Ministry hails CSE sale as major milestone — investor to be chosen in 2026

The House of Representatives has unanimously approved legislation paving the way for the privatisation of the Cyprus Stock Exchange (CSE), marking what the government described as a major institutional reform for the country’s financial sector.

In a statement welcoming the decision of the plenary, the Finance Ministry said that the passage of the bill constitutes “ significant institutional and reform milestone“, forming part of the broader modernisation of the capital market and the strengthening of the competitiveness and credibility of the Republic’s financial system.

The ministry stated that the new law establishes the necessary framework for the privatisation of the Cyprus Stock Exchange (CSE), as well as for the smooth transfer of the responsibilities of the Central Depository and the Central Registry of Securities to a strategic investor.

It added that it also ensures “the uninterrupted continuation of their operations and the protection of the public interest”.

It further stated that the legislation “safeguards the labour rights of CSE staff, providing for their smooth transfer to the Finance Ministry or, alternatively, the payment of compensation under an early voluntary retirement scheme“.

The Finance Ministry also expressed its thanks to members of parliament, and in particular to the House finance committee, “for their cooperation and contribution to completing the reform, reaffirming its commitment to the effective implementation of the law for the benefit of the Cypriot economy”.

The legislation, formally titled the Law on the Privatisation of the Cyprus Stock Exchange, the Central Depository and the Central Registry of Securities and the Transfer of CSE Staff to the Ministry of Finance Law of 2025, sets out the legal structure for the process.

It provides for the creation of a special purpose vehicle that will act as the vehicle for the privatisation, as well as the procedure for the sale of its shares to a strategic investor.

The law also defines the competent bodies, the process for selecting the strategic investor and the individual stages of the privatisation.

It regulates the transfer of operations, responsibilities, activities, functions, as well as the assets and liabilities of the CSE to the special purpose vehicle and subsequently to the strategic investor.

Regarding employees, it provides either for their transfer to the public service or for compensation under a voluntary early retirement scheme.

A revised bill submitted by the Finance Ministry ensures the career progression and rights of staff who will move into the public service or opt for voluntary retirement.

It also introduces a provision for the inclusion of qualitative criteria in the evaluation of prospective strategic investors, so that beyond the financial offer, the business plan for the development of the stock market will also be taken into account.

Specifically, the evaluation of offers will be based on a weighted ratio, with the offered price corresponding to 70 per cent and the business plan to 30 per cent.

This is bill is “extremely important for the Cypriot economy and its prospects,” said House finance committee president Christiana Erotokritou during her intervention in the plenary session.

She stated that the CSE in its current form has limited capacity for growth, investment in new technologies and expansion of its investor base.

Moreover, she stressed that the strategic investor should be an institutional and regulated entity, namely another regulated market capable of boosting the capital market, clarifying that this is not a “sell-off” but a development choice.

She expressed satisfaction over the consultation with trade unions and over the fact that the Finance Ministry accepted the position that price should not be the sole selection criterion, something reflected in the 30 per cent weighting assigned to qualitative criteria.

“The advantages of privatisation have already been highlighted,” said Disy MP Harris Georgiades.

He welcomed the strengthening of the qualitative criterion in the final form of the bill and underlined that for his party the privatisation of the CSE does not constitute the sale of an asset but a prospect for growth and market upgrading.

He added that parliament must closely monitor the course of the process launched with the adoption of the law.

The move follows a year in which the CSE itself reported strong performance and substantial preparatory work for privatisation.

In December of the previous year, CSE chairman Marinos Christodoulides said that, “the Cyprus Stock Exchange continued its steadily upward trajectory of recent years, recording notable activity as well as increased investment interest, within a highly changeable international environment characterised by economic challenges, instability and growth opportunities”.

“Specifically, up to December 29, 2025, the General Price Index of the CSE recorded a positive change of 27.29 per cent compared with its level on December 31, 2024,” he added.

He said that “the average daily trading activity amounted to €699,000, a figure that reflects the gradual strengthening of market liquidity”.

Market capitalisation stood at €37.5 billion in 2025, while “the participation of foreign investors in the capitalisation of CSE-listed companies amounted to 38.03 per cent of the total market capitalisation,” he stated.

He added that remote members accounted for approximately 10 per cent of daily trading activity and described progress on privatisation as pivotal, saying that, “of key importance during 2025 was the achievement of substantial progress on the important project of the privatisation of the Cyprus Stock Exchange”.

“The privatisation project is expected to move forward in 2026, with the selection of a strategic investor and the conclusion of an agreement with the state, which is currently the owner of the CSE,” he said at the time.

At the same time, industry stakeholders have expressed reservations about the possible path of the CSE privatisation and the ownership model that will ultimately be adopted.

Speaking to the Cyprus Mail, Roman Lokhov of Roemer Capital argued that Cyprus is well positioned to build a strong capital market but cautioned against transferring full control of the exchange to a single entity, particularly another foreign exchange.

“If you want fast and sustainable development of the capital market, one stakeholder is not enough,” he said.

“The stock exchange should not be sold entirely to one owner,” he added, advocating a multi-stakeholder model involving local and international banks, brokerages and funds, alongside continued government participation.

“When a stock exchange is sold to another exchange, sometimes not much changes,” he warned, arguing that Cyprus should use privatisation to create a broader financial ecosystem and position itself as a gateway between Europe, the Middle East and emerging markets.