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The Jurisdictions with Stock Exchanges - Bermuda to Hong Kong Compiled by Tax-news.com editorial staff in London, New York and Hong Kong Robert Lee, Jeremy Hetherington-Gore, Mike Godfrey and Mary Swire
The Bermuda Stock Exchange (BSX) opened in 1971. It is a fully electronic open market with daily trading and centralised settlement. In 1998 the value of securities traded was over $27 bn. The BSX is owned by three Bermuda banking institutions and in 1992 it was formed into a limited liability company. Trading memberships on the exchange are freely available to international brokers who meet BSX requirements. The BSX deals in equities, mutual funds, specialist debt securities and Eurobonds, as well as depositary receipts. Currently more than 300 securities are listed on the BSX of which 170 are mutual funds and 53 are debt issues. 32 local securities are listed on the exchange and these are traded on a separate market. Total capitalisation of listed securities (excluding funds) is $125bn. Regulatory Basis Including Listing Rules The BSX is
regulated by the Bermuda Monetary Authority (BMA) under the Bermuda Stock
Exchange Company Act 1992; the BMA is a full member of IOSCO. The BSX was
the first offshore exchange (in 1996) to receive Designated Status from
the US SEC. The BSX has issued regulations for Trading Membership, Domestic
and International Listing.
The BSX international listing regulations give the BSX a competitive edge in certain key niche markets and provide a platform from which to develop an international offshore capital market. The international regulations facilitate the listing of equity securities, including secondary listings and primary listings of restricted marketing issues, international investment funds such as mutual funds and unit trusts, Eurobond and other international fixed income issues, as well as depositary receipts. The international regulations apply to all companies not majority-owned by Bermudians. Under the domestic regulations, local companies are listed on either the Main Board or a SmallCap section. Under Bermuda law, foreign ownership in local companies is restricted to 40% of issued share capital. Structure - Sponsors The listing
sponsors category is open to law firms, accounting firms, fund managers,
trust companies, and other service providers who meet the BSX requirements.
Listing sponsors are entitled to sponsor applications for new listings
of mutual funds, Eurobonds, depository receipts, and secondary listings.
Listing sponsors may also sponsor primary listings in conjunction with
a BSX trading member. Listing sponsors do not have trading privileges on
the BSX.
Trading and Settlement The Bermuda Electronic Securities Trading (BEST) system started in late 1998. The trading engine works on a system of priority rules and tries to match orders with those already in the system. Unmatched orders are then queued according to the time they are received, waiting to be matched. In early 2001, BSX plans to implement GlobalSCRIP, an electronic settlement system, which will provide an electronic registry for companies listed on the BSX. Settlement will occur on a rolling T+3 day cycle and settlement documents will be produced through the Exchange. In place of the current shares in certificate form, Bermuda securities will be registered - GlobalSCRIP will enable a much easier exchange of shares which will enhance the investor's ability to buy or sell local shares. This also means that the centralised registration facility will separate and track shares eligible for Bermudian ownership as opposed to those available to non-Bermudians. Another new service the BSX plans to launch is a facility to easily exchange shares for hedge fund investments, a process which has proved problematic in the past. The BSX has embarked upon a joint venture to do this with PlusFunds.com. The PlusFunds.com service aims to offer real-time net asset valuations every seven seconds. The exchange's system will be implemented before the end of the year 2000 with at least 20 funds on offer. In 1996, the
BSX created a trading facility allowing members to make crossing trades
on the BSX. A crossing is a transaction in which one trading member handles
both sides of the trade. These trades, which may be made at any time, may
include international securities not listed on the BSX. Crossings on the
BSX now total over $7 billion per month.
Market The CSX is a private limited company owned by the Cayman Islands Government but operated as an independent entity. The CSX, which commenced operations in July 1997, was originally set up to provide a listing facility for the specialist products of the Cayman Islands, namely offshore mutual funds and specialist debt securities. Over 370 issues have been approved for listing since the CSX's inception in 1997. In July 1999, the CSX was granted approved organization status by the London Stock Exchange. The CSX was able to demonstrate that its regime for listed securities meets all the detailed criteria for inclusion on the list of approved organizations. This is the first time an offshore stock exchange has been added to the list. The approved organization designation means that securities listed on the CSX are eligible for trading in the LSE's international equity market and for quotation on the SEAQ (Stock Exchange Automatic Quotation) international trading system. The Exchange specialises in listing of Mutual Funds, Domestic Debt/Equity and International Debt (including SPV's and Eurobonds), depositary receipts and derivative warrants Regulatory Basis Including Listing Rules With the exception of debt securities, all applications for listing must be made through a registered Listing Agent, who will be the intermediary with CSX throughout the process and handle all the details. Listing applications are reviewed by Exchange staff and then forwarded to the CSX's Listing Committee for a decision. Structure The CSX has approved a number of Listing Agents who are Cayman Islands based lawyers, accountants or other financial-based service providers. All issuers, other than issuers of international debt securities and securities which are subject of a secondary listing, must appoint a Listing Agent in connection with their application for listing. The Listing Agent will provide a formal link between the Issuer and the Exchange and will be responsible for advising the Issuer on all aspects of the listing process. Costs of Listing To obtain a listing on the CSX the Issuer of a Security is required to pay a fee, both at the point of application and annually to maintain the listing. The following tables list the fee structure for listing on the Cayman Stock Exchange (US$) Mutual Funds
In the case
of an umbrella fund, where the application covers a number of sub-funds,
the initial fee and the first annual fee will be applied to the fund as
a whole. Thereafter, the annual fees will be charged per sub-fund in accordance
with the above table.
Equity Securities(Domestic) Fees are in
accordance with the following scale (based on Market Value)
Other Securities
Notes
The Bolsa Nacional de Valores SA (BNV) began operating the first security market in Costa Rica and Central America on August 19 1976. Approximately 97% of the Bolsa Nacional de Valores is owned by the brokerage firms and it is ruled by a Board of Directors which is elected by the General Assembly; however, the General Manager and a group of executives are accountable for the operation, administration and management of the BNV. Structure There are currently 28 brokers permitted to trade securities on the BNV Types Of Issue Besides equities and public and private sector bonds, there is the Money Market Account, Lien Certificates, Repurchase Agreement (REPOS), securities issued in foreign currency and paid in colones and securities issued in colones and paid in US dollars, Multiple Certificates or macro securities and investment funds. Settlement The trading process is completely automated. The systems used by the Bolsa Nacional de Valores have been created for the needs of the securities market and designed by Costa Rican technicians. The Bolsa Nacional de Valores operates using the following types of transaction settlements:
The Cyprus Stock Exchange started its operations as a legal entity in the form of a public corporation body on the 29th of March of 1996, by virtue of The Cyprus Stock Exchange Laws and Regulations which had been passed by the House of Representatives in 1993 and 1995 respectively. The Cyprus Stock Exchange is a regulated Exchange where all transactions concerning corporate and public securities are carried out. Such securities include stocks, bonds and warrants. The main participants in the market are the Members of the Stock Exchange (stock brokerage firms), the listed issuers and the investors. The Council of the CSE was appointed by the Council of Ministers in December 1993 in accordance with the Law, and was initially charged with the responsibility of preparing detailed Regulations which would govern the operation of the CSE. The Council of the CSE is responsible for the management of the Exchange and for the implementation of its policy. More specifically, the Council supervises the operation of the Exchange and has exclusive authority over the management and administration of its assets, in accordance with the provisions of the Law and the Regulations. The Cyprus stock market experienced a boom in 1999, with its main index registering a 700% increase; the inevitable collapse in share values followed in 2000, with the index falling to 300 by October. Total market capitalisation fell to CYP £8,774 billion at the end of October compared to £10,422 billion in September. The total value of transactions during the month was CYP £458 million with an average of £20 million per trading session. The Banking sector contributed 22.24% of the total value traded, which was the highest, whereas the Government Bonds had the lowest contribution with 0.01%. Alongside its trading problems, and partly as a result of them, the CSE also has major structural and governance problems, with incessant and bad-tempered back-biting between stockbrokers, investors' representatives, the Government and the CSE itself. In an attempt to improve the fortunes of the beleaguered Cyprus Stock Exchange (CSE), the Cyprus Finance Ministry announced in October 2000 that it is drafting in a Greek expert team to draw its own conclusions on the problems that have beset the exchange. Greek stock market expert Demetris Tsimbanoulis and his team have 100 days in which to examine stock exchange practices and operations in Cyprus and compose a report of recommendations. He will submit preliminary findings within two months. According to Finance Ministry sources, the report will include an analysis of the current situation in Cyprus; a list of voids and weaknesses; a list of the comparative advantages and disadvantages of the CSE; suggestions deriving from EU stock market practices and steps to ensure the harmonisation of the CSE with EU guidelines and a list of practices followed on developed stock markets and a description of technical developments in the sector, in particular with reference to the development of e-commerce. Regulatory Basis Including Listing Rules All securities, with the exception of bonds issued by the Government of the Republic, get a listing following the approval of the Council of the Cyprus Stock Exchange, with the consent of the Securities Commission. Bonds issued by the Government of the Republic are quoted following a decision taken by the Minister of Finance, announced to the Council of the Cyprus Stock Exchange. Types of Issue Transactions
on the Cyprus Stock Exchange concern equities, bonds and warrants.
Price Information and Trading Services AG Financial Network is the company that trail-blazed the provision of live CSE prices to the investing community. This pioneering company has recently launched CSE Online 2000, a service which offers many new features including real time technical analysis. AG Financial Network allows users access to its system either through dial-up, leased lines or the Internet. Another established force offering information on CSE prices is the giant multinational, Reuters, which offers its service either through its own satellite dishes or leased lines but also allows access through the Internet. The other multinational involved in the provision of CSE prices is Telerate, but this company has not yet managed to make major inroads in the market. Telerate recently reduced its operations in Cyprus and now provides services through sub-contractors, although the original service is available either through satellite dishes, leased lines and also through the Internet. AvacomNet has announced plans to launch Avacas, its new CSE online service that will be free to investors. The company is expected to employ different software, constructed exclusively in Cyprus by AvacomNet's software developers. This will allow users to access the system through the Internet. Stockwatch.com.cy, Cypria.com and Moneynet.com.cy also offer equity prices and live ticker prices to all users. Cyprus ISPs XAK.com.cy and Spidertrade.com.cy have started to offer price information to their online customers, and four out of the five Internet Service Providers (ISPs) including Spidernet, Cytanet, Logosnet and AvacomNet are providing CSE prices through their WAP service. Some Cyprus banks offer the same service. Currently there
is little foreign interest in the Cyprus stock market, but Cyprus financial
services provider SFSIS has received authorisation from the Securities
& Futures Association (SFA) of the UK to conduct investment business
in equities and bonds. The company aims to tap at least 40 per cent of
the Cypriot and Greek population in the UK. The focus of SFSIS will be
to cater to the needs of private clients in the UK who are interested in
investing in the Cyprus Stock Exchange (CSE) and other stock markets including
the Athens Stock Exchange and London Stock Exchange. Clients in the UK
will be able to make greater investments in the CSE, with all trades originating
from the UK going live through SFS's electronic trading system direct to
the SFS floor traders for execution.
The Channel Islands Stock Exchange ("CISX"/the "Exchange") commenced operations on 27 October 1998. The CISX was formed as a company limited both by guarantee and by shares. Management and control are vested in the Board of Directors. The market capitalisation of the CISX, as at 19 June 2000, was in excess of US $15 billion, covering 123 listed securities. The volume of shares issued since its inception is in excess of 40 million. Types of Issue Initially, the CISX has concentrated on its core products:
Listing Fees Listing
Fees with effect from 3 April 2000:
Notes:
The CISX's screen-based trading platform is based on Reuter's Triarch network installed at the Exchange's St Peter Port, Guernsey offices. To access the CISX pages on Reuters, simply enter CISXINDEX and follow the menu choices. Reuters has been involved with the financial markets in The Channel Islands for over 20 years, with offices in Guernsey and Jersey in 1984. Reuters was chosen by the CISX because it offers a first class system for the delivery and management of the Exchange's market data. There is also the opportunity to access the considerable communications network and range of information services available from Reuters. The key features of the trading system are as follows:
Records of securities trading in Hong Kong date back to 1866 but the first formal stock market, the Association of Stockbrokers in Hong Kong, was established in 1891. It was renamed the Hong Kong Stock Exchange in 1914. In 1921, a second exchange was incorporated - the Hong Kong Stockbrokers' Association. The two exchanges merged to form the Hong Kong Stock Exchange in 1947. The rapid growth of the Hong Kong economy led to the establishment of three other exchanges in the late 1960s and early 1970s, including the Far East Exchange (1969), the Kam Ngan Stock Exchange (1971) and the Kowloon Stock Exchange (1972). Prompted by the 1973 market crash and the need to strengthen market surveillance, the Hong Kong government set up a working party in 1977 to consider the unification of the four stock exchanges. As a result, the unified exchange - the Stock Exchange of Hong Kong (SEHK) - was incorporated on July 7, 1980. The four exchanges ceased trading after the close of business on March 27, 1986. A new era began with the commencement of trading via a computerised system on the unified exchange on April 2, 1986. After the October Crash in 1987, SEHK underwent a complete reform, including the establishment of a more widely representative Council and a strong, professional executive management team, to safeguard the interests of all participants and to operate and develop the market effectively. To enhance the competitiveness of the Hong Kong securities market so as to meet the challenge of an increasingly globalised market, the Financial Secretary of the Hong Kong SAR Government announced in his Budget Speech on March 3, 1999 a comprehensive market reform for the securities and futures market. Under the reform, SEHK and Hong Kong Futures Exchange Limited (HKFE) were demutualised, the two exchanges and their respective clearing houses were merged with the Hong Kong Securities Clearing Company Limited (HKSCC) to form a single holding company - Hong Kong Exchanges and Clearing Limited (HKEx). In accordance with the Schemes of Arrangements of the exchanges and the Exchanges and Clearing Houses (Merger) Ordinance which took effect on March 6, 2000, SEHK became a wholly-owned subsidiary of HKEx together with HKFE and HKSCC. Today, SEHK is among the leading stock exchanges in the world. As at the end of June, 2000, it was the eleventh largest territorial stock market in the world in terms of market capitalisation and the second largest territorial in Asia. The launch of the Growth Enterprise Market (GEM) in November 1999 for smaller and high growth companies has broadened Hong Kong's stock market, although the timing of GEM's launch was unfortunate, and the 'dotcom' shakeout in 2000 has weakened its impact. Hong Kong's securities market has been increasingly internationalised. A recent Stock Exchange survey indicated that trading by overseas investors, mostly institutions, contributed about one third of the total turnover in 1999. As of July 2000, the number of listed companies on the main board was 718, and the number of China-incorporated listings was 46. Total market capitalisation was US$645 bn, and average daily turnover was US$1.8 bn. 41 companies were listed on GEM, with capitalisation of US$11 bn, and daily turnover of US$ 52 m. There were 1,011 stock, commodity and bullion brokers, exchanges and services as of March 2000, employing 15,626. Fund raising activities revitalised in the second half of 1999 in line with improving economic conditions. In the first half of 2000, 18 companies made initial public offerings, of which two were H-share companies (mainland-incorporated companies), raising a total of HK$ 73.6 billion (US$ 9,439 million), compared to HK$ 3.0 billion (US$ 381 million) raised by 9 companies in the same period of 1999. The
Jurisdictions with Stock Exchanges - Ireland to Switzerland
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