Welcome to the CSX - Spring 2005 newsletter.

Content:	2005 and off to a remarkable start
	Changes to the Membership Rules
	Regulatory Action SEGOES Securities Ltd.
	International Monetary Fund Assessment Points to Quality and Strength of Cayman Islands’ Regulatory and Anti Money-Laundering Regimes.
	Board of Directors re-appointed
	Stuarts admitted as listing agent
	Cayman Islands 2005 Public holidays

The Cayman Islands Stock Exchange had a very good 2004 and there is every reason to think that thanks to its ability to successfully develop niche products and respond to changing market conditions, the Exchange will have an even better 2005. The steady growth of the Exchange, from 200 listings in 1999 to over 850 listings to date is a testament to its success.

The UK Inland Revenue recognition contributed to a surge in the demand for the Exchange’s listing products. By year-end over 850 listed issues showed a combined market capitalisation of close to USD55bn and a remarkable increase in listings for that year.

The Exchange caters for the specialist products of the Cayman Islands, with Mutual funds and Hedge funds carrying the largest market share of its listings. However, in 2004 the CSX enjoyed increased interest in the listing of its other products such as global depositary receipts, eurobonds and derivative warrants.

There are a multitude of benefits for investors and companies looking to list their funds on the Cayman Islands Stock Exchange. The listing process is quick, disclosing all relevant information without imposing unnecessary conditions. This is largely because the European directives which apply to the Dublin, Luxembourg and London exchanges do not apply to the CSX and it can therefore be more flexible in its approach.

One reason for the Exchange’s success is its discriminating listing rules and policies which preclude listings of highly speculative stocks. "The listing of companies with penny stocks of questinable value could negatively affect the reputation of the Exchange. We have made sure that the listings meet the high standards of governance and compliance, thereby ensuring that we maintain the faith of investors," says Anthony Travers, senior partner of Maples and Calder and the Chairman of the Exchange’s Council. The Council’s role is to ensure that the Exchange recognises market demands and offers the right product. "We have expanded our range conservatively but very successfully", he adds.

The CSX has recently issued amendments to the Membership Rules. The changes incorporated the second amendment to these rules. The new set of rules is dated December 2004 and replaces the previous August 2003 version. Changes were made to Chapter 2 - Admission requirements and procedures as well as Chapter 5 - Investigation and disciplinary proceedings.

The amendments to Chapter 2 are a consequence of the changes to Chapter 5, which has been revisited in detail. The most important changes to Chapter 5 are those in respect of the process for disciplinary action and the appeals procedure. Other areas have been amended to ensure a consistent and logical approach to the disciplinary process.

The Membership Rules are available in full on the CSX website at www.csx.com.ky. Hard copies in CSX binders are also available from the CSX at a cost of US$50. If you have any comments or queries on these rules please contact Monique Melis by e-mail: monique.melis@csx.com.ky or phone direct line: 345- 914-1881.

Following the suspension of the firm in March 2004, the CSX on 11 October 2004 announced the termination of Segoes Securities Ltd.’s broker membership.

In terminating the broker membership, the CSX was acting pursuant to its powers under rule 2.14 of the Rules having concluded that SEGOES was in breach of some or all of rules 2.14(h), 2.14(i)(i), (ii) and (iv).

The CSX was assessed against the relevant IOSCO principles. The IMF mission’s assessment of the operations of the CSX is positive, stating that "as an SRO, the Exchange appears to carry out its functions in a professional and competent manner." Of the relevant 11 IOSCO Principles, 5 were rated as "implemented", 2 as "broadly implemented" and 4 as "not applicable".

The assessors found that "the listing rules of the Stock Exchange provide for full, accurate and timely disclosure of financial results and other information that is material to investors’ dicisions. It also provides that all holders of securities in a company are treated in a fair and equitable manner. Accounting and auditing standards are in line with the best international practice."

Additional fact sheets and backgrounders summarizing the securities section of the report are available via the IMF report link on the Cayman Islands Goverment web site www.gov.ky.

The Board of Directors were in December 2004 re-appointed for a new period of two years by the Cayman Islands Stock Exchange Authority.

Members of the CSX Board of Directors: (Standing from left) Charles Farrington, Sheree Ebanks, Harry Chisholm, Jude Scott, CEO Valia Theodoraki. (Sitting from left) : Vice Chairman Deborah Drummond, Chairman Anthony B. Travers, Gwendolyn McLaughlin. Absent: James Bergstrom, Nick Freeland, Barry Smith.

Stuarts, Walker Hersant Attorneys-at-law was admitted as a Listing Agent of the Cayman Islands Stock Exchange (CSX) in 2004.

With the Board of the United Kingdom Inland Revenue designating the CSX as a recognized stock exchange under Section 841(1)(b) of the Income & Corporation Taxes Act 1988, becoming a Listing Agent of the CSX was a natural progression for us in response to client demand, stated Andrew Hersant a partner of Stuarts, Walker Hersant.

Commenting on their decision to become a Listing Agent Mr. Hersant explained that "due to the continued expansion of our funds practice and the increasing client interest in obtaining a CSX listing, to become a Listing Agent was a natural and economical development enabling us to provide a comprehensive service to our clients".

Given that the Cayman Islands is widely recognized as a leading jurisdiction for the establishment of investment funds, including hedge funds, the designation of the CSX as a recognized stock exchange provides an exciting future, making the Cayman Islands an extremely attractive jurisdiction to obtain a listing.

Stuarts, Walker Hersant Attorneys-at-Law, was formed in 2002 by a number of leading Cayman Islands attorneys. The firm specializes in corporate and commercial law, investment funds, private equity structures, offshore capital market transactions and regulatory matters, regularly representing leading fund managers, private equity houses, banks and other financial institutions. In addition the firm is recognized as a commercial litigation practice.

For further information please contact:
Andrew Hersant: (345) 814 7904 andrew.hersant@stuartslaw.com
Chris Humphries: (345) 814 7911 chris.humphries@stuartslaw.com