It looks as though the Capital Market Commission’s (CMC) order for the closure and liquidation of stockbrokerage DF last week – the second after P&A Voillis in less than six months – is not an isolated instance but a symptom of a wider malaise. According to stock market sources, the underlying crisis will reach a climax in the next few months. CMC cited serious and repeated violations of stock market legislation by DF that made its continued operation dangerous for investors and the smooth functioning of the stock market. DF was found to be using clients’ money on its own account, had displayed a series of organizational and financial problems and its capital adequacy ratio was lower than required by law. The general situation in the stockbrokerage sector is far from enviable. More than 7,000 jobs have been shed since the market frenzy of 1999 and an estimated 10-15 firms are facing serious problems of survival, if stock market turnover stays at the current levels of 100-150 million euros per session. One of them, said to have a large client base, has no hope of recouping large debts by clients and is already under supervision by CMC. Market pundits take the view that the situation is irreversible for small and mid-sized stockbrokerages, for which the only option would be to merge into bigger concerns. The Association of Members of the Athens Exchange Council (SMEHA) said in a letter to CMC President Alexis Pilavios, dated December 30, that there is an urgent need to update and amend the 1997 ethics code for the investment services sector. SMEHA Chairman Alexandros Moraitakis said the association’s members wish to see a tightening of fuzzy regulations that often render them unwitting violators. He says the rules need to be made clearer so that they eliminate the element of subjective judgment on the part of auditors or the overseeing authority, and that audits are conducted on the basis of a specific methodology. SMEHA argues that such an overhaul would buttress the operation of the Greek capital market, protect investors’ interests, promote safety and transparency in transactions, upgrade healthy competition among stockbrokerages and smoothen relations between overseeing authorities and firms. SMEHA is about to submit to CMC its proposals on the draft bill regarding market abuse, which the government has said will be debated by Parliament later this month. Market sources told Kathimerini that while the bill is on the right track, it suffers from a lack of clarity, as it is merely based on the translation of an EU directive and needs the accompanying regulatory measures regarding its implementation to be clarified.