Cayman Islands: CSX - Corporate And Sovereign Debt Securities

Last Updated: 27 May 2016
Article by Antonia Hardy and Philip Paschalides

Most Read Contributor in Cayman Islands, September 2018

Introduction

This guide is a summary of the main listing requirements and listing application process for a company seeking admission of corporate and sovereign debt securities to the Official List of the Cayman Islands Stock Exchange (the "CSX") and the prospectus obligations.

This Firm Memo is intended as an overview of the subject matter and should be used as a starting point for a more detailed and comprehensive discussion of the issues, based on the particular circumstances or transactions envisaged. Firm Memos on listing equities (including start-ups and mineral companies), and investment funds (including retail and exchange traded funds)are also available on request.

Information on CSX

The CSX commenced its operations on 2 January 1997 with the aim of providing facilities for the listing and trading of equity and debt securities.

With approximately 3,000 listings and a current listed market value of approximately US$170 billion, it is the leading offshore exchange in a North American time zone. While complying with international standards for recognised stock exchanges, the CSX adopts a flexible and pragmatic approach to regulation. Consequently, the CSX provides issuers of securities with fast, efficient and cost effective listing facility. In terms of listing requirements and procedures, the CSX offers a more flexible, less onerous alternative to other exchanges.

Deutsche Börse XETRA® trading platform

On 25 March 2013 the CSX started using the Deutsche Börse XETRA® trading platform.

The Xetra Trading Platform (the "Xetra") is one of the flagship technologies offered by the Deutsche Börse. Xetra can be operated either fully electronically for continuous trading, or through a specialist for the continuous auction trading model.

The CSX offers companies that wish to list access to a network of approximately 400 global participants who are currently authorised to trade on one or more Xetra markets. International Xetra participants can be passported through a simple process as CSX broker members and are able to reuse their existing Xetra connection to enter trades into the CSX Xetra platform.

Why use CSX

  1. Fast and efficient listing services from an experienced and highly qualified team that understands the complexities of the specialist products listed on the CSX and is committed to meeting each issuer's listing deadline.
  2. Competitive pricing.
  3. The CSX will not impose fees for trading of any securities listed on the CSX. The 'no trading fees guarantee' will remain in place until at least March 2015.
  4. Listing Committee convene as often as necessary to approve listing.
  5. International standards of issuer regulation.
  6. Sophisticated listing rules that are easy to understand and commercially driven.
  7. As the CSX operates outside EU, and no EU directives apply, the regulatory burden is less onerous than listing on other major stock exchanges. CSX is not bound by US SEC regulations.

Timing

The CSX will guarantee turn-around times for documents. Generally this is five days for a first review, which generally means that a CSX listing can be accommodated within a fairly tight time-frame.

Fees

The listing fees for a listing on the CSX are at least competitive with those charged by other stock exchanges. For a one-off issuance these are a US$2,500 initial fee and a US$2,500 annual fee. The CSX offers a ten percent discount on the annual fee if the annual fees for the term of the bonds are paid up-front.

Accounts

  1. Where the Issuer has been incorporated for less than the usual two year period for which audited financial statements are required, the CSX may be willing to accept financial statements for a shorter period.
  2. The CSX is flexible in relation to the accounting standards to which the Issuer's accounts can be prepared ie no need for IFRS.
  3. The CSX impose a requirement for audited accounts to be submitted on a continuing basis.
  4. It may also not be necessary to include certain financial information on the Issuer (profit and loss statements or balance sheets) in the listing document.

Transfer restrictions

The CSX will consider permitting restrictions on transfer in appropriate circumstances.

Clearing and settlement

To be admitted to listing and trading on the CSX, securities must have an International Securities Identification Number (ISIN). The CSX can supply ISINs for Cayman Islands and BVI incorporated issuers.

Securities to be listed on the CSX must be eligible for deposit in an acceptable electronic clearing and settlement system including Euroclear/Clearstream/DTC or any acceptable alternative system agreed in advance with the CSX. The CSX will be willing to consider alternatives to clearing in appropriate circumstances (for example, where there will be a small number of investors or qualified purchasers who will be likely to hold to term) provided that appropriate alternative arrangements are put in place and appropriately disclosed. This may include the Issuer itself maintaining a register, and has obvious cost advantages.

Paying agent

The CSX will accept paying agents from jurisdictions other than the Cayman Islands. The CSX may also be willing to consider having the Issuer act as paying agent in appropriate circumstances.

Incorporation by reference

The CSX will generally be willing to allow incorporation by reference where the information being incorporated is publicly available from other sources.

Programmes

Where securities are issued under a programme, the CSX listing of the programme is only required to be updated every five years.

Continuing obligations

The continuing obligations are relatively light. Other than publishing annual accounts, the principal requirement is to notify the CSX of certain changes affecting the Issuer (for example, changes in the nature of the Issuer's business, the Issuer's directors, the Issuer's auditors) or the securities (for example, any change in rights, and repurchases etc). There is also a general obligation to notify the CSX of any new developments which are not public knowledge and which may reasonably be expected to affect materially the market activity in and the price of the bonds, or the ability of the Issuer to meet its commitments.

Confidentiality

The CSX may grant a waiver from the requirement to disclose any matter which would otherwise be required under the listing rules, where disclosure of such matter would be unduly detrimental to the Issuer.

No listing agent

There is no requirement to appoint a formal listing agent in the Cayman Islands, although for practical purposes it may be helpful to instruct Cayman Islands counsel who have familiarity with the Listing Rules to review the documentation and to liaise with the CSX.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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