Nicos Trypatsas Chief Officer Cyprus Stock Exchange - CSE Listing of Collective Investment Schemes...

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Nicos Trypatsas Chief Officer Cyprus Stock Exchange - CSE Listing of Collective Investment Schemes on the Cyprus Stock Exchange Promoting Cyprus as a Fund Jurisdiction Conference - June 4, 2014 - Nicosia Slide 2 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 Slide 3 3 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 Slide 4 4 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 CSEs Useful Statistics INTRODUCTION ABOUT THE CYPRUS STOCK EXCHANGE Slide 5 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 5 Slide 6 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 CSEs 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 6 Slide 7 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 CSEs 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 AIFs with limited number of persons, specifically below 75). AIFs with limited number of persons (75) can be kept on a special Registry of the CSE. 7 UCITS Tradable Non-Tradable Quoting Slide 8 8 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 CSEs NON-TRADABLE COLLECTIVE INVESTMENT SCHEMES MARKET Slide 9 Listing Requirements for Tradable Collective Investment Schemes Market: a)License from the Competent Authorities of the country of origin. b)The Schemes 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 funds assets or the variable capital investment companys assets, should be at least 200.000. 9 SPECIAL LISTING REQUIREMENTS Slide 10 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 Exchanges public announcement for listing). 10 Methods of listing of Collective Investment Schemes Slide 11 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 ON-GOING OBLIGATIONS FOR LISTED FUNDS (IN ACCORDANCE WITH CSES LEGISLATION - REGULATIONS) Slide 12 LISTING FEES BASIC AIM: COMPETITIVE AND FLEXIBLE PRICING POLICY Application Fee for Listing Listing on the Tradable Collective Investment Schemes Market. Listing on the Collective Investment Schemes Market (Non-Tradable). 1.000 500 Annual Subscription Single Fund1.000 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 funds units. 250 per fund Publication of prices of sub-funds units (up to 20 sub-funds). 170 per sub fund Publication of prices of sub-funds (above 20 sub funds). 130 per sub fund 12 Slide 13 FEES FOR CSE REGISTRY: 13 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 transaction 0,02% of the value of transaction Slide 14 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 ETFs 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 14 Slide 15 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 securitie