The Cyprus Stock Exchange (CSE) announced that it has accepted more than 15 listings of bonds on its Emerging Companies Market that were previously listed on the GXG Markets.
In the context of its efforts to improve its service and broaden the range of products and services provided, the Cyprus Stock Exchange has created two new Markets in the Emerging Companies Markets, according to which it now allows listings in Sterling pounds (GBP) and with the Registry of the Issuers not to be kept with the Cyprus Central Depository, but in CREST.
The securities to be traded will not be entered in the CSE’s Central Depository /Registry and will not be cleared / settled by the Central Depository / Registry. The clearing and settlement of the transactions for these two new markets in GBP will be carried out by clearing agents. The relevant Regulatory Decisions have been published in the Official Gazette of the Republic: RAA 311/2015, RAA 312/2015, RAA 313/2015 and RAA 314/2015.
Private corporations from most jurisdictions are eligible to issue and then list their bonds on the Third Market of the Vienna Stock Exchange or the Emerging Companies Market of the Cyprus Stock Exchange (ECM/CSE) under simplified rules and conditions.
Under the EUs MiFID regulations aimed at encouraging competition within capital markets, the EU allowed for the creation of Multilateral Trading Facilities (MTF) which have been described as a form of “lite exchange” because they provide similar or competing trading services, such as rulebooks and market surveillance departments, but operate through simplified procedures and at very competitive fees than what it would cost to list financial instruments (shares, bonds, funds) on the traditional stock market segments.
The MTF Market of Vienna Stock Exchange is operated by the regulated Vienna Stock Exchange and the ECM is operated by the Cyprus Stock Exchange, which is the MTF Market of Cyprus.
In Vienna they also refer to the MTF Market as the Third Market but trading in bonds goes through the same clearing and settlement structure.
The biggest advantages for listing in MTF Markets are:
TYPES OF BONDS
The Vienna Stock Exchange allows for most types of bond listings including:
*Performance Linked Bonds are increasingly becoming attractive since they spread the risk of performance on the investors.
Such Performance Linked Bonds may also be used for trading in capital markets in derivative products such as trading in shares, bonds and forex. When the trading performance is positive, the NAV will increase, whereas if there are trading losses, the NAV will decline.
The Vienna Stock Exchange prefers for Issuers to conduct their private placement of bonds and then list on the Exchange. An Issuer can apply for a larger amount of listing, but list the bonds in tranches of minimum EUR 200.000 lots over several years.
Once the listing procedures have been approved, Eurivex will secure an Austrian AT-ISIN for the bonds.
In future, an Issuer may continue to privately place additional bonds and then following a simple process, add-on to the existing issue (same ISIN) subject to Vienna Stock Exchange approval.
One of the key advantages of listing on the MTF Market of Vienna Stock Exchange is that the Exchange accepts all documentation in English and by e-mail.
An issuer would need an EU-based regulated investment firm (Eurivex Ltd. – www.eurivex.com) to act as the Investment firm signing the application and also appoint a Payment Agent in addition to completing the other documentation.
Eurivex, a regulated by CySEC investment firm provides complete packages directly or through other professional firms.
Eurivex will prepare the Information Memorandum as well as Terms and Conditions of the bond issue and liaison with the Vienna Stock Exchange until the listing is secured.
CLEARING & SETTLEMENT, TRADING
The Issuer also needs to furnish evidence that it meets the requirements for including in trading pursuant to Exchange rules, but Issuer has free choice of clearing system while its Global certificates have to be deposited with Euroclear, Clearstream Luxembourg, the Austrian central custodian OeKB or other custodians having a clearing link with OeKB.
Bonds are traded on Xetra trading system, but Issuer is under no obligation to provide liquidity/to quote, since no actual trading is legally required.
Issuer will need to furnish full corporate documents including Certificate of Incorporation, Shareholder and Director Registry, Memorandum & Articles of Association as well as provide basic KYC documentation of Company directors/principal owners.
Issuer will also provide additional information in order for Eurivex to prepare the Information Memorandum and other documents required for the listing.
When all the documents in the correct form have been provided, it will take Eurivex 1-2 weeks to prepare and submit the first draft Information Memorandum to the Vienna Stock Exchange for review, secure the AT-ISIN, complete the bond dematerialization and electronic delivery to OeKB and secure the final listing approval after 1 week.
Eurivex offers competitive packages covering all the fees, including the Vienna Stock Exchange listing, securing of AT-ISIN, bond registry dematerialization and electronic delivery to OeKB, listing agent and payment agent fees per bond listing (ISIN).
Eurivex, a regulated Cyprus investment firm is an approved Nomad for listings on the Emerging Companies Market of the Cyprus Stock Exchange (ECM) under simplified listing rules.
The Cyprus Stock Exchange, a eurozone member exchange allows private or public companies domiciled in any jurisdiction in addition to Cyprus to issue bonds and list them on the ECM of the CSE in record time.
Such a listing of bonds is ideal for:
The ECM is very similar to what the AIM is for the London Stock Exchange with the added advantage that it’s a Multilateral Trading Facility (MTF) as defined by the EU’s Markets for Financial Instruments Directive (MiFID) and operated by an EU regulated stock exchange which the Cyprus Stock Exchange is.
The minimum amount of the bonds that can be listed on any eurozone stock exchange, including Cyprus is EUR 200.000 per listing.
The Bond Registry is maintained by the CSE in electronic format.
A Trustee will need to be appointed with a Trust agreement in place in order to protect the rights and act in the best interests of bond holders.
Once the bonds are listed, the CSE will provide the ISIN code allowing the bonds to be accessible by all professional investors using their Bloomberg or Reuters terminals.
The whole listing process takes 2 weeks to complete and the fees are very reasonable.
Companies interested to list their bonds on the ECM need to maintain a CSE approved Nominated Advisor (Nomad) to handle the listing procedures. Eurivex is an approved and experienced Nomad.
Eurivex can also handle the documentation for buying and selling of the bonds to be transacted on the CSE, which means the promoter or the company can find the buyers and sellers for its bonds and then leave the paperwork to Eurivex to complete.
Eurivex offers complete package for bond listings including finding all the professionals to make your bond issue a success.
Procedures to list the bonds
A legal entity, based in any jurisdiction is eligible to issue and then list its bonds on the ECM.
Such a legal entity will need to provide the following documents:
Companies should also provide a copy of their latest utility bill as proof of address.
2 year history or 3 year business plan
Existing companies may list their bonds based on their prior 2 year history, providing audited accounts based on according to International Accounting Standards. For newly setup companies, they may list the bonds based on forward looking business plan with financial projections for next 3 years with reasonable justification. cpr certification
Major shareholders of private or public companies will have to provide their identity details (copy of passport or Identity card in case of EU nationals) as well as most recent utility bill copy as proof of address.
When shareholders are legal entities, full corporate documents as above are required.
All information provided will be open for public scrutiny. The CSE however allows the appointment of nominee shareholders and directors.
Board of Directors
The CV, educational and business background of all directors in addition to their basic identification and proof of address documents will need to be provided to the CSE. The information is open for public scrutiny.
Every listed company on the ECM needs to appoint an approved by the Cyprus Stock Exchange Nominated Advisor (Nomad) which will be responsible for the company’s listing.
The company also needs to have a Trustee, registered office, legal advisor, auditor, and reveal the banks where it has a relationship.
Private placement of bonds
The Issuer can issue its bonds privately through a private placement and then list the bonds on the ECM of the CSE provided the minimum listing size is EUR 200.000, which is the minimum set for all eurozone stock exchanges.
The Issuer can complete the procedures for a bond listing for larger amounts and thereafter list the bonds in increments of EUR 200.000.
If the company wishes to hold an Initial Public Offering (IPO) after its application is approved, then it may do so but up to EUR 2.4 mln under simplified procedures.
If the amount of the IPO is above EUR 2.4 mln, then the company needs to prepare a prospectus and submit it to the Cyprus Securities & Exchange Commission for approval before it can proceed.
Otherwise, if the IPO is below EUR 2.4 mln, it will do so under simplified listing procedures and by submitting its Admission Document only.
A trustee will need to be appointed and a Trust agreement signed between the Issuer and the Trustee.
The Trustee can be a lawyer or Trust Company based anywhere with the Trust agreement allowed to apply to any jurisdiction.
The Admission Document is prepared by the approved Nomad in cooperation with the client and includes details about the following:
Requirements for a successful listing
The role of the Nomad is critical to the listing process as it is for the Nomad to determine the company’s suitability for an ECM admission.
The Nomad is responsible for the company’s compliance with the ECM Rules for Companies on and following admission. The ECM Rules are published by the Cyprus Stock Exchange and set out the rules and responsibilities that an ECM company must comply with.
All companies that have listed securities on the ECM are required to comply with a number of ongoing obligations. The Nomad will guide the company on its ongoing compliance with the ECM Rules. The key considerations to bear in mind are: