AN EXTENSIVE report into the Cyprus Stock Exchange (CSE) has recommended partial privatisation and liberalisation of its operating framework as “essential” to the bourse staying competitive on a global level.
Over the past year, the CSE has fallen around 700 points since its 1999 peak, representing some £6 billion in value, with the government hard-pressed to seek ways of resurrecting the market and appeasing angry investors.
Parliament has already adopted number of measures aimed at boosting the market, but to little effect.
Over the past week, however, investors seemed more confident, with the CSE all-share index breaking the 200-mark.
The 750-page report, which took a team of Greek experts two months to complete, focused on the CSE’s workings and recommended lifting “restrictions hindering the bourse’s growth.”
Dr. Demetris Tsimbanoulis, who heads the team, told a news conference yesterday that the CSE needed “to keep up with global developments in the capital market that are rapidly moving along. “This is an ongoing process,” he added. “Three years from now, perhaps an entirely different approach will be needed. That is why we need to move fast.”
Among the proposals made to the Securities and Exchange Commission (SEC), the CSE’s watchdog body, were the need to pass legislation regulating which companies are allowed to offer investment services and regulations relating to the issuing of listed companies’ prospectuses. Another major issue was the need for full computerisation of the CSE’s activities, ensuring smooth operation.
“It is very important that the SEC be given increased powers to issue sanctions on investment companies, because that will truly discourage foul play,” Tsimbanoulis noted, adding that currently investors who have a grievance have to go through an arduous and time-consuming legal process to gain redress.
Small investors have long been complaining their lifetime savings have been squandered away by schemes orchestrated by some investment companies. Recently the Attorney-general started taking legal steps to force companies to return money to investors wanting to pull out of pending listings.
Finance Minister Takis Klerides yesterday clearly backed the experts’ recommendations, noting that “now we are faced with the hard part – instituting legislation governing the functioning and control of companies offering investment services.” The Finance Minister denied suggestions the move was an election campaign gimmick.
He said new laws would be passed on mergers and acquisitions, private placements and public offerings, prospectuses and, possibly, setting up a secondary market for trading in shares from neighbouring and Mediterranean countries. The minister did not, however, elaborate on how these might be implemented.
Klerides added that the report would help identify the CSE’s problems and compare it to bourses in other countries. “Cyprus is, after all, acceding to the EU, and ultimately the CSE will face fierce competition.”
Despite conceding there was “a lot of work to be done,” Tsimbanoulis said he was optimistic about the market’s future, “provided there is the will to go ahead with substantive changes.”
The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.
