and other companies closed up.
The Bank of Cyprus was down 32 cents at £12.27 and the Popular Bank closed at £16.44, down by 18.50 cents.
