Cayman Islands Stock Exchange (CSX): how it works, who runs it, and what issuers must disclose

I now have sufficient information from the primary sources to write the complete reference page. Let me compile this carefully.

What this exchange is

The Cayman Islands Stock Exchange (CSX) was founded in 1996 and is based in Grand Cayman, Cayman Islands, and started operations in July 1997. Its ISO 10383 market identifier code — the standard machine-readable tag used by banks and data vendors — is XCAY.

Trading on the exchange is conducted in Cayman Islands dollars (KYD). The Cayman Islands dollar is pegged to the US dollar at a fixed rate of approximately CI$1 = US$1.22, so all prices quoted in KYD convert directly and predictably.

The CSX was originally set up to provide a listing facility for the specialist products of the Cayman Islands — mutual funds and specialist debt securities. That heritage still defines it today: the overwhelming majority of its listings are bond-like instruments, structured-finance vehicles, and investment funds, not company shares.

It has only a handful of domestic equity listings, with just three primary equity listings as of 2024, so anyone coming here expecting a broad share market will find a specialist debt and fund exchange with a very thin equity tier attached.

The CSX is known for the broad array of companies that access the exchange, including leading global financial institutions, emerging technology and life sciences companies, as well as some of the world’s most successful hedge funds. The candid picture is this: the CSX is a world-class listing venue for bonds, structured notes, and offshore funds, and a marginal marketplace for ordinary company shares.

Investors seeking Caribbean equity exposure will find almost nothing here; those needing a recognised, regulated address for a Eurobond or a Cayman-domiciled fund will find it excellent.

Who owns it

The CSX was established under the Cayman Islands Stock Exchange Company Law, 1996, as a private limited company. It is fully owned by the Cayman Islands government.

The exchange has never been a members’ club, was incorporated as a government-owned company from the outset, and its own shares are not listed on any exchange.

The CSX is governed by a Non-Executive Board of Directors and overseen by a Chief Executive, accountable to the Board, who is responsible for strategic direction of the exchange as well as its day-to-day operations. The Chairman is Anthony Travers, a former Senior Partner at the law firm Maples and Calder.

The CSX does not belong to any regional exchange group and operates as a standalone government-owned entity.

Who regulates it

The Stock Exchange Authority is an autonomous body established in 1996 under Cayman Islands law as the dedicated regulator for the CSX. The CSX was established under the Cayman Islands Stock Exchange Company Law, 1996, as a private limited company.

The Stock Exchange Authority holds statutory responsibility for the policy, regulation, and supervision of the exchange itself — think of it as the exchange’s own direct overseer, distinct from the broader financial-sector watchdog.

The Cayman Islands Monetary Authority (CIMA) is the primary financial-services regulator of the Cayman Islands. CIMA manages the Cayman Islands currency, regulates and supervises financial services, provides assistance to overseas regulatory authorities, and advises the Cayman Islands government on financial-services regulatory matters.

CIMA is the body that must licence every broker member who wishes to trade on the exchange. A broker member admitted to trade in securities listed on the exchange also must be licensed for trading in securities by the Cayman Islands Monetary Authority.

CIMA has extensive enforcement powers, including the ability to revoke licences, impose conditions, and take legal action. The Securities Investment Business Act (SIBA) — the Cayman’s main securities-business statute — criminalises insider trading and market manipulation, with penalties including fines of up to KYD 100,000 (approximately US$122,000) and imprisonment for up to seven years.

CIMA’s public website, where regulated firms and filings can be found, is at cima.ky. The CSX’s own official list and company announcements are published at csx.ky.

What trades there

The Listing Rules cover equity securities, secondary listings, specialist debt securities, investment funds, depositary receipts, derivative warrants, corporate and sovereign debt securities, and retail debt securities. In plain terms: company shares, bonds of all kinds (including Eurobonds and structured-finance notes), rights certificates linked to other securities, and listed investment funds all have their own rule chapter.

The CSX recently launched a new equity market — ‘XCAY’ — which operates on Deutsche Börse’s XETRA trading platform and provides connectivity to up to 400 banks and brokers worldwide, as well as easy access to markets on both sides of the Atlantic. There is no separately branded second or junior board for emerging companies, but the rules do carve out lighter requirements for “specialist companies” — those without a full three-year operating record — that target sophisticated investors.

Not published: the CSX does not publish a named overall share index with a publicly calculated value on its website (csx.ky) or in its listing rules. The Listing Rules and the product guides reviewed do not specify any benchmark index, its calculation methodology, or a review schedule.

The exchange publishes a Daily Official List and trading summaries, but no standalone equity index appears to exist for the XCAY equity market at this time.

What it takes to list

A new applicant for equity listing must have an expected market capitalisation of at least US$5 million, with a sufficiently liquid market — normally at least 25% of equity securities in public hands (which excludes holdings of directors, substantial shareholders, or their associates) — unless the applicant is a specialist company limited to sophisticated investors, in which case the requirement for a liquid market can be relaxed. That 25% publicly held slice is what the market calls the minimum free-float requirement.

Companies must have an adequate operating record under substantially the same management; the normal requirement for three years’ prior operations can be varied for certain specialist issuers such as technology, shipping, or mineral companies, which may supply instead a satisfactory business plan or expert valuation. The company must be properly registered and its constitution must meet certain governance standards specified in the CSX rules, including a requirement for a minimum of three directors.

Unless a company is a specialist company there is a requirement for a majority of the company’s directors to be independent of management and any other conflicting interests.

The CSX has a specific offering for specialist companies — those without a three-year operating history or audited financial statements — looking to issue securities to qualified investors, defined as those who subscribe for at least US$100,000 of securities in issuers and represent that they are knowledgeable in investment matters. This creates, in effect, a lighter-touch route for early-stage companies that restricts the investor base to institutions and wealthy individuals.

What companies must tell you

A company must notify the CSX immediately of any price-sensitive information, material new developments or operational changes, and any material change in its performance or financial position. In certain cases the CSX will also require that a circular be sent to shareholders, and where the company proposes a change that will fundamentally alter its business operations or a significant transaction with a related party, the CSX may require the company to obtain prior shareholder approval.

The issuer must publish audited annual financial statements within six months of its year end and prepare semi-annual interim financial statements, which may be unaudited.

For listed investment funds, the timetable is longer: audited annual reports and accounts must be sent to shareholders and the CSX within nine months of the period to which they relate. The Listing Rules require all announcements and financial documents to be filed in English, which is the sole official language of the exchange and the Cayman Islands legal system.

Not published: the CSX’s Listing Rules (csx.ky/Documents/Rules/CSX_LR2014_Complete.pdf, the most recent complete version publicly available) do not specify a percentage shareholding threshold at which a shareholder must publicly disclose their stake — a major-shareholding disclosure threshold — for the equity market. The rules require equal treatment of all shareholders and notification of takeovers, but no numerical trigger (such as the 5% or 10% thresholds common in the EU or the UK) is stated in the publicly available equity product guide at csx.ky/listing/equity.asp or in the general listing rules.

The governing statute, the Cayman Islands Stock Exchange Company Law, 1996, does not itself set such a threshold; the exchange retains discretion to require disclosure of “substantial shareholders” without fixing a number in its public rules. Similarly, the equity product guide does not mandate specific pay disclosure for board members beyond the general obligation to include all information necessary for an investor to make an informed decision.

How trading works

Trading on the XCAY equity platform runs Monday to Friday, with the main session between 7:00 am and 12:30 pm Cayman Islands time (12:00 noon to 5:30 pm GMT). The pre-trading session starts 30 minutes before the main session, from 6:30 am Cayman time (11:30 am GMT).

During this session broker members may enter orders in preparation for the main session or revise or delete existing orders. The order book is not open for trading during this session, so orders will not be matched until the beginning of the main trading session.

Five-minute auctions are held at the beginning and end of the main trading session, during which orders are matched on the principle of maximum executable volume. At the end of the opening auction, continuous trading commences at 7:05 am Cayman Islands time (12:05 GMT).

The Cayman Islands does not observe daylight saving time, so the GMT offset remains fixed at GMT−5 throughout the year. The exchange runs approximately 250 trading days per year, following a calendar of standard public holidays.

Any security traded on XCAY can be supported by broker members who are also specialist market makers, playing an active support role to the trading in particular securities. Market making is optional, not mandatory for all securities.

There are no CSX trading fees. Not published: the CSX’s trading procedures page (csx.ky/trading/trading-procedures.asp) does not specify a price-movement circuit-breaker — a point at which trading automatically halts — for the XCAY equity session; the exchange’s own XETRA-based platform has system-level volatility interruption mechanisms inherited from Deutsche Börse, but these are not enumerated in the CSX’s public rulebook.

How a trade is settled

Securities of issuers incorporated in the Cayman Islands may opt to use direct physical settlement as the approved settlement mechanism. Settlement takes place on the third business day (T+3) after the date the transaction is executed — meaning if you buy on Monday, money and shares change hands on Thursday, assuming no public holidays intervene.

Securities may be accepted for listing and trading if they are eligible for deposit and settlement in an acceptable electronic settlement system such as the Depository Trust and Clearing Company (DTCC), Euroclear Bank, TMX CDS, or any other system agreed in advance with the CSX. All securities listed on the CSX may be settled through Clearstream Banking Luxembourg.

Clearstream is the pan-European central securities depository — the institution that keeps the definitive record of who owns which securities and effects the actual transfer of ownership.

For international cross-listings on the CSX, settlement takes place in the primary market, and the procedures follow those of the primary market. In practice this means a foreign company with a secondary listing here settles through whichever of DTCC, Euroclear, or Clearstream is used in its home market.

Whether shares are held in your own name or under a nominee depends on the settlement system used; Clearstream-settled securities are almost always held under a chain of custodians rather than in the beneficial owner’s own name.

Short selling, lending and margin

The CSX’s publicly published Listing Rules and trading procedures do not contain any provision permitting or regulating short selling — selling shares you do not own in the expectation of buying them back more cheaply — or securities lending for the XCAY equity market. Cayman Islands laws and regulations do not impose restrictions on, or prescribe rules for, investment strategies including leverage and shorting at the fund level, but this permissiveness applies to fund management, not to exchange-traded activity.

Not published: the CSX’s trading procedures page (csx.ky/trading/trading-procedures.asp) and Listing Rules (csx.ky/Documents/Rules/CSX_LR2014_Complete.pdf) make no mention of approved short-selling mechanisms, securities-borrowing programmes, or margin-trading facilities for the exchange’s equity market. Given the extremely thin domestic equity base — fewer than a handful of primary equity listings — the practical reality is that neither short selling nor share lending exists as an organised activity on this exchange.

Buyers and sellers are effectively long-only participants transacting in a very illiquid market.

Can a foreigner buy here?

The Cayman Islands levies 0% corporate tax, income tax, capital gains tax, and withholding tax. There is no requirement for a foreign investor to register with any government body or obtain a tax identification number simply to buy securities listed on the CSX.

Only CSX broker members may access the trading facilities of the CSX, and a broker member admitted to trade must also be licensed for trading in securities by the Cayman Islands Monetary Authority. A foreign investor therefore opens an account with a CSX-licensed broker or, for securities settled through Clearstream or DTCC, instructs their own custodian bank to transact through one of the approximately 400 institutions connected to the XETRA network.

Dividends paid by Cayman Islands companies are not subject to withholding tax, regardless of whether they are paid to residents or non-residents. Recipients of dividends are also not taxed on dividend income in the Cayman Islands.

However, the tax treatment in the recipient’s home jurisdiction will depend on their local tax laws and any applicable double-taxation agreements. Capital gains on securities are similarly untaxed at source in the Cayman Islands; your own country’s rules determine what you owe at home.

There are no capital controls in the Cayman Islands: money may be repatriated freely. The CSX is a member of the Intermarket Surveillance Group (ISG) and an affiliate member of the International Organisation of Securities Commissions (IOSCO).

It holds recognised status from both UK HMRC and the Irish Revenue, enabling debt securities listed on the CSX to benefit from the UK/Irish Quoted Eurobond Exemption. There is no foreign-receipt programme (such as an American depositary receipt) for CSX-listed equities, as the equity market is too small to sustain one.

What it costs

CSX fees for a primary listing of equity securities are set out on the exchange’s listing fees page; listing and annual fees for secondary listings are half those of a corresponding primary listing. The equity product guide at csx.ky/listing/equity.asp states these fees as a schedule but does not reproduce the full table in plain text — the fee table is rendered as an image on the page.

What the public documentation does confirm is that the initial listing fee and annual retention fee both scale with the size of the issuer, and that there are no CSX trading fees.

For debt securities, the current annual fee for a standalone issue is US$3,500. A fee of US$500 (CI$410, approximately US$500) is payable by the issuer of a class of securities already listed where the issue was pre-empted in a previously approved listing application and the nominal value of the securities to be issued does not exceed the maximum nominal amount previously approved.

There is no stamp duty or transaction tax on securities trades in the Cayman Islands; the only taxes that exist in the jurisdiction are stamp duties on land transfers.

Where the prices are

The CSX publishes a Daily Official List and a Daily Trading Summary on its own website at csx.ky — these are the primary free sources of closing prices, and they are available to anyone. The exchange operates on a fully electronic trading platform developed under a partnership with Bloomberg L.P., and Bloomberg terminal subscribers can access CSX-listed securities directly through that connection.

The XETRA platform also means that the roughly 400 institutions connected to the broader XETRA network can see live order-book data during the trading session.

For the broader market of commercial data vendors: the CSX is a small and specialist exchange, and its equity data is not widely distributed on platforms aimed at retail investors. The EODHD (End-of-Day Historical Data) service uses the suffix .CSX to identify securities listed here, which provides at least one route to machine-readable historical closing prices.

The exchange does not, however, publish a single consolidated real-time price feed for free public consumption; price discovery for the thinly traded equity market is best done directly through a licensed CSX broker or via Bloomberg.