By Jean Christou
THE FINANCE Minister has requested an early decision on the Cyprus Stock Exchange (CSE) transfer to the IMC, a move bourse chief Nondas Metaxas said yesterday was of vital importance.
Responding to journalists’ questions on the controversial move yesterday, Finance Minister Takis Klerides said he had asked the Committee for Building Relaxations, which is examining the issue, for an early decision on the matter.
“I have pleaded with the committee to take a decision as soon as possible so their suggestions will be tabled to the cabinet,” Klerides said.
“I’m not saying the committee has been delaying but because it’s an urgent matter. I except their work will be completed soon so that the cabinet will be able to take its decision.”
The CSE needs planning relaxation to move to the Latsia IMC site, which is situated in an industrial area.
If the relaxations committee does not allow the move, Klerides said the CSE would have to find an alternative site. The exchange has already budgeted for a move.
The IMC option is vehemently opposed by Nicosia Mayor Lellos Demetriades, who says the bourse should remain in central Nicosia and threatens to take the matter to the Supreme Court if the cabinet allows the move.
Relocating from their cramped premises is a top priority for the CSE board, not only for their own comfort, but because it is one of the factors which will be taken into account by the European Federation of Stock Markets to which is has applied for associate membership.
A three-man delegation from the federation will pay a one-day visit to the island on Friday to reassess the CSE application for membership.
“The federation is not interested in our address,” Metaxas told the Mail yesterday. “But they are interested in making sure the premises from where we operate are acceptable for allowing the exchange to perform its daily tasks.”
He said it would take the CSE several weeks to move, but he could not say at this stage whether the bourse would suspend trading for any period of time.
Metaxas said the CSE board had wanted to move before the delegation arrived. “They saw the problems we were facing when they came last November and now the problems have worsened,” he said.
He said more people had been hired and more equipment bought due to the rapid expansion of the bourse over the past five years. “Obviously there is no room for more people and hardware,” he said. “To solve this issue is of vital importance.”
Other issues of interest to the European delegation are Cyprus` compliance with EU stock exchange regulations and directives, problems within the economy that might affect the market, and any other problems, which might hinder the operation of the CSE.
Federation delegates shelved the CSE’s application after the last visit.
“Last time when they came it was November 1999 when we had the problem of the uncleared titles and they said they would not make a recommendation at that stage,” Metaxas said. “Well we solved the problem and we notified them that we had and here we are.”
The federation is also interested in the economy and its effects on the market such as the liberalisation of interest rates, exchange control and privatisation.
Associate membership to the European federation would give the CSE official recognition as a European stock exchange, some influence in decision-making and access to direct information on alliances and developments on European markets.
“As far as the EU is concerned, our legislation is compatible with EU directives, but yes, there are areas which need improvement,” Metaxas said. “Also there are gaps in the legislation and we have many suggestions, some of which have already found their way to parliament while others are still being studied.”
On the sometimes-incomprehensible movement of stocks on the CSE, Metaxas said the bourse was not any different from others around the world.
“The stock exchange is affected by a general psychology and many movements in the price of stocks are not explained by economic fundamentals but by the psychology of the investor,” he said.
“If only economic fundamentals determined the price of stocks, then the exchanges would be very easily predicted, which they are not. There are psychological fundamentals that influence investors and in a small country like Cyprus they become more important.”
