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Athens, Cyprus Stock Exchanges Sign Final Agreement

by Lorys Charalambous,, Cyprus

20 October 2006

The Cyprus and Athens stock exchanges have this week signed a final agreement for the launch of their 'common platform' on 30th October, amid complaints from Cypriot investors and brokerages that costs will rise and that preparations are inadequate.

The common platform, which has been talked about for years, has come to fruition after officials from both bourses met a year ago and signed a cooperation agreement. At the end of 2005, the total number of listed companies on the Cyprus Stock Exchange was 144. At year-end, the equity market capitalisation (excluding the Investment Companies Market), amounted to CYP3.2 billion (EUR5.58 billion), up from CYP2.0 billion at the end of 2004.

Spyros Kapralos, Chairman of the Athens Stock Exchange, said: "This is an exceptionally important moment for us for the project that will boost the accessibility and liquidity of the Greek and Cypriot capital market." The Council of the Cyprus Stock Exchange announced a number of changes which would come into effect from 30th October, including reform of the institutional structure of the CSE and its central registry, the introduction of new, specialized markets, enhancement of corporate governance, the introduction of custodial services, the upgrading of technical infrastructure, and the adoption of the euro for pricing of securities.

But members of the Cyprus Financial Services Association (KEPEY) said change was being foisted on them which they had not asked for and did not want, expressing concerns about cost structures, settlement risk, short selling (allowed by the Athens exchange but not by the Cyprus exchange), and exchange risk. Some member firms asked for a postponement of the launch date until half way through November, to allow more thorough preparation.

Probably what is underlying the fears of the Cyprus brokerages is the fact that Athens transaction costs are some 30% below Cyprus ones - who will want to trade a stock in Cyprus if they can do the same trade in Athens for 30% less?

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