Nondas Cl. Metaxas - Cyprus Profile

Insights | 23 July 2014 | Cyprus Stock Exchange

Nondas Cl. Metaxas, Director General of the Cyprus Stock Exchange

Fund listing on the Cyprus Stock Exchange (CSE) is set to increase with the new Alternative Investment Fund legislation finally in place, says Director General of the CSE Nondas Metaxas.

Cyprus is currently going through challenging economic times, how could a flourishing fund industry aid recovery?

Cyprus is still experiencing difficult economic times and the Cyprus Stock Exchange (CSE) is intensifying its efforts to promote new initiatives to help the country overcome this challenging economic situation and contribute to the rebuilding of the economy. The fund industry is one of the initiatives that the CSE has focused its efforts on. We have included this in our strategy since 1999, with the aim to extend the range of products offered to investors and consequently facilitate the further development of the financial market in Cyprus. The development and promotion of the funds industry in Cyprus is expected to bring significant benefits to the economy as well as the Cyprus Stock Exchange. Collective Investment Funds can contribute to the required fund raising process of major projects, as well as aid job creation and the expansion of partnerships with variousprofessional investment groups. Funds like these could contribute to the efforts of attracting further investments into Cyprus and also substitute and complement the banking sector in financing projects. These aspects would greatly support the efforts to overcome today’s difficult economic climate.

What types of funds can be listed on the Cyprus Stock Exchange (CSE)?

The sector of the collective investment schemes is divided into two main categories: Undertakings for Collective Investment in Transferable Securities known as UCITS and Alternative Investment Funds, known as AIFs.  The listing of UCITS units or shares, international collective non-private investment schemes (ICIS) and various other types of units of collective non-private investment schemes on the Cyprus Stock Exchange became possible in 2012, following a relevant amendment of the Cyprus Stock Exchange Law.  The exchange amended its regulatory decisions to cover the listing process of these investment schemes (with or without trading) in December 2013. In regard to Alternative Investment Funds, it is important to note that Cyprus’ new fund framework has now been passed, which will allow the listing and trading in the regulated market for shares of variable capital investment companies addressed to the public, units of tradable AIFs (Exchange Traded Funds (ETFs) on AIFs), as well as the listing without trading of units of AIFs.

What are the key advantages of listing a fund on the CSE?

A CSE listing provides a number of advantages for fund managers and investors. The Cyprus Stock Exchange is a European regulated and recognised exchange, which provides a better fund profile and credibility to investors. It has fast and simple listing procedures with minimum bureaucracy, advanced technology, infrastructure, flexibility and effectiveness at low-cost. We have a competitive pricing policy for market participants and investors, with the potential to increase a fund’s investor base. Funds that obtain a listing can be more effectively marketed to investors and can therefore be considered as an eligible investment proposition for particular institutional investors, overcoming specific restrictions from investing in non-listed securities, or in investments that are not listed on a recognised exchange.

A CSE listing also provides visibility and transparency to investors with the prices of listed funds posted on the CSE’s website and reported to the market through the Exchange by major data vendors. Price mechanism is provided, either through net asset value (NAV) postings or market prices, if traded. This parameter is important for fund managers who require a publicly quoted Securities Exchange price for their investments. Our advantageous tax regime is another benefit, with no capital gains tax imposed on securities’ transactions and since the beginning of 2014 no fee is imposed on securities’ transactions.

Moreover, fund managers and investors can enjoy several other advantages Cyprus has to offer, such as its ideal location, favourable overall tax regime, effective regulatory supervision and investor protection, high-level services by professionals and last, but not least, the enhanced marketing potential in relation to EU passporting in financial markets.

How many and what types of funds are currently listed on the CSE?

The Cyprus Stock Exchange recently (March 2014) accepted its first listings of 16 non-negotiated Collective Investment Funds – more specifically, two Mutual Funds of the single schemes type and 14 umbrella schemes. I expect this is only the beginning of this promising CSE initiative and that a number of other funds will follow, covering the entire framework of the dynamic fund business.

Are you seeing an increase in interest in listing on the CSE? If so, from where and what types of funds?

Since the beginning of 2014, with the amendment of CSE’s regulatory decisions covering the listing process of investment schemes (with or without trading), we received a number of enquiries from fund managers interested in listing their funds on the exchange. It seems that the greater interest for listing will be in Alternative Investment Funds, and now that the new fund legislation has been passed, we expect fund listing on the CSE to increase.

What are the listing requirements of the CSE?

To list in the tradable Collective Investment Schemes Market, the key requirements are to obtain a license from the competent authorities of the country of origin, assets of at least €200,000 and the appointment of at least one Market Maker on a continuous basis, for the purpose of sufficient trading. Also required is a submission of the registry of unit holders or shareholders to the central depository of the CSE. In the case of an Exchange Traded Fund (ETF), the index provider must have granted the ETF issuer a license, to legally use an underlying index in the name of the ETF.

The key listing requirements for the Non-Tradable Collective Investment Schemes market are to have a license from the competent authorities of the country of origin and the common fund’s assets, or the variable capital investment company’s assets, must be at least €200,000.

What are the listing fees and how competitive are they compared to other exchanges?

CSE’s listing fees in regard to Collective Investment Schemes are considered very competitive. The listing fee or application fee for the Tradable Collective Investment Schemes is €1,000 and for Non-Tradable Collective Investment Schemes €500. In addition to the application fee, there is an annual subscription fee of €1,000 for single funds and €1,000 for umbrella funds plus €400 per class or sub-fund.

How do you see the fund industry and the CSE developing over the next five years?

I believe the fund industry in Cyprus will grow and that its development can bring significant benefits to the Cyprus economy. The CSE has been significantly affected by the recent financial crisis, however if this new sector is utilised correctly by market participants, it can play a vital role in directing our economy back to growth and assist Cyprus to advance as a regional financial center.

Another related development in this direction is the introduction of Islamic financial instruments. The CSE warmly welcomes these types of instruments and is taking steps to promote their listing. There have already been a number of meetings and discussion between the CSE, various experts, the Cyprus Securities and Exchange Committee, the Ministry of Finance, Invest Cyprus and the  Cyprus Investment Fund Association on these matters.  We unanimously see the benefit of the efforts to develop this sector, efforts which will intensify in the future.

The Exchange will continue diversifying its activities and services as well as our efforts to enhance Cyprus’ competitiveness and accessibility for foreign investors. We are determined to establish the CSE and its services as an integral part of the country’s growth strategy and hope to contribute to the efforts of strengthening Cyprus’ role as both a regional business hub and a financial centre.


Nondas Metaxas is the Director General – Chief Executive Officer (CEO) of the Cyprus Stock Exchange. He was the head of the Over-The-Counter market of the Cyprus Chamber of Commerce and Industry form 1979 to 1985, a member of the first council of the Cyprus Stock Exchange (1993-1995) and is a member of the board of directors of Association of National Numbering Agencies (ANNA). Metaxas has been a board member of the Federation of the European Securities Exchanges (FESE) and the chairman of the Budget and Audit Committee of FESE, as well as number of other boards and committees. He has taught at theUniversity of Cyprus, the Postgraduate Diploma of the Mediterranean Institute of Management and the Haigazian University of Beirut among other institutions and has written extensively on capital market issues, marketing and export promotion.

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