Governance
 
Cyprus Stock Exchange (CSE)
 
The Cyprus Stock Exchange is a public corporate body, established by virtue of the Securities and Cyprus Stock Exchange Laws in 1993.
The CSE does not have share capital.
 
The CSE is governed by the Council.
 
The CSE as a semi-governmental legal entity is accountable to the State :
·         The annual budget of the CSE is submitted to the Ministry of Finance and the House of Parliament for approval (section 49 of CSE Law)
·         The CSE prepares accounts which are audited by independent and recognized auditors and are submitted to the Minister of Finance and to the Auditor General of the Republic (section 49 of CSE Law)
·         The CSE is subject to financial and operational audit by the Auditor General of the Republic.
 
Council
 
The procedure and eligibility requirements for the appointment of members of the Council of the CSE are determined by Law – the Securities and Cyprus Stock Exchange Laws.
 
·         The members of the Council are all non executive and independent.
 
·         The members of the Council are appointed by the Council of Ministers upon a proposal by the Minister of Finance (section 11 of the CSE Law).
 
·         Members of the Council are appointed persons of acknowledged experience and knowledge in economics, investments, finance, money and capital markets, as also trade and industry, who are capable of contributing to the achievement of the objectives of the CSE Law and particularly to the development of an orderly and systematic securities market, as well as to the due protection of investors and the public in general. Such persons should not have either directly or indirectly themselves, their spouse or through blood relatives up to the second degree of kindred material interest or control or participate on any Board of companies whose shares are listed on the Stock Exchange upon their appointment or during their term of service (section 11 of the CSE Law)
 
·         Due to the fact that the CSE is an Operator of a Regulated Market, the members of the Council must also comply with the fit and proper requirements stipulated by MIFID II (transposed in Cyprus by Law 87(I)/2017) and prior to their appointment are subject to scrutiny by the Cyprus Securities and Exchange Commission.
 
·         The following persons are not eligible for appointment to the position of member of the Council:
 
-          Ministers, members of the House of Representatives, members of Municipal Councils or other Local Authorities, members of the Commission, religious officials, civil servants and members of the Armed Forces or the Security Forces of the Republic
-          Persons who in accordance with the Laws in force in the Republic, have been declared bankrupt or persons against whom a receiver's order has been issued or who have reached a compromise with their creditors
-          Persons who, in accordance with the Laws in force in the Republic, have been declared insane or of unsound mind
-          Persons who have been convicted of a criminal offence involving dishonesty or moral indecency
-          Persons who in judicial or disciplinary procedures have been found guilty of contravention any Law, regulation or procedure which relates to the Stock Exchange
 
The position a member of the Council may be declared vacant by the Council of Ministers upon the occurrence of any of the events referred to above.
 
 
The term of office of the members is five years and is renewable (section 11 of the CSE Law)
 
 
Independence
 
·         Members of the Council should not have either directly or indirectly themselves, their spouse or through blood relatives up to the second degree of kindred material interest or control or participate on any Board of companies whose shares are listed on the Stock Exchange upon their appointment or during their term of service (section 11 of the CSE Law)
 
·         The Members of the Council are prohibited, while in office, to engage in any stock exchange transactions for their own benefit (section 11 of the CSE Law).
 
·         A Member of the Council who has a personal interest in a matter under discussion is obliged by Law to declare this to the Council and to abstain from the discussion and voting on this matter [section 14(6) of the CSE Law].
 
·        Principle of impartiality [section 42(2) of the General Principles of Administrative Law]: (2) Δε μετέχει στην παραγωγή διοικητικής πράξης πρόσωπο που έχει ιδιάζουσα σχέση ή συγγενικό δεσμό εξ αίματος ή εξ αγχιστείας μέχρι και του τέταρτου βαθμού ή βρίσκεται σε οξεία έχθρα με το άτομο που αφορά η εξεταζόμενη υπόθεση ή που έχει συμφέρον για την έκβασή της. A person having a special relationship or a blood-related or marriage relationship up to the fourth degree or is in an acute hatred with the person concerned by the case or having an interest in its outcome must not be involved in the production of an administrative act.
 
·         The Chairman of the Council and the General Manager are subject to the Labor Exercise Control in the Private Sector by Former Government Officials and Certain Former Employees of the Public and the Wider Public Sector Law [114(I)/2007] under which they must obtain approval from the Special Committee set up in accordance with this Law, if they wish to be employed in the private sector in the first two years after their departure from the CSE. 
 
 
Competencies of the Council
 
The competencies of the Council are determined in the CSE Laws and Regulations. We refer the following main competencies:
 
·         The Council is assigned with the administration of the Stock Exchange and with the responsibility to implement its policy (section 9 of the CSE Law)
 
·         The Council supervises the operation of the Stock Exchange and has complete power over the management and administration of its assets in accordance with the provisions of the Law and the Regulations (section 10 of the CSE Law)
 
·         The CSE Council issues Regulatory Decisions for the procedures of the CSE Markets and the Central Depository / Central Registry.
 
·         The Council (according to section 10 of the CSE Law):
 

(a)	Represents the Stock Exchange before the judicial and other authorities.
(b)	Approves the listing of securities on the Stock Exchange as provided in Stock Exchange Regulations.
(c)	Determines the opening and closing times of its operations.
(d)	Has the power to take all necessary action under the circumstances for the uninterrupted and orderly conduct of its operations.
(e)	Has the power to fix fees on transactions negotiated on the Stock Exchange or announced to it in accordance with the provisions of this Law, as well as other fees, rates and subscriptions.
(f)	Appoints and terminates the services of the employees of the Stock Exchange.
(g)	Provides for the keeping of accounts, as well as the preparation and submission of statements, balance sheets and budgets.
(h)	Provides for the publication of an official Price Bulletin and other publications of stock market content.
(i)	Exercises disciplinary power over the Members of the CSE and the CSE employees in accordance with the Law and Regulations.
(j)	Prepares and submits for approval Stock Exchange Regulations.
(k)	In general is competent to take every action which under this Law or the Stock Exchange Regulations befits to the primary or customary purposes and functions of the Stock Exchange in accordance with the Law and to regulate by its decisions as stipulated by the Stock Exchange Regulations, matters of procedure or formality which may have remained pending and require regulation.
(l)	Has the power to create and enter into contracts for futures and options, and to provide for related services and the exercise of related functions in relation to the creation of futures / option contracts.
(m)	Has the power to establish and operate a Derivatives Market, and to offer consequential or related services for making contracts or settlement of transactions regarding Derivative Products.
(n)	Has the power to establish and operate a Commodities Market and to provide consequential or related services regarding the safekeeping, sale or purchase of commodities.

 
·          The Council has the power to decide the registration of securities in the Central Depository / Central Registry [section 10(1) of the Securities and Cyprus Stock Exchange (Central Securities Depository and Central Registry) Law]
 
·         The Council has the power to decide the removal of securities from the Central Registry / Depository [section 19(1) of the Securities and Cyprus Stock Exchange (Central Securities Depository and Central Registry) Law]
 
·         The Council issues Regulatory Decisions to determine the following [Section 24 of the Securities and Cyprus Stock Exchange (Central Securities Depository and Central Registry) Law]:
 

(a)	The requirements, the form, the content and the procedure for the registrations in the Central Securities Depository and Central Registry;
(b)	The form and the content of all kinds of announcements which are addressed to the issuers and vice versa;
(c)	The rules which govern the execution, clearing and settlement of transactions on dematerialized securities, subject always to the provisions of the Law on the Irrevocability of Settlement in the Payment and Securities Settlement Systems;
(d)	The rules which govern the opening, operation and closing of share accounts or accounts in the Central Securities Depository and Central Registry, in respect of the registration of securities and the conduct of any transaction in relation thereto;
(e)	The form and the content of any certifications granted in respect of securities registered in the Central Securities Depository and Central Registry;
(f)	The rules which govern the deposit or release of a deposited dematerialised security or any other matter related to the clearing and settlement of transactions, made in respect of dematerialised securities which have been deposited in a foreign central depository or central registry, subject always to the provisions of the Law on the Irrevocability of Settlement in the Payment and Securities Settlement Systems;
(g)	The conditions and the execution limits of transactions on dematerialized securities by the Members;
(h)	The establishment and operation of a Fund and the fixing of the contributions to such Fund by the Members or the custodians and/or the provision of guarantees or assurances by the Members or the custodians in view of ensuring the clearing and settlement of the stock exchange transactions; and
(i)	Matters of technical nature.

 
 
Remuneration for the Members of the Council
 
The remuneration for the Members of the CSE Council is determined by a decision of the Council of Ministers in accordance with section 18 of the Securities and Cyprus Stock Exchange Laws which provides that «The Chairman and other members of the Council, receive such remuneration as is determined by the Council of Ministers ». This remuneration has been determined by a decision by the Council of Ministers dated 13 July 2016 to be 70 euro per meeting. In addition, the Chairman receives a small allowance in line with the relevant allowance for other Chairmen of Public Corporate Bodies.
 
 
Council Committees
 
Section 17(3) of the CSE Law gives the Council the power to appoint sub committees to carry out any of its functions and competencies.
 
The CSE Council has established the following committees:
 
Audit Committee
Mr Savvas Polyviou, Chairman
Mr Demetris Koutsoftas, Member
Ms Andrea Kountouri, Member
 
Risk Management Committee
Mr Andreas Michalias, Chairman
Mr Demetris Koutsoftas, Member
Mr George Hadjipavlou, Member
 
The main functions of the Audit Committee:
 
1.       Investigates any matter within the limits of its powers, as defined in its Memorandum
2.       Recommends, monitors and evaluates the function of the Internal Audit Department
3.       Assigns any task necessary to the internal Audit Director
4.       Evaluates the work of the Internal Auditor
5.       Ensures the continuous independence and objectivity of the External Auditors by continuously reviewing and evaluating, on a continuous basis, the effectiveness of the Audit by approving the Audit and non-audit services offered.
6.       Estimates and submits through the Annual Budgets of the CSE the expected Operating expenses, including the possible outsourcing of duties.
 
The main responsibilities of the Audit Committee:
 
1.       Financial statements
 
(a)    Ensuring the reliability of Financial Reports
(b)   Supervising the selection of Accounting Principles
(c)    Evaluation of information in the Annual Budget
(d)   Examination of Audit Results
(e)   Examination of Interim Financial Statement
 
2.       Internal Control Systems:
 
(a)    Examining of the effectiveness of Internal control systems
(b)   Inspecting of own account transactions
(c)    Examining of auditor’s reports
 
3.       External Auditors Supervision: 
 
(a)    Submitting a proposal to the CSE Council for the External Auditors on the following issues
(b)   Submitting a report to the Council of the CSE for the services of the External Auditors offered
(c)    Examining any issues related to the External Auditors, including the co-operation with Internal Auditors
 
4.       Examining compliance issues
 
5.       Annual report on Corporate Governance of the CSE
 
 
The main functions of the Risk Management Committee:
1.              It proposes a risk-taking strategy that meets the business / development goals of the CSE, setting risk appetite levels.
2.              Suggests for the development and continuous effectiveness of the internal risk management system and its integration into the process of business / development decisions.
3.              It recommends the principles that should govern risk management in terms of their identification, forecasting, measurement, monitoring, control and mitigation.
4.              It promotes on a regular basis and monitors the overall level of risk profile of the including compliance with the institutional framework on risk management.
5.              It ensures that the General Manager as well as the CSE Council are adequately informed on all matters relating to the risk taking strategy, tolerance level and level of risk.
6.              It regularly recommends and monitors risk management related to the adoption of the provisions of the new MIFID II, the MIFIR and the implementation of Regulation (EU) 909/2014 on Improving the Settlement of Securities (CSDR).
 
 
 
User Committees
 
The CSE has established the following User Committees in line with CSD Regulation 909/2014:
 
·         Issuers Committee
 
The relevant Announcement dated 23 April 2018 can be found on the CSE website on the following link:
 
http://oam.cse.com.cy/Announcement/announcementvariation/39022
 
·         Participants Committee (Members and Custodians)
 
The relevant Announcement dated 23 April 2018 can be found on the CSE website on the following link:
 
http://oam.cse.com.cy/Announcement/announcementvariation/39023
 
 
These Committees advise the CSE Council on matters relating to the securities settlement systems (the Systems) and express opinion on any matter regarding the Systems, upon request of the Council. They may also submit to the Council reports, complaints or suggestions on any matter regarding these Systems, for the purpose of improving procedures.
 
 
General Manager
 
The General Manager is in charge of the management of the stock exchange, and has the responsibility to oversee the various departments of the CSE and their orderly and efficient operations.
 
His competencies are stated in the CSE Laws and Regulations as well as in the relevant Scheme of Service. Indicatively -
 
·         In accordance with section 19(1) of the Securities and Cyprus Stock Exchange Law «The general management of the operations of the Stock Exchange is assigned to the Manager of the Stock Exchange».
·         The General Manager participates without having the right to vote, at the meetings of the Council or any other committee or subcommittee of the Council (section 14(9) of the CSE Law).
·         The General Manager (together with the Chairman of the Council) signs the Balance Sheet for the preceding financial year – section 49(3) of the CSE Law
·         By a joint decision of the Chairman of the Council and the General Manager, the trading of a listed security may be suspended (section 183 of the CSE Law).
 
 
Corporate Governance
 
The CSE applies the CSE Corporate Governance Code which applies to listed companies, to the extent that it can, having in mind its status as a public corporate body.
 
The Annual Report of the CSE includes a Report on Corporate Governance which states whether the CSE complies with the Code and the extent to which it implements its principles and in the event that it has not complied with the Code provisions, it gives adequate explanation.
 
Both the CSE Corporate Governance Code and the CSE’s Annual  Reports can be found on its website.
 
 
 
Risk Monitoring Tools
 
The following key functions operate independently from one another:
 
·         Risk management function
·         Technology function
·         Compliance and Internal Control function
·         Internal audit function