The Cyprus Stock Exchange (CSE) is preparing the market for a 'big bang' by implementing a major deregulation which will free the fixed trading brokerage commissions and allow stockbrokers to offer and set their fees according to supply and demand. The shake-up could be implemented by July 1997, two years after Cyprus Stock Exchange Law was passed. At present, investors pay a 1% brokerage commission when buying securities, plus 0.15% stamp duty levied by the government, and a further 1% brokerage commission when selling their positions. The fee paid by the brokers to the CSE was most recently reduced to 1 per thousand or 10% of the amount the brokers collect from investors for both inside and outside transactions.
The CSE Council is still awaiting confirmation of its most recent proposals tabled before parliament amending the CSE Law. The amendments, first prepared in October 1996 and subsequently tabled by the Ministry of Finance before the parliament in February this year, aim to facilitate the listing of private companies on the exchange. The amendments mostly relate to changing the rules under which private companies can alter their capital structure before a listing, at present with a 12-month freezing period, and dealings and the holding of office by relatives of directors and owners.
The CSE is also in the process of setting up a computerized central register of all listed stocks to replace the registers held by listed companies, while all stock will be 'dematerialized' and the transfer of securities will be performed through an electronic book-entry system.
New moves are also under way to further boost the CSE, including a 5% cut in the corporation tax for new companies which plan to be listed on the CSE within a set period of time.