The Cayman Islands Stock Exchange is much more than a mere ‘listing machine’ and is an integral part of the Cayman Islands success story. Its hi-tech low cost professional approach has seen impressive year on year growth since its beginnings in 1997. The initial surge of interest has yet to die down. With its current listings standing at over 1200 (January 2007), it has posted an impressive annual growth rate of over 20 per cent.
Currently the fastest growing market for the exchange is the listing of securitized debt instruments. The CSX can also attribute its considerable growth to the hedge funds that have listed on the exchange since its inception. This is a product for which the CSX has gained a large market share in the world of capital markets. The CSX is focused firmly on the international capital markets and the world’s leading financial institutions have listed their products on the CSX, making full use of its efficient and sophisticated listing regime.
Respectability and flexibility
The CSX is a private limited company owned by the Cayman Islands Government but operating as an independent entity. It is recognised and accepted by global institutional investors as an exchange with a listing service that provides their investors with the necessary degree of regulation and comfort they require when making their investment decisions. The CSX is still a relatively young stock exchange and this summer will celebrate its 10th anniversary. It was founded in July 1997 as a response to Cayman’s dominant position in the mutual funds industry. Initially it provided a listing facility for the specialist products of the Cayman Islands: offshore mutual funds and specialist debt securities. Following swiftly from this, in March 1998 rules for the listing of derivative warrants were also introduced. Since then it has expanded its facilities to include depository receipts and more recently eurobonds. It also provides an equity trading platform for trading in the shares of domestic and international issuers.
The success of the CSX lies in its ability to react swiftly to changes in products and markets. The listing rules are sophisticated and tailored to meet the needs of issuers and to accommodate the latest structures and products. The emphasis is on the disclosure of all relevant information without imposing unnecessarily onerous conditions. The CSX staff are dedicated and professional with vast experience in capital markets and regulation, ensuring service from a team that understands the complexities of the specialist products. Its competitiveness lies in the adherence to the issuer’s timetable as well as in low listing fees. In normal circumstances the CSX staff can provide a five day turnaround time on reviews of listing documents.
The power of the internet
The internet has revolutionised the world of offshore stock exchanges. The ability to instantly access data from overseas, and to trade over the internet has removed most of the disincentives to list overseas. Listing on an exchange always has to some degree an element of marketing, by listing on the exchange it will instantly raise the profile of the products. And CSX recognises the power of the internet for funds and products listed on the exchange. When a fund is listed on the CSX, it is given space to publish its marketing materials on the CSX website. The site can provide hyper links to the fund’s own website or to other sites providing analytical data for the fund.
In order to ensure the highest standards are met, the CSX forged a partnership with the global financial information provider, Bloomberg Financial Markets, resulting in a fully electronic listing platform and a dedicated news wire service. The CSX also automatically updates Bloomberg with any public information given to the exchange. The CSX’s trading facility is web-based and ‘order driven’, providing broker members of the Exchange accessing the system with electronic notification of new quotes entered into the system. Orders and trades are displayed on-screen through the central system. To assure comprehensive protection for all market participants, the CSX conducts market surveillance to monitor all market transactions.
International co-operation and participation
In June 2001, the CSX became the first offshore exchange to become an affiliate member of the Intermarket Surveillance Group. The Exchange now forms part of a group of self-regulatory organisations committed to confidential market information sharing for regulatory purposes and to co-ordination of regulatory efforts among its membership. The CSX also is an affiliate member of IOSCO and a member of the European Securitisation Forum (an independent initiative of The Bond Market Association).
Previously, the CSX in 1999 was admitted to the London Stock Exchange’s list of approved organisations, making it the first offshore Exchange to gain this designation. The CSX has also gained membership of the Asia Pacific Offshore Institute. This is an important area of international co-operation as it allows the CSX to exchange ideas and become more engaged in initiatives of the Asia Pacific Region, an important geographical area of the CSX business model.
The CSX will continue to actively seek membership of relevant associations and trade bodies, as well as recognitions from international regulators in various jurisdictions.
The Exchange will work towards strengthening its position as a first class international exchange. The combination of innovative facilities, a personalized approach and flexibility makes the CSX an attractive venue for specialized offshore products.
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