Nicos TrypatsasChief OfficerCyprus Stock Exchange - CSE

Listing of Collective Investment Schemes on the Cyprus Stock

Exchange Promoting Cyprus as a Fund Jurisdiction

Conference - June 4, 2014 - Nicosia

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 CSE2

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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 pan-European Target 2 system).

Central Securities Depository / Registry Operations (Corporate Actions, OTC Trades, Off-Exchange Transactions, etc).

INTRODUCTION ABOUT THE CYPRUS STOCK EXCHANGE

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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.

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

CSE’s Useful Statistics

INTRODUCTION ABOUT THE CYPRUS STOCK EXCHANGE

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.

POTENTIAL CONTRIBUTION OF FUNDS TO THE RECOVERY OF THE CYPRUS ECONOMY

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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).

COLLECTIVE INVESTMENT SCHEMES ON THE CSE

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LISTING OF FUNDS ON THE CYPRUS STOCK EXCHANGE

Shares of Variable Capital Investment Companies (VCIC)

Units of Mutual Funds which operate as Exchange Traded Funds (ETFs)

Units of Common Funds

Market of Tradable Collective Investment Schemes

Market of Non-Tradable Collective Investment Schemes

Quoting of prices on CSE’s web-site, without listing (17 funds, 159 sub-funds)

MARKETS/QUOTATION AIFs (Expected within next

months)

Shares of Variable Capital Investment Companies addressed to the public

Units of Tradable AIFs (ETFs on AIFs)

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. 7

UCITS

Tradable

Non-Tradable

Quoting

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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

CSE’s NON-TRADABLE COLLECTIVE INVESTMENT SCHEMES MARKET

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.

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.

Listing Requirements for Non-Tradable 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.

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SPECIAL LISTING REQUIREMENTS

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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Methods of listing of Collective Investment Schemes

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.

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ON-GOING OBLIGATIONS FOR LISTED FUNDS (IN ACCORDANCE WITH CSE’S LEGISLATION - REGULATIONS)

LISTING FEES – BASIC AIM: COMPETITIVE AND FLEXIBLE PRICING

POLICYApplication Fee for ListingListing on the Tradable Collective Investment Schemes Market.Listing on the Collective Investment Schemes Market (Non-Tradable).

€1.000

€500

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

(up to 20 sub-funds).€170 per sub fund

Publication of prices of sub-funds (above 20 sub funds).

€130 per sub fund

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FEES FOR CSE REGISTRY:

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Enrollment of Fund on the Central Registry and Depository of CSE:

Fee for the undertaking of Fund for listing on the Tradable Funds Market (at the initial listing stage).

Fee for the undertaking of Fund for listing on the Fund Market (non-tradable) (at the initial listing stage).

0,01%

For the calculation of the above charge, the total value of newly listed mutual funds on the CSE is derived as the result of the nominal value of a Fund.

Minimum charge €1.000

Maximum charge €10.000

 

€500

Annual fee for keeping of Fund Register in the CSD

 

Annual fee for the Tradable Funds Market. €800 annually

Annual fee for the Funds Market (Non-tradable).

€500 annually

Member Fees (for Tradable Market)   Variable Charge 0,0125% on the value of transactions Pre-agreed trades Charge Central Depository fee for transactions

0,01% on the value of transaction0,02% of the value of transaction

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?

COLLECTIVE INVESTMENT SCHEMES LISTED ON OTHER STOCK EXCHANGES

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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

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 of international investments firms and banking institutions.

Effective supervision by Regulator.

Enhanced marketing potential from EU Passporting.

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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.

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BENEFITS OF LISTING FUNDS 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

ADVANTAGES PROVIDED BY THE LISTING ON 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 for registering listed securities, operated by 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.

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OTHER USEFUL SERVICES 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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ADDITIONAL RELEVANT SERVICES AND PRODUCTS PROVIDED BY THE CSE:

Thank you for your attention !

Contact details:

Mr. Nicos Trypatsas, Chief OfficerMrs Maria Petsa, Head of Listing and Market Division

www.cse.com.cyemail: info@cse.com.cy

Phone: +357 22712300, +357 22712373