The Cyprus Stock Exchange (CSE) has begun experiencing difficulties and, without state support, will not be able to cover its budget if its privatisation process is not completed.
This is the main conclusion drawn from what is stated in the introductory report accompanying the Stock Exchange's budget for 2027, which was recently submitted to Parliament and will soon be put under the microscope of the House Finance Committee.
According to the report, the CSE's budget for the new year is in deficit by €3.14 million, despite the provision for granting state support, with revenues and expenditures amounting to €7 million and €10.13 million, respectively.
In the years 2028-2029, the budget will continue to be in deficit by €0.08 million and amounts to €7.6 million and €7.9 million, respectively, while the deficit will be covered by equivalent cash reserves that the Organisation is estimated to have on 31 December 2026.
It is noted that over time the CSE budget has been financed from its own resources, while from 2027 onwards, state funding of €1.3 million in 2027, €1.7 million in 2028 and €1.8 million in 2029 will be required.
Based on the above, the report emphasises that "in the coming years, if privatisation is not completed, cash reserves will not be sufficient to cover the budget."
The revenue
However, as far as revenue is concerned, in 2027 it is expected to reach €7 million and will be increased by 26.4% or in absolute numbers by €1.456 million, while in the years 2028-2029 it is estimated that it will increase further and reach €7.55 million and €7.8 million, respectively.
Based on the introductory report, the increase in revenue is mainly due to the provision for the granting of state sponsorship of €1.28 million in the years 2027-2029 and concerns the possible completion of the privatisation of the CSE and payment by the state of the cost of early retirement of personnel.
The costs
As for expenditures, in 2027 they are expected to reach €10.13 million and be increased by 11.42% compared to 2026 or in absolute numbers by €1.04 million, while in the years 2028-2029, expenditures are estimated to decrease and reach €7.6 million and €7.8 million, respectively.
It is worth mentioning that, based on a relevant table, the majority of the expenses in both 2027 and the years 2028-2029 concern the Council's salary and staff salaries, which for 2027 are expected to amount to €6.62 million.
In fact, concerning staff salaries, as stated in the introductory report, in 2027 these are marginally increased compared to 2026 and continue to include the cost of the Early Retirement Plan of €1.8 million, as well as the allocation of a lump sum to the Staff Welfare Fund of €400,000, based on an agreement signed with the Ministry of Finance.
It is noted that both provisions may be paid on the reporting date of the privatisation of the CSE.
How will the Athens Stock Exchange acquisition affect the CSE?
However, and based on the explanatory note accompanying the Stock Exchange's budget, the CSE is also significantly affected by the acquisition of the Athens Stock Exchange by the European Euronext Group.
As the note specifically states, "following the successful completion of the relevant public takeover bid and the integration of the Athens Stock Exchange into the Euronext European Group, Euronext Athens (new name of the Athens Stock Exchange) is in a transitional stage of changing its electronic systems, which mainly concern (i) the Euronext Trading System (Optic), - (the transition to the system is expected to be completed by June 2027) and (ii) the Central Depository and Central Registry and Clearing System (this transition is expected to be completed in 2029)."
Following the above development, it is added that the Cyprus Stock Exchange recently received a proposal from the Euronext Group for the CSE to transition to the common trading system with Euronext Athens (OPTIC), as planned, from June 2027.
This relevant proposal in principle by the Euronext Group, it is further stated, also provides for the cost of the infrastructure (initial and annual - €250,000 excluding VAT initial for transition and €770,000 excluding VAT, annual right of use for the trading system only).
With this development, it is explained that expenses are increasing significantly, therefore, to cover cash reserves, a provision has been made for receiving revenue from the Ministry of Finance for the coming years.
This additional funding arises for the year 2027 from the provision for payment of the total expenditure amount of €2,160,093 arising from the transfer of personnel due to privatisation in the year 2027.
