Capital Markets

Regional Investment Gateway

Cyprus aims to establish itself as a key listing jurisdiction for both the EU capital market and emerging regional markets. Although the Cyprus Stock Exchange is still small compared to many of its fellow EU exchanges, among its plans is to open new service lines to satisfy market demands and attract more participants.

Reaching a healthy GDP growth of almost 4% in 2018, the Cyprus economy has seen some of the strongest growth rates in the EU over the last few years. Investment has been pouring into multiple sectors for the last five years with 2014-2016 recording €9.1 billion in FDI inflows, and the country’s official return to investment grade in 2018 has further boosted investor confidence in the small Eastern Mediterranean country.

However, these positive economic effects are yet to filter into the securities market. Leveraging on its geostrategic position, EU membership and cost-effective operating environment, the Cyprus capital market’s landscape has seen progress over the last few years, supported by the country’s strong professional services sector and a growing investment funds industry. However, the 2013 financial crisis has no doubt left its mark with many market participants still recovering from the lean years and fighting their way back to sustainable growth.

Nonetheless, the country’s appeal is steadily growing as a listing jurisdiction due to its cost-effectiveness, its investor-friendly and transparent tax framework, a European ‘passport’ for issuing, its euro currency, and the free transfer of funds and offer of securities. Cyprus’ offering is increasingly sought after by international businesses seeking a cost-conscious way to diversify their portfolios and tap into both the EU capital market as well as emerging regional and niche markets.

 The Cyprus Stock Exchange

Catching the wave of economic growth in Cyprus, the Cyprus Stock Exchange (CSE) has set its sights on further development and growth. A key goal for the CSE in 2019 is to strengthen its role within the economy as a vital capital raising tool to help companies and institutions expand their activities. Equally important in this quest is to attract new companies to list on the CSE’s markets to provide new investment opportunities. The CSE has numerous strengths and offers multiple advantages. The Exchange provides all basic securities operations, such as listing, trading, clearing and settlement, as well as registry services. The Exchange also operates within an advanced legal and regulatory framework, complying with all EU Directives and internationally accepted securities practices.

The Exchange currently operates a Regulated Market and a Multilateral Trading Facility – the Emerging Companies Market (ECM) – for shares and bonds, which operates under the Cyprus Securities and Stock Exchange Law and the Investment Services and Activities and Regulated Markets Law (MiFID). Shares, rights, warrants, corporate bonds, government bonds/ treasury bills, collective investment schemes and Global Depositary Receipts (GDRs) can be traded on the CSE, with the most popular being shares and bonds. Currently, CSE participants include 20 Broker Firms, 13 Custodians and 55 Nominated Advisors.

The Main Market, Alternative Market, Corporate Bonds Market, Government Bonds Market, Collective Investment Schemes Market and the Depository Receipts are all segments of the Regulated Market, which currently lists 66 International Securities Identification Numbers (ISINs) for shares, 26 ISINs for bonds and 21 ISINs for funds.

The ECM has segments for shares, bonds, shares whose registry is not kept by the Cyprus Central Securities Depository and Central Registry (CSD),and bonds whose registry is not kept by the Cyprus CSD – with 41 ISIN’s for shares and 29 for bonds listed in total. The ECM offers simplified listing criteria at a low cost and is successfully attracting companies both locally and internationally. It has evolved from being mainly focused on small domestic companies, to a growing international market offering opportunities to companies from around the world – and allows for a more personalised service at competitive fees, particularly to companies that are too small to list on a larger exchange or wish to gain their first experience of listing securities within the EU. The ECM has proved resilient and successful in the last years, despite the adverse economic climate and allows companies with an attractive commercial proposition to attract funds.

Additionally, the Exchange also has the responsibility for the establishment and management of a Central Depository and Central Registry (CSD). The majority of the securities listed on the CSE are registered also in the CSD. Issuers of non-listed securities, that wish to have their registry maintained by the Cyprus Stock Exchange may assign this job to the Cyprus CSD.

New Initiatives

In an effort to expand its business, the CSE is focusing on sectors that are showing strong performance, such as funds, shipping, and energy. The aim is to ensure the securities market can provide the necessary tools and prospects to participants to achieve their targets, and also provide regional market participants and companies a convenient venue for listing and investing in a transparent, efficient and business-friendly environment.

With regards to funds, the Cyprus Stock Exchange has several initiatives. It already operates two markets for listing funds, the Market for Tradable Collective Investment Schemes and the Market for Non-Tradable Collective Investment Schemes. Listing provides visibility and transparency to investors, and the Exchange provides fast and simple listing procedures and a competitive pricing policy. In addition, the CSE has recently launched a new service in order to offer registry services to fund managers, which means maintaining the registry of unit holders of non-tradable funds in the CSE’s Central Depository and Central Registry in a dematerialised form, and handling redemptions and transfers of funds’ units.

As for shipping, together with the Athens Exchange – with which it has a common trading platform – the CSE is examining the possibility of creating a new market for listing bonds by shipping companies. In the energy sector, the CSE now holds a 10% stake in the Hellenic Energy Exchange (HEnEx) – which was founded as part of the EU’s target model to create a single energy market and is expected to launch operations in mid-2019. Furthermore, based on CSE’s participation in HEnEx, the CSE Council has submitted a proposal to the Government of Cyprus, in order to serve the Cypriot Electricity Market, as an operator.

Trading Volume

Due to the adverse financial conditions of past years on a large number of listed issuers, the value of shares, bonds and other instruments traded on the Exchange has remained relatively weak, despite moderate recent growth. For 2018 the turnover amounted to €132 million, which represents a year-on-year increase of 58.1%, compared to the turnover of €83 million in 2017. The daily average turnover for 2018 was €0.5 million in 2018, compared to €0.3 million in 2017. The financial sector was the largest economic sector with 58.12%, followed by the consumer services sector with 17.71% of the equity market capitalisation. However, the Exchange is growing and has already managed to attract companies from different sectors of the economy such as: basic materials, oil and gas, technology and telecommunications, consumer goods (food & beverage and personal & household goods), consumer services (retail, media, travel & leisure), from industry the construction and materials segment, and financial sector players such as banks, insurance firms and real estate companies.

Supporting a Growing Funds Industry

Funds are a new and promising industry in Cyprus and much effort has been made by the authorities and market participants to attract both local and international funds for registration-licensing in Cyprus with the aim of promoting the country as a funds jurisdiction. A CSE listing provides a number of advantages for fund managers and investors. The CSE is an EU-regulated and recognised Exchange, which provides a transparent fund profile and credibility to investors. It has fast and simple listing procedures with minimum bureaucracy, advanced technology, infrastructure and effectiveness at a low cost. There is great potential for listing Collective Investment Schemes, of both UCITS and Alternative Investment Funds (AIFs) on the CSE, allowing fund promoters to attract greater interest from institutional investors. The favourable environment provided by Cyprus’ attractive tax regime, the legal framework which is harmonised with EU Directives, and the vast pool of skilled professionals provide the basic prerequisites for enabling the future growth of the funds industry. The Cyprus Stock Exchange has already accepted listings for 17 non-tradable Collective Investment Schemes – more specifically, two single scheme UCITS funds and 15 sub-funds of one UCITS umbrella scheme – bringing the total assets under management of these listed funds to €52.9 million. Additionally, the CSE has also accepted the listing for two AIFs non-tradable Collective Investment Schemes, one single scheme and one umbrella scheme with two sub-funds. With the sector gaining momentum, more funds are expected to follow.

Regional Growth and Global Connections

A key strategy of the Cyprus Stock Exchange is one of regional growth and collaboration with neighbouring stock exchanges. The signing of memorandums with other Exchanges has provided the opportunity to collaborate on a wide spectrum of reciprocal issues of interest.

The CSE offers fully computerised online trading, clearing and settlement. Investors have access to the Securities listed on the CSE Market as well as to the securities listed on the Athens Exchange Market (Athex Group) through the Common Trading Platform established between the two Exchanges. Through this platform, Greek market participants (members and custodians) have access to view and trade the securities listed on the CSE and vice versa. The CSE also provides a successful service to non-listed companies that wish to submit their registries for handling by the Cyprus Central Depository and Central Registry.

Additionally, the Exchange also introduced a regulatory framework for the operation of the Depository Interests (DIs) to facilitate the clearing and settlement of cross-border trades between the CSE and London Stock Exchange (LSE) for dually listed companies.

The CSE has also been appointed by the Cyprus Securities and Exchange Commission (CySEC) as the Officially Appointed Mechanism for the Storage of Regulated Information (OAM) for Cyprus, according to the provision of the Transparency Directive – a system that makes use of digital signatures. In addition, the CSE acts as the auctioneer of Greenhouse Gas Emission Allowances (EUAs) in the Republic of Cyprus. The Exchange is responsible for the supply of allowances to be auctioned in the primary market on behalf of the Cyprus government.

In 2016, the CSE introduced a service tailored for the issuance of Legal Entity Identifier Codes (LEI) to interested legal entities. This service is provided by the CSE in cooperation with the London Stock Exchange/Unavista, and the issuance of LEI codes is done through the Unavista platform. The CSE also continues to successfully provide the FISN, ISIN and CFI codes to interested market participants as the official national representative for Cyprus, as appointed by ANNA.

Future Expectations

Although Cyprus is a small player in the European capital markets sphere, the country is taking bold steps to adapt to global trends and establish itself as a key regional player. In line with these aspirations, the Cyprus Stock Exchange is equally determined to become a more dynamic market, by tapping into its potential for further growth and expansion. To reach these targets, industry experts have also called for the introduction of more government-backed incentives to attract more international and strategic market participants to the country. These types of measures would certainly aid in repositioning the CSE as a tool for serious capital raising locally and provide more opportunities for investors. For example, with the right initiatives economic sectors that could benefit from fund raising and increased visibility through the CSE are renewables, research and innovation, education and the private healthcare sector.

Cyprus is a country that continuously and systematically strives to offer a diverse and investor-friendly environment. The CSE as a recognised trading venue in the European Union, can act as a convenient gateway for investors in the region. The country’s comparative advantage of its geostrategic location combined with its strong professional services sector makes it an ideal link between a number of regional markets and the EU. And with the Cyprus Stock Exchange fully aligned with the country’s broader plans of economic growth and expansion, the next few years are set to also boost the capital markets landscape.


2018 Total Turnover: €132 million (a year-on-year increase of 58.1%)

Breakdown of Total Turnover:

Shares traded: 70.6%

Corporate and Government Bonds: 29.4%

2018 Daily Average Turnover:€0.5 million per trading day

2018 Total Market Capitalisation (incl. Bonds Market): €6.1 billion

Equity Market Capitalisation:

Financial sector: 58%

Consumer services: 18%

Industrials: 14%

Other: 10%


5 Top Shares in 2018 (most traded securities by value):

  1. Demetra Investment Public Ltd
  2. Bank of Cyprus Holdings Plc
  3. Hellenic Bank Public Company Ltd
  4. Salamis Tours (Holdings) Public Ltd
  5. Vassiliko Cements Works Public Company Ltd
For more information, contact Cyprus' investment promotion agency, Invest Cyprus.

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July 2019

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