Deliberations on the bill for the privatization of the Cyprus Stock Exchange (CSE) are set to begin today, Monday, in the Parliamentary Finance Committee.

Approved by the Cabinet on June 4, the bill outlines the process for selecting a strategic investor, the transfer of responsibilities and personnel to the Ministry of Finance, and the phased handover of operations and assets.

The privatization initiative is designed to strengthen the stock market and attract investment interest. It also serves as a critical milestone for securing disbursements under the Recovery and Resilience Plan. According to the Ministry of Finance, the reform is expected to positively impact the economy and reinforce Cyprus's role as a regional financial hub.

The accompanying explanatory report highlights that the legislation formalizes the framework for the privatization of the CSE, the Central Depository, and the Central Registry of Securities, with the goal of transferring ownership to a strategic investor.

Specifically, the bill defines the stages of privatization, the investor selection methodology, and the authorities responsible for implementation. It also provides for the transfer of all CSE operations, responsibilities, activities, functions, and assets—both assets and liabilities—to the new owner or another designated entity.

Additionally, the bill stipulates the transfer of permanent CSE staff to the Ministry of Finance or their compensation through a voluntary early retirement scheme.

The report notes that the privatization of the CSE reflects a settled political decision.

“Given that the CSE’s turnover has steadily declined in recent decades due to various local and global financial crises—resulting in ongoing losses—the government has sought long-term solutions to ensure the sustainability of the stock market in Cyprus,” it states.

A study conducted by an independent consultant on behalf of the Ministry of Finance evaluated alternative models for restructuring and upgrading the stock exchange, ultimately identifying privatization as the most viable and advantageous option for the state.

Following this, a competitive process was launched to hire specialized advisors who drafted the current bill. The draft underwent public consultation in early 2024 and was shaped through coordination with key state bodies, including the Cyprus Securities and Exchange Commission, the Department of Public Administration and Personnel, the Tax Department, and other relevant agencies.

The selection of a strategic investor for the CSE has been designated as a key milestone in Cyprus’ National Recovery and Resilience Plan. It is a prerequisite for submitting the country’s 7th payment request to the European Commission by the end of 2025.

According to the impact assessment, privatizing the CSE—following the model of most European stock exchanges—is expected to improve the institution's competitiveness, restore investor confidence, and enhance market liquidity and appeal. It is also projected to positively affect the broader economy, positioning Cyprus as a regional financial services hub.