The CSX listing rules are designed to meet international standards, disclose all relevant information and accommodate disclosure requirements and the necessary flexibility for specialised instruments listed on the exchange. At the same the objective is to avoid overly onerous requirements.
For instance structured debt listings do not require a local sponsor, there are no investment restrictions or minimum capitalisation requirements for investment funds, there is no requirement for locally resident directors and the provisions of EU directives, such as the EU Prospectus Directive, do not apply.
As CSX regulations are concentrating on minimising systemic risk and sophisticated investors, a listing on the exchange combines high visibility to institutional investors with a comparatively low disclosure cost.
In the past the exchange has been responsive to market needs and adapted its listing requirements to address new fund and debt structures and products. As a result, the Cayman Stock Exchange is now the preferred place world-wide for the listing of catastrophe bonds.
The Cayman Islands Stock Exchange has offered a specialised listing and trading facility in the Cayman Islands since 1997. The CSX focuses on the listing of the products of the Cayman Islands financial services industry, notably investment funds and structured debt product aimed at institutional and high net worth investors.
The fund structures include mutual funds, hedge funds, funds of funds, open and closed ended funds, umbrella funds, master/feeder structures, segregated portfolio/protected cell companies, limited partnerships and unit trusts. Listed debt products encompass asset-backed, collateralised and credit-linked securities, Eurobonds, as well as sukuks and catastrophe bonds.
The CSX also features a secondary listing facility and offshore trading of securities listed and traded on other recognised exchanges and enables domestic companies to list and trade locally.
In 1999 the CSX was admitted to the London Stock Exchange’s list of approved organisations, as the first offshore exchange to gain this designation. This enabled securities listed on the CSX to become both eligible for quotation on the SEAQ (Stock Exchange Automatic Quotation) international trading system and eligible for trading in the LSE’s international equity market.
In the UK the Cayman Stock Exchange has been designated by Her Majesty’s Revenue and Customs as a recognised stock exchange under section 1005(1)(b) of the Income Tax Act of 2007. As a result, all securities registered on CSX are classed as “listed on a registered stock exchange” for the purpose of tax legislation.
This is an important factor under UK law for several reasons. Firstly, UK pension schemes are permitted to hold securities listed on these exchanges, giving companies and funds listed on such an exchange access to a larger market of sophisticated, well-capitalised investors. In addition debt securities satisfying the Eurobond exemption on these exchanges are not required to withhold tax from distributions to parties in the UK.
Thirdly, securities listed on these exchanges may be held in tax-advantaged individual savings accounts and personal equity plans and finally, there is some inheritance tax advantage to holding securities listed on recognised stock exchanges.
Third party oversight of listed securities
The completely electronic listing application, results in a fast and efficient listing process that is carried out by professionals who are sensitive to the issuer’s listing deadlines. There is no enhanced fee for speedy handling of new listings.
The initial listing documents are reviewed by the CSX staff for the suitability of the issuer’s directors, investment manager, administrator, custodian, prime broker, arranger and auditors.
Subsequently compliance staff of the Cayman Islands Stock Exchange ensures the periodic filing of NAVs and monitors NAV updates for unusual changes in NAVs, subscriptions and redemptions.
Staff also monitors the timely filing of audited financial statements and reviews the statements for undisclosed information and risks. In addition CSX staff carries out general compliance reviews and monitors new developments that could affect the listed security.
This third party oversight and monitoring function of the exchange reduces the risk and increases transparency for investors.
The CSX website also provides interactive access to information and prices of listed securities. In addition CSX has partnered with Bloomberg and Telekurs to publish some or all of this data through their facilities.
The full schedule of fees is published on the CSX website at www.csx.com.ky.