The Cyprus Finance Ministry has recently put forward draft legislation aiming to modernise the Cyprus Stock Exchange (CSE) and this legislation, which envisages tough regulations and the significant empowerment of the Securities and Exchange Commission (SEC), has caused considerable fear in the market.
The draft bill provides for a code of conduct for listed companies on the Cyprus Stock Exchange to ensure shareholder's rights and promote transparency, yet at the same time it gives sweeping powers to the SEC rather than doing what it was intended to do, that is to strengthen its supervisory role.
If the draft bill is passed, the SEC would be able to intervene in the day-to-day functions of CSE, initiate investigations against anyone it views as suspect, including stockbrokers, and exercise other powers such as over-ruling the right of journalists not to reveal their sources.
Whilst the proposed legislation has a long way to
go before it becomes law, if indeed it does, it has
still induced a great number of protests from all
corners, including the CSE itself and stockbrokers.
In retort, Finance Minister Takis Klerides has said
that this reaction is unnecessary and has called on
all parties to refrain from making premature statements.
He said 'We have prepared a draft and circulated it
among all interested parties with a view to engage
in discussions leading to the drafting of the final
document. There is no cause for panic.' Supporting
Klerides is SEC Chairman Andreas Charalambous, who
said the whole issue had been blown out of proportion,
mainly because 'people have not had time to study
the proposals carefully.'
CSE Chairman, Paris Lenas, has not issued an official statement on the proposed legislation but Christodoulos Ellinas, chairman of the Union of Brokers, is reported to have expressed strong reservations about the proposals.
An unnamed source quoted in a Cyprus newspaper said that the Finance Ministry has muddled up the responsibilities of the SEC and the CSE, saying 'the CSE is there to take care of the day-to-day operations of the Exchange and is responsible for its members, both listed companies and the brokers. The SEC on the other hand, should only act as a supervisory body, ensuring that the law is upheld.' The same source added that with the new proposals there would be an over-lapping of work as the SEC would intervene in the normal functions of the CSE, such as studying applications for new listings and supervising daily trading, and in the process would not be able to carry out its real function of supervision.
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