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New Equity Trading Platform for the Cayman Islands Stock Exchange

The Cayman Islands Stock Exchange (the “CSX”) has recently announced that it has signed an agreement with Deutsche Boerse AG to use its XETRA trading platform. The anticipated live date for the trading platform is 25 March 2013.

The new trading platform will provide issuers of equities (“Issuers”) with a competitive secondary market in the Cayman Islands, which in turn should prove to be particularly attractive to institutional investors who may be restricted from investing in securities unless they are listed on a recognised exchange. Combined with the benefits of a tax free offshore financial centre with unrestricted capital movement the new trading platform should prove to be highly beneficial to international Issuers and investors.

The CSX

The CSX commenced operations in July 1997 and functions as a specialist exchange for listing equity securities, specialist debt, offshore funds, depositary receipts and Eurobonds. 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. The CSX has developed sophisticated listing rules tailored to meet the needs of Issuers with the latest structures and products and is recognised by many of the world’s leading financial institutions, including Goldman Sachs, JPMorgan Chase, Morgan Stanley, Credit Suisse, Deutsche Bank and BNP Paribas, all of whom have listed products on the CSX.

International Recognition

The CSX has been granted approved organisation status by the London Stock Exchange (“LSE”). This means that securities listed on the CSX are eligible for trading on the LSE’s international equity markets and for quotation on the Stock Exchange Automatic Quotation international trading system.

The CSX is an affiliate member of the International Organisation of Securities Commissions (“IOSCO”), the leading international group of securities market regulators. CSX’s affiliation with IOSCO indicates that the exchange meets the highest internationally accepted standards of securities regulation.

The UK Inland Revenue has granted the CSX “recognised stock exchange” status, which in summary, means that:

  • interest on securities listed on the CSX can be paid without deduction of UK withholding tax;
  • securities listed on the CSX fall under the definition of “qualifying investments” which is a requirement for most Personal Equity Plans and Individual Savings Accounts; and
  • personal pension schemes restricted to investing with recognised stock exchanges can invest in CSX listed securities.

Advantages of an Equity Listing on the CSX

The advantages of an equity listing on the CSX for international Issuers include:

  • Access to a wider investment base: Both institutional and non-institutional investors may be prohibited or restricted from investing in unlisted securities or securities which are not listed on a recognised stock exchange. An equity listing on the CSX would therefore increase the potential investor base by providing enhanced access to such investors.
  • Increased prestige and profile: A listing on a well regulated and recognised stock exchange, such as the CSX, provides a valuable marketing tool for the promoters of the Issuer.
  • Increased Visibility and Transparency: Publication of the Issuer’s listed price and other information on the CSX’s dedicated Bloomberg and Telekurs pages guarantee visibility for the Issuer and transparency for the investor at all times.
  • Flexibility: The CSX is not bound by the European Prospectus Directive and so can be more flexible in its approach by meeting the needs of Issuers.

About XETRA

The XETRA trading platform is in use at several exchanges including the Frankfurt, Irish and Shanghai stock exchanges and Eurex AG. Approximately 400 banks and brokerage firms in 20 countries connect to Deutsche Boerse’s XETRA Network and approximately 900,000 securities are currently traded using XETRA technology.

Contact our experts for further advice

View profile for Chris HumphriesChris Humphries
Managing Director and Head of Funds

This publication is for general guidance and is not intended to be a substitute for specific legal advice. Specialist advice should be sought about specific circumstances.