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Cayman Islands Stock Exchange Gearing Up For Higher Growth

by Leroy Baker,, New York

15 November 2005

The Cayman Islands Stock Exchange expects to grow faster during 2005-2006 than in the previous financial year, Members in the House learned last week.

Tabling the financial statements of the CI Stock Exchange (CSX) for the 18-month period ended 30 June 2004, the Financial Secretary, the Hon. G Kenneth Jefferson, stated that the anticipation of the institution's future growth was a direct result of the recognition the CSX had received from United Kingdom's Inland Revenue. However, he added that this expectation was contingent on the performance of the major global economies and financial markets.

The total market capitalisation of the CSX at the 12-month period ending 30 June 2004 was US$51 billion, of which US$45 billion related to mutual funds. Also at 30 June, 2004, listings on the exchange totalled 710, of which 620 were in respect of mutual funds, Mr. Jefferson reported to Members.

At the end of the 18-month period under report, the exchange’s total revenues, rising to $1,206,844, showed a significant increase over the 2002 figure of CI$741,045 (US$895,000). Operating expenses for the 18-month period totalled $1,386,970, bringing the net operating loss down from 2002, to $180,126, an improvement on the operating loss of $231,765 reported in 2002.

According to Mr Jefferson, these results indicate that the CISX is on a "steady path to self-sufficiency". As a result, the grant received from Government was reduced by 10 per cent, to $270,746, for the 18-month period under report, compared to $199,560 granted for the 12-month period that ended in 2002.

Continuing, Mr. Jefferson said the CSX had seven listing agents. Since the end of the 18-month review period, two additional firms had joined as listing agents. The listing fees have not been raised since February 2002.

Meanwhile, the CSX’s registered representatives had risen from 12 in 2002 to 19 at the end of June 2004.

The number of broker members had also risen from five at 31 December 2002, to eight at end-June 2004. Mr Jefferson reported that of the three new members, two, headquartered in New York, joined as remote broker members in order to take advantage of a new facility developed by the CSX and implemented beginning September 2003.

The “crossing” facility is open to broker members wanting to execute trades in US securities on the Cayman Islands Stock Exchange after US trading hours. Income generated from the crossing market amounted to $44,104 by June 2004.

Referring to the two “very important goals” that the exchange achieved during the 18-month period, Mr. Jefferson said the International Organisation of Securities Commissions (IOSCO) at its annual conference in October 2003 in Seoul, South Korea, had voted to approve CSX as an affiliate member.

Further, on 4 March 2004, the exchange was designated as a “recognised stock exchange” by the United Kingdom’s Inland Revenue, allowing securities listed on the exchange to benefit from tax exemptions.

“This recognition resulted in a noticeable increase in new listings, in both mutual fund and debt security categories, as well as in the number of listing agents. This trend is continuing well into the new financial year,” Mr Jefferson observed.

It is anticipated that shareholders in the CISX will receive a total dividend of $58,415 for the 18 month period ending on 30 June 2004.

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