On 29 January 2025, the Cyprus Securities and Exchange Commission (CySEC) announced in a press release that a roundtable discussion had been held to breathe new life into the Cyprus Stock Exchange (CSE).
Subsequently, an initiative has been launched to restore the CSE’s role as a driver of economic development in Cyprus, where companies do not just list, but thrive.
CySEC's Revitalisation Strategy
CySEC has introduced a strategic initiative in order to revitalise the CSE and reinforce its role as a significant driver of economic growth and fulfil its potential as a critical part in Cyprus’ financial ecosystem; CySEC is thus actively working to enhance the CSE’s functionality, liquidity, and appeal to both domestic and international investors.
Some of the ideas put forward include the introduction of government, semi government organisation or local authority bonds; incentives for companies to list on the stock exchange, such as tax reductions aimed at enhancing liquidity and diversifying the tradable securities on the CSE.
Further discussions revolved around boosting financial literacy and investor education, which has been a key focus of CySEC. Thanks to the accessibility of investor information, advertisements and propaganda, through social media, boosting financial literacy has never been more crucial for ensuring stable investor participation.
Another crucial step in restoring the CSE is the organisation of marketing campaigns and events in coalition with international financial organisations in order to promote investment opportunities in Cyprus, aiming to enhance the CSE’s competitiveness.
CySEC’s Chairman, Dr George Theocharides, commented on the initiative, stating: "A healthy stock exchange helps listed companies raise capital for their development. Especially in a small economy like Cyprus, it is crucial because it strengthens liquidity and creates opportunities for establishing new businesses, in addition to supporting the existing ones. A healthy CSE can also play a role in the internationalisation of Cypriot businesses by attracting foreign investors and opening new markets for them".
Learning from Global Financial Hubs: Luxembourg and Dubai
While Cyprus may have a small economy, size has not stopped other countries from turning their stock exchanges into thriving financial hubs.
Luxembourg for instance, although it is not the largest in Europe it is one of the most specialised.
In assessing what can be taken from Luxembourg’s example, Cyprus could focus on a niche financial sector that aligns with global trends. Among the possibilities are FinTech or Environmental Social Governance (ESG) investments, establishing tax incentives for companies introducing sustainable bonds or digital assets, or collaborating with other international financial markets and institutions.
Additionally, Dubai is another prime example, having transformed itself into a global financial hub offering notable tax benefits and a business-friendly regulatory environment, which is highly attractive to international investors.
Key takeaways from the Dubai International Financial Centre's (DIFC) success is the introduction of attractive tax policies, the creation of a special financial district where international companies may set up regional headquarters, and the implementation of fast-track listing processes in order to reduce bureaucracy and encourage more IPOs.
Cyprus' Stock Market Revival
A thriving CSE is not just good for investors, but good for Cyprus as a whole; it means a stronger economy, more global connections, and a stock exchange that is not an afterthought but a destination.
By implementing these tactics, CySEC aims to restore confidence in the CSE, enhance global participation, and position Cyprus—particularly the CSE—as a dynamic, abundant, and resilient marketplace. This will bolster Cyprus’s financial sector and cultivate long-term economic sustainability.
The blueprint for success is there, with small economies continuously proving they can punch above their weight in global finance. However, like any great redemption story, its success largely depends on execution; if CySEC can turn these proposals into meaningful actions, CSE could very well transform into a modern, competitive exchange. In today’s fast-moving climate, innovation is not only necessary for growth but also to avoid becoming obsolete.
Written by Andie Henderson, Legal and Compliance Associate, FAI Comply