Welcome to the Summer 2004 newsletter from the Cayman Islands Stock Exchange.

Content:	CSX recognised by UK Inland Revenue
	East Capital
	O2Micro started Trading
	Cross-market on Bloomberg
	New Listing agent - CARD
	CSX attends Hedge Funds World Nordic Region conference

On March 4th 2004 the Board of the UK Inland Revenue granted the Cayman Islands Stock Exchange (CSX) status as a “recognised stock exchange” under Section 841 of the Income and Corporation Taxes Act 1988.

This recognition of the CSX places the Exchange on the same footing with those in other financial centres, such as the Irish, London and Luxembourg stock exchanges. The recognition enhances Cayman’s position as a jurisdiction with the regulatory and legislative framework necessary for the conduct of international finance and securities transactions.

Companies listing debt securities on the CSX can take advantage of the “quoted eurobond exemption”. This important advantage now means interest on the securities so listed can be paid without deduction of UK withholding tax. The Cayman Islands is already one of the leading jurisdictions for structured finance transactions, but the recognition increases its attractiveness as the financial centre most suitable for the issuance and listing of corporate debt and a variety of asset-backed and securitised interest-bearing notes.

As a direct result of the recognition, a number of new secured fixed rate and floating rate note issues from Sun Funding Limited have been listed on the Exchange.

The status of Cayman as a listing jurisdiction for funds and debt securities opens new possibilities for funds that had previously sought listing on the Irish, London and Luxembourg exchanges. The enhanced interest in the CSX resulting from the UK Inland Revenue recognition is demonstrated through recent listings of funds, of the Cargill Inc. Group of Companies and Saffron Capital. In the past few months the CSX has additionally listed East Capital Bering Fund, SciVest Offshore Enhanced Market Neutral Equity Fund and ML Yen Global Horizons Ltd.

East Capital is a market leader in East European fund management with assets of over USD800m under management in three Swedish registered UCITS funds: East Capital Baltic Fund, East Capital Russia Fund and East Capital Eastern Europe Fund.

On June 1 2004, East Capital Asset Management (Cayman) Ltd, part of the leading Swedish investment group East Capital, launched the East Capital Bering Fund, a specialist investment product listed on the Cayman Islands Stock Exchange dedicated to Russian second and third-tier stocks. The new Fund is named after Vitus Bering, the famous Danish captain commissioned in 1725 by Peter the Great to explore East Siberia . The East Capital Bering Fund’s strategy is to probe the unexplored business landscape of Russia.

“Our many years of experience in the Russian market gives us the knowledge to invest in Russian companies that are smaller and therefore not analysed by the larger investment houses. As such these companies are not well known though they have huge potential to profit investors”, says Mr. Justas Pipinis, CEO of East Capital. “There are several unexploited opportunities in Russia”, continues Mr. Pipinis. “These smaller companies have great potential for investors but are dependent on anticipated reforms in Russia. Therefore they are not practical investments in a regular UCITS fund with daily trading”. Creating a specialised fund with a Cayman Islands domicile proved to be the optimal solution.

“We opted for a listing on the Cayman Islands Stock Exchange to ensure the fund’s transparency and accessibility for existing and potential investors”, concludes Mr. Pipinis.

O2Micro® International Limited (NASDAQ: OIIM), a supplier of power management and security ICs to manufacturers of products for the computer, consumer, industrial, and communications markets, recently commenced trading of its shares on the Cayman Islands Stock Exchange with the trading symbol OIIM-KY.

O2Micro’s power management ICs are widely used by leading suppliers of notebook computers, DVD players, LCD TV, LCD Monitors, and automotive global positioning systems. These power management ICs enable products to run more efficiently and use less energy.

O2Micro shares have been listed on NASDAQ® since August 2000 with the trading symbol OIIM. Shares can now be traded on the CSX through CSX authorised brokers.

“This dual international listing of O2Micro shares, on CSX and NASDAQ®, will facilitate trading convenience for many international investors”, said Sterling Du, CEO and Chairman of O2Micro.

The CSX crossing activity is now displayed on Bloomberg. The feed is supplied to Bloomberg one minute after the data is displayed on the CSX website and is immediately disseminated on the CSX Bloomberg pages (CSX option 6).

The data is displayed in such a way that the daily crossing activity is shown on the first of the three crossing pages. The daily activity is then followed by a daily summary and a monthly summary.

The CSX has seen the volume of crossing activity increase since the launch of the platform in September 2003. The crossing rules are contained in Chapter 7 of the membership rules and any queries in regard to access to the crossing market can be addressed to: Monique Melis, Head of Business Development on email: Monique.Melis@csx.com.ky.

Charles Adams, Ritchie & Duckworth (“CARD”), Cayman Island attorneys-at-law, was admitted as a Listing Agent of CSX on 15th June 2004. The decision by CARD to apply for admission was prompted by the announcement that CSX was designated as a “recognised stock exchange” by the Board of the United Kingdom Inland Revenue under Section 841(1)(b) of the Income and Corporation Taxes Act 1988 on 4th March 2004.

Commenting on their admission as a Listing Agent, Richard Fear, a partner of CARD, said “we have seen a tremendous growth in our funds business during the last few years, with a significant number of funds listing their shares on the Irish Stock Exchange. Since the designation of CSX as a recognised stock exchange, interest in obtaining a CSX listing by existing and potential clients reached a level where becoming a Listing Agent made both professional and economic sense. We are very excited about this development and have received tremendous support and encouragement from the staff of CSX. The CSX Listing Rules have been written with emphasis on the disclosure of relevant information without imposing unnecessary onerous conditions – there are for example no restrictions on investment policies and no minimum subscription levels – which, together with efficient and responsive service from CSX staff, makes Cayman an attractive jurisdiction to obtain a listing.”

CARD was founded in 1991 in succession to the long established firm of Charles Adams & Co. CARD operates from offices in George Town, Grand Cayman and currently has 10 attorneys and an experienced support staff of 17 members. The firm offers a full range of legal services with emphasis on corporate, commercial and trust work, commercial and trust litigation and the establishment and maintenance of offshore structures.

CARD also provides for the formation of Cayman Islands companies and partnerships and offers registered office and secretarial facilities for such entities through its wholly owned and licensed corporate management company, CARD Corporate Services Limited.

The CSX attended the Hedge Fund world forum in Stockholm April 21-23 2004. A highly sophisticated conference, attended by senior professionals in the Swedish hedge fund industry as well as interested parties from London in particular, this event was new to the CSX and the booth was well attended, with keen interest shown in both the Exchange and Cayman as a financial centre.

The CSX listed its first Scandinavian fund on June 1st. The fund’s issuer is targeting undiscovered markets in the Baltic region, Eastern Europe and Russia (see article on page 2).