Listing of Collective Investment
Schemes on the Cyprus Stock Exchange
Promoting Cyprus as a Fund Jurisdiction Conference June 4, 2014 - Nicosia
Nicos Trypatsas
Chief Officer
Cyprus Stock Exchange - CSE
OVERVIEW OF PRESENTATION
 Introduction about the Cyprus Stock Exchange (CSE)
 Benefits of listing Funds on the CSE (Why list?)
 What kind of Funds can be listed on the CSE – Procedure in brief
(What Funds to list?)
 Obligations (Initial and On-going) - Fee structure (What is the
cost for listing?)
 Additional relevant services and products provided by the CSE
2
INTRODUCTION ABOUT THE
CYPRUS STOCK EXCHANGE
 Cyprus Stock Exchange operates as a
Regulated Market under MiFID and is
supervised by the Cyprus Securities
and Exchange Commission (CySEC).
 Also operates an MTF Market, the
Emerging Companies Market.
 CSE offers all types of core functions
in relation to securities:
 Listing and Trading of Securities.
 Clearing
and Settlement of
Transactions
(through
panEuropean Target 2 system).
 Central Securities Depository /
Registry Operations (Corporate
Actions,
OTC
Trades,
OffExchange Transactions, etc).
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INTRODUCTION ABOUT THE
CYPRUS STOCK EXCHANGE
 Simple listing procedures – Quick
and effective process / competitive
pricing policy / response to market
needs, continuous effort to reduce
bureaucracy.
 Common Platform with Athens
Exchange since October 2006 same software system for trading
and CSD [both Exchanges /
Depositories (CSDs) operate on an
autonomous
basis,
aiming
at
achieving synergies].
 Listed Securities: Shares, Corporate
Bonds, Government Bonds and
Treasury Bills, Units of Funds.
CSE’s Useful Statistics
 Members: 20
(7 Remote Members)
 Custodians: 14
(12 Remote Custodians)
 Nominated Advisors for the ECM
Market: 35
 Regulated Market:
102 Shares, 54 Bonds
 Emerging Companies Market:
18 Shares, 1 Bond
4
POTENTIAL CONTRIBUTION OF FUNDS TO THE
RECOVERY OF THE CYPRUS ECONOMY
 Collective Investment Schemes can contribute to the required fund
raising process for big projects (tourist infrastructure, projects for
economic development, in the energy sector, etc) and therefore
contribute in general, to the effort of attracting foreign investors.
 Substitute and / or complement the Banking Sector in financing
projects (therefore assist to overcome the well-known difficult
position at present).
 Can create new business opportunities, offer new employment
positions to qualified personnel and further develop the business
activity of professionals
such
as
accountants,
lawyers,
consultants, financial advisors, portfolio managers, etc.
 Contribute to strengthening the position of Cyprus, as a financial
center.
5
COLLECTIVE INVESTMENT SCHEMES ON THE CSE
CSE - Pioneered in relation to the establishment of the Funds industry
in Cyprus.
UCITS: Open-ended Undertakings for Collective Investment in
Transferable Securities:
 Common Funds (constituted under the Contract Law)
 Variable Capital Investment Companies (VCIC)
AIF * : Alternative Investment Funds – Relevant legislation is
expected to be passed shortly by the House of
Representatives
 Common Funds
 Variable or Fixed Capital Investments Companies
 Investment Limited Partnerships
CySec is the Competent Authority for granting their operation license.
* The AIF Law will replace the International Collective Investment Schemes’ Law of 1999/
2000 (where Central Bank is the competent Authority). CySEC will then become the single
licensing Authority. Also, based on a relevant initiative, a review in CSE’s Legislation will be
brought into effect shortly, providing for listing of AIFs on the CSE, (in addition to listing of
UCITs which is already feasible).
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LISTING OF FUNDS ON THE CYPRUS STOCK EXCHANGE
MARKETS/QUOTATION
 Tradable
 Market of Tradable
Collective Investment
Schemes
of
Non Non-Tradable  Market
Tradable
Collective
Investment Schemes
 Quoting
 Quoting of prices on
CSE’s
web-site,
without listing (17
funds,
159
subfunds)
UCITS
AIFs
(Expected within next
months)
 Shares of Variable
Capital Investment
Companies (VCIC)
 Shares
of
Variable
Capital
Investment
Companies addressed
to the public
 Units of Mutual
Funds
which
operate
as
Exchange Traded
Funds (ETFs)
 Units of Tradable AIFs
(ETFs on AIFs)
 Units of Common
Funds
 Units of AIFs (except
AIF’s
with
limited
number of persons,
specifically below 75).
AIF’s
with
limited
number of persons
(≤75) can be kept on a
special Registry of the
CSE.
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CSE’s NON-TRADABLE COLLECTIVE
INVESTMENT SCHEMES MARKET
Current status:
16 Funds:
The first ones to list on CSE:
 Hellas- Cyprus Recovery Fund Mutual Fund (single fund)
 SOL GMM Balanced Fund (single fund)
 GMM Funds (umbrella fund) - 14 investment compartments
Fund Manager: GMM Global Money Managers Ltd
Listing Date: 13 March 2014
Current Value of Fund: About €44,4 Million
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SPECIAL LISTING REQUIREMENTS
Listing Requirements for
Tradable Collective Investment
Schemes Market:
a) License
from
the
Competent
Authorities of the country of origin.
b) The Scheme’s assets should be at
least €200.000.
c) Appointment of at least one Market
Maker on a continuous basis, for the
purpose of sufficient trading.
d) The ETF may sell its units to the
public in Cyprus.
Listing Requirements for NonTradable Collective Investment
Schemes Market:
a) License from the Competent
Authorities of the country of origin.
b) The common fund’s assets or the
variable
capital
investment
company’s assets, should be at
least €200.000.
e) Submission of Registry of Unit
holders or Shareholders to the
Central Depository / Registry of the
CSE.
f) In case of an ETF, the index
provider must have granted the ETF
issuer a license, to legally use an
underlying index in the name of the
ETF.
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Methods of listing of Collective Investment Schemes
 IPO (initial public offering) and capital raising (Listing of
securities which have already been issued or will be issued, a
part of which could be offered through public offering before
the commencement of trading).
 Private placement (Placing securities which will be issued and
allocated prior to the Stock Exchange’s public announcement
for listing).
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ON-GOING OBLIGATIONS FOR LISTED FUNDS
(IN ACCORDANCE WITH CSE’S LEGISLATION - REGULATIONS)
i.
Daily reporting of NAV (Net Asset Value).
ii.
Announcement of any decisions, with regards to
suspension of fund units’ subscriptions, redemptions or
mergers.
iii.
Submission and publication of financial statements (annual
and semi-annual reports, quarterly statements).
iv. Submission and publication of any information with regards
to material changes of each fund, i.e. in the content of the
Prospectus and the Articles of Association.
11
LISTING FEES – BASIC AIM:
COMPETITIVE AND FLEXIBLE PRICING POLICY
Application Fee for Listing
 Listing on the Tradable
Investment Schemes Market.
Collective €1.000
 Listing on the Collective Investment €500
Schemes Market (Non-Tradable).
Annual Subscription
 Single Fund
€1.000 per fund
 Umbrella/ Multi-class fund(s)
€1.000 per fund
plus
€400
per
class/sub-fund
Annual Fee for the publication of prices through the CSE
Price Index and electronically through the CSE Website
 Publication of prices of the fund’s units.
€250 per fund
 Publication of prices of sub-fund’s units
€170 per sub fund
(up to 20 sub-funds).
 Publication of prices of sub-funds (above
€130 per sub fund
20 sub funds).
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FEES FOR CSE REGISTRY:
Enrollment of Fund on the Central Registry and
Depository of CSE:
0,01%
 Fee for the undertaking of Fund for listing on
the Tradable Funds Market (at the initial listing For the calculation of the above charge, the
total value of newly listed mutual funds on the
stage).
CSE is derived as the result of the nominal
value of a Fund.
Minimum charge €1.000
Maximum charge €10.000
 Fee for the undertaking of Fund for listing on
the Fund Market (non-tradable) (at the initial
listing stage).
Annual fee for keeping of Fund Register in the CSD

€500
Annual fee for the Tradable Funds Market.
€800 annually
Annual fee for the Funds Market (Nontradable).
Member Fees (for Tradable Market)
 Variable Charge
 Pre-agreed trades Charge
 Central Depository fee for transactions

€500 annually
0,0125% on the value of transactions
0,01% on the value of transaction
0,02% of the value of transaction
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COLLECTIVE INVESTMENT SCHEMES LISTED
ON OTHER STOCK EXCHANGES
An important market / sector:
 Luxembourg Stock Exchange - for 2013: Total 6,342 UCIs (Undertaking
for Collective Investments). Luxembourg is an established European
centre for Hedge Funds and other Specialist Funds.
 Irish Stock Exchange - for 2013: Total 2,352 [Funds (including umbrella
funds) + sub-funds]. About 300 new funds and sub-funds each year.
Hedge funds and property funds, among others, have been accepted
for listing.
 Malta Stock Exchange - for 2013: Total 58 (39 Funds- Primary Listed +
19 Funds - Secondary Listed).
 Borsa Italianna (since 2002), 650 ETF’s listed on ETF Plus Market –
Traded on the Stock Exchange like a share, the ETF tracks the reference
index through totally passive investment.
 Hong-Kong Exchange for 2013: Total 129 listed funds.
 Therefore, why also not in Cyprus, and on the Cyprus Stock Exchange?
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BENEFITS / ADVANTAGES FOR LICENSING AND
LISTING OF FUNDS IN CYPRUS AND ON THE CSE

Member-State of the European Union (EU) / Favorable geo-strategic and
financial position


Cyprus enjoys the benefits of the EU and Eurozone (harmonised
regulatory framework, Euro currency, free transfer of funds and offer
of securities, European passport for issuing securities etc)
Favorable tax regime:

Corporate tax of 12,5%

No capital gains tax (on securities’ transactions)

No fee imposed on securities’ transactions, since 02/01/14

Regarding dividends paid to non-tax residents of Cyprus (no
withholding tax)

Wide list of double tax treaties (over 40 countries)

Attractive incentives recently introduced for granting Cypriot
nationality (Cyprus Naturalisation Scheme) – covering among others,
investments in listed securities. (For possible use, consultation should
be received by tax-investment experts).

Disposal or sale of unit holdings in a fund, is exempt from taxation
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BENEFITS / ADVANTAGES FOR LICENSING AND
LISTING OF FUNDS IN CYPRUS AND ON THE CSE

High level of professionals: Lawyers, Accountants, Custodians, Tax and
Investment Advisors, Portfolio Managers, Jurisdiction for International
CIFs, etc (consist an adequate network ensuring compliance with all
legal / regulatory terms and requirements).

Local presence
institutions.

Effective supervision by Regulator.

Enhanced marketing potential from EU Passporting.
of
international
investments
firms
and
banking
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BENEFITS OF LISTING FUNDS ON THE CSE
 Listed on a Recognised and Regulated Stock Exchange.

Securities listed on the Regulated Market of CSE have been recognised
for tax purposes by the HMRC UK Tax Authority, since 2009.

CSE was also recognised-accepted by the Federal Financial Markets
Services (FFMS) of Russia, since 2010.

Full recognition and high-rating by Thomas Murray Organisation,
regarding the CSD of CSE / CSD successfully assessed against the
ESCB – CESR Recommendations.

Full and active member of FESE, ECSDA, WFE, ANNA (Associations of
Securities Exchanges, Depositories, etc).
 Potential increase of Fund’s investor base.
 Simple, quick listing procedures, minimum bureaucracy, flexibility and
effectiveness / Low cost procedures. CSE has experienced and specialist
personnel, to assist market participants and professionals in the industry.
17
ADVANTAGES PROVIDED BY THE LISTING ON THE CSE
 Funds can be more effectively marketed to investors. Can be eligible
investment proposition for particular investors e.g. pension schemes etc,
therefore overcome specific restrictions from investing in unlisted
securities, or in investments not listed on a recognised exchange.
 Visibility and transparency is provided to investors. This provides a better
public profile and prestige. Prices are posted on CSE’s site and are
reported to the market, (public at large), through the Exchange, by major
data vendors etc.
 Competitive pricing policy.
 Price mechanism is provided (either through NAV postings, or market
prices if traded). Fund managers require a publicly quoted securities
Exchange price, for their investments.
 Use of advanced infrastructure and technology of CSE.
All of the above are useful tools for marketing funds to investors
internationally and enhance fund raising opportunities. Also, Regulation
provides a better funds profile and credibility to investors.
18
OTHER USEFUL SERVICES PROVIDED BY THE CSE

Electronic on-line applications for Listings by issuers – via the CSE’s site
(www.cse.com.cy) – link (“On line Application Portal”).

Undertaking and keeping of registries of Funds (keeping of registries,
issuing certificates for unit holders, etc).

Undertaking and maintenance electronically of non-listed companies
registries of shareholders on CSE’s Central Registry / Depository.

Issuance of International Securities Codes, ISIN and CIF Codes – CSE
acts as Official National Representative for Cyprus, as appointed by
Association of National Numbering Agencies.

Omnibus Accounts
Custodians.

Officially Appointed Mechanism for the storage and dissemination of
Regulated Information (OAM service).

Use of Electronic Signatures (innovative in Cyprus by CSE), for
disseminating – receiving listed issuers’ announcements. Also, plan to
extend the use of Electronic Signatures for on-line applications for listing.
for
registering
listed
securities,
operated
by
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ADDITIONAL RELEVANT SERVICES AND
PRODUCTS PROVIDED BY THE CSE:

Over-the-Counter transactions for listed securities.

Listing of Depositary Receipts.

Listing of Corporate Bonds, without listing of share capital (provided that
is not convertible into share capital).

CSE has provided recently to Government, services regarding the new
Retail Bond issued.

Recent update of CSE’s website – more user friendly, readily accessible
from all modern PC’s, smartphones, etc.

Data Recovery Services of CIF’s, Brokerage Houses.
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Thank you for your attention !
Contact details:
Mr. Nicos Trypatsas, Chief Officer
Mrs Maria Petsa, Head of Listing and Market Division
www.cse.com.cy
email: info@cse.com.cy
Phone: +357 22712300, +357 22712373