Cyprus bourse link with ASE may be postponed
NICOSIA (Reuters) – The Cyprus Stock Exchange could postpone a widely publicized linkup with the Greek market from January 2 because of concerns the market was not fully prepared for the transition, the chairman of the Cypriot bourse said yesterday. Akis Kleanthous dismissed suggestions a delay could be a setback for the exchange, which has struggled in recent years, but said authorities needed to verify the market was ready for the switchover to make the transition as smooth as possible. «As far as implementation is concerned we are pretty much ready, but we have some reservations on the readiness of the market. There may be time needed to pass this (new) information to investors,» Kleanthous told Reuters. A key point of contention was the reference rate at which Cypriot shares, now denominated in Cyprus pounds, would be converted to euros as part of the switchover. Kleanthous’s comments were the first official admission that the market was considering a delay to the platform launch which was announced in September. The link will essentially merge trading on the two bourses, giving the considerably smaller Cypriot market badly needed visibility to a pool of institutional investors in Greece. «My feeling is we may need to give a couple of weeks more to the market… It’s excused in terms of the size of the project,» Kleanthous said. The Cypriot bourse has 150 companies listed with a total market capitalization, including bonds, of 5.65 billion Cyprus pounds ($11.77 billion). The Greek market has more than 350 companies listed and a market capitalization in excess of 90 billion euros ($106 billion). The transition includes adoption of a different trading system, longer opening hours for the Cypriot bourse and switching to euros from pounds. The latter is considered a good test run for Cypriots before joining the eurozone by the stated target of 2008. But Kleanthous intimated there was confusion and disagreement on the reference value which will be used in the conversion. Cyprus is a member of the European Exchange Rate Mechanism (ERM2), a stabilization grid anchoring the pound to the euro at a peg of 1.7086 euros to the pound in a 2.25 percent fluctuation band.
