Private corporations from most jurisdictions are eligible to issue and then list their bonds on the Third Market of the Vienna Stock Exchange or the Emerging Companies Market of the Cyprus Stock Exchange (ECM/CSE) under simplified rules and conditions.
Under the EUs MiFID regulations aimed at encouraging competition within capital markets, the EU allowed for the creation of Multilateral Trading Facilities (MTF) which have been described as a form of “lite exchange” because they provide similar or competing trading services, such as rulebooks and market surveillance departments, but operate through simplified procedures and at very competitive fees than what it would cost to list financial instruments (shares, bonds, funds) on the traditional stock market segments.
The MTF Market of Vienna Stock Exchange is operated by the regulated Vienna Stock Exchange and the ECM is operated by the Cyprus Stock Exchange, which is the MTF Market of Cyprus.
In Vienna they also refer to the MTF Market as the Third Market but trading in bonds goes through the same clearing and settlement structure.
The biggest advantages for listing in MTF Markets are:
- The Issuer does not need to have prior history. Special Purpose Vehicles (SPVs) can be formed and the companies can act as the Issuer.
- A bond listing on an EU stock exchange allows the Issuer regulatory approval to sell the bonds and raise money from investors across the EU28.
- Issuer secures Austrian (AT) International Securities Identification Number (ISIN).
- All kinds of denominations possible for listings on Vienna SE.
- There is no minimum or maximum ownership rule.
- The concept of using nominees is legally allowed.
- There is no minimum volume rule. This means even if for the whole year there is no volume traded on the financial instruments, this is acceptable.
- Listing is done by submission of Information Memorandum under simplified listing procedures.
- Listing is secured on average in 2-4 weeks.
- All applications submitted by e-mail.
- Listing costs are significantly lower.
- The level of reporting after listing is negligible.
- Trading in the financial instruments is done via brokers.
TYPES OF BONDS
The Vienna Stock Exchange allows for most types of bond listings including:
- Traditional bonds with fixed coupon
- Floating rates
- Zero coupon bonds
- Performance linked bonds*, whose value is tied to the performance of the underlying asset.
*Performance Linked Bonds are increasingly becoming attractive since they spread the risk of performance on the investors.
Such Performance Linked Bonds may also be used for trading in capital markets in derivative products such as trading in shares, bonds and forex. When the trading performance is positive, the NAV will increase, whereas if there are trading losses, the NAV will decline.
The Vienna Stock Exchange prefers for Issuers to conduct their private placement of bonds and then list on the Exchange. An Issuer can apply for a larger amount of listing, but list the bonds in tranches of minimum EUR 200.000 lots over several years.
Once the listing procedures have been approved, Eurivex will secure an Austrian AT-ISIN for the bonds.
In future, an Issuer may continue to privately place additional bonds and then following a simple process, add-on to the existing issue (same ISIN) subject to Vienna Stock Exchange approval.
One of the key advantages of listing on the MTF Market of Vienna Stock Exchange is that the Exchange accepts all documentation in English and by e-mail.
An issuer would need an EU-based regulated investment firm (Eurivex Ltd. – www.eurivex.com) to act as the Investment firm signing the application and also appoint a Payment Agent in addition to completing the other documentation.
Eurivex, a regulated by CySEC investment firm provides complete packages directly or through other professional firms.
Eurivex will prepare the Information Memorandum as well as Terms and Conditions of the bond issue and liaison with the Vienna Stock Exchange until the listing is secured.
CLEARING & SETTLEMENT, TRADING
The Issuer also needs to furnish evidence that it meets the requirements for including in trading pursuant to Exchange rules, but Issuer has free choice of clearing system while its Global certificates have to be deposited with Euroclear, Clearstream Luxembourg, the Austrian central custodian OeKB or other custodians having a clearing link with OeKB.
Bonds are traded on Xetra trading system, but Issuer is under no obligation to provide liquidity/to quote, since no actual trading is legally required.
Issuer will need to furnish full corporate documents including Certificate of Incorporation, Shareholder and Director Registry, Memorandum & Articles of Association as well as provide basic KYC documentation of Company directors/principal owners.
Issuer will also provide additional information in order for Eurivex to prepare the Information Memorandum and other documents required for the listing.
When all the documents in the correct form have been provided, it will take Eurivex 1-2 weeks to prepare and submit the first draft Information Memorandum to the Vienna Stock Exchange for review, secure the AT-ISIN, complete the bond dematerialization and electronic delivery to OeKB and secure the final listing approval after 1 week.
Eurivex offers competitive packages covering all the fees, including the Vienna Stock Exchange listing, securing of AT-ISIN, bond registry dematerialization and electronic delivery to OeKB, listing agent and payment agent fees per bond listing (ISIN).