Seven years after its notorious «bubble,» the Athens Stock Exchange appears to have matured at last, with 50 percent of its capitalization at the hands of foreign investors. At the same time, the legal framework provides firm guarantees against upheavals such as the ones in its recent past. In an interview with Kathimerini, ASE president Spyros Kapralos comments on developments in international financial markets, the Greek banking sector, as well as on proposals to improve the market’s operations. Last year was the best over the last six for the Greek stock market, with turnover rising 60 percent. This year, the market appears to have moved up a gear. What are your own estimates? It was, indeed, a good year for the Greek stock market. The general index gained about 20 percent. What is even more important to us is that the FTSE mid-cap index gained over 50 percent, while the small-cap index gained about 35 percent. That is, there was a significant turn for investors toward these stocks and this is especially good news for us. We believe that we helped in that direction with moves such as the first Greek roadshow in London. There is also an increasing number of Greek businesspeople who realize the value of their shares’ spread and liquidity. The bad news is that Greek investors have not returned to the market to the degree we would have liked and that the position of Greek institutionals has weakened. So, actually the Greek stock market moves because of foreign investors who account for the increase in turnover. Turnover indeed increased because of foreign investors’ placements. Without the foreign investors and given the three major problems facing our markets (the absence of Greek institutionals, the fact that Greek retail investors are not active and that there are no capital inflows from the management of Greek pension funds), our market would have been marginalized. Thankfully, this has not happened due to the help of foreign institutionals who «vote Greece» on the one hand because of the improvement in major economic indicators and, on the other, because of the modernization and legal strengthening of the market through the measures taken over the past two years. Currently, foreign investors account for 46 percent of total market capitalization and they own 48 percent of Hellenic Exchanges (the company that runs the ASE and the derivatives market). We keep improving the market’s reputation, foreign investors trust us and this could provide a further boost to the market. Of course, this does not mean that prices will keep rising permanently, but, in my opinion, the number of investors in the Greek market will keep increasing. Last week, investor interest focused almost exclusively on developments in the banking sector and, specifically, the public offers made by Piraeus and Marfin Popular. How do you see these developments and what impact will they have on the market? What happened during the last couple of weeks, and still draws much attention, was an unprecedented experience for us, since it was the first time that two stock exchanges (Athens and Nicosia) with different regulations were involved. I think the decision to suspend trading in the shares and their derivatives the previous Friday was the correct one, because we protected investors at a time when things were highly volatile. I must tell you that we acted promptly to ensure that investors shared all available information through the ASE’s website during the weekend so that we could resume trading on these shares on Monday. A few months ago, several proposals were submitted to you by foreign consultants regarding Hellenic Exchanges’ development model. What moves have you made so far and what are your thoughts on the Sofia exchange, which you will visit in a few days? As you very well know, we are at a point where international financial markets are at the heart of economic developments and competition is stiff. The mergers and alliances among international financial groups, including stock markets, affect us directly. I believe that when the dust settles the big players will turn their attention to smaller bourses such as ours. We already heard last month about OMX, the company running the exchanges of the Scandinavian and Baltic states, making a bid to acquire Slovenia’s bourse. At the same time, both OMX and the Frankfurt stock markets announced official bids for a 44 percent stake in Bulgaria’s stock market, which the government of Bulgaria will soon privatize. When we learn all details about the sale of the share by the Bulgarian state, Hellenic Exchanges’ top management will decide whether it is in the company’s interest to participate or not in the privatization of the Sofia Stock Exchange. Over the next few days, a Hellenic Exchanges team will go to Sofia and will present to market experts there our experience from our partnership with the Cyprus bourse and the common platform we have devised. Is it true that you are considering changing the regulations to make it more difficult for mergers that help big shareholders eventually take the company private? It is true that, at the moment, there is a certain uncertainty in the legislation regarding companies leaving the ASE to go private. We have pointed out this legal loophole and have proposed a change in regulations both to the Capital Market Commission and the Ministry of Development. We want the minority shareholders to get the right price for a company’s exit from the bourse. That is why we ask for the move’s approval by an extraordinary shareholders’ assembly and by increased participation levels required for a quorum (75 percent, for example). On the other hand, we do not want some interest groups to block companies going private and holding them hostage in order to achieve a higher price. I personally believe a compromise must be found. For example, a law could require a company valuation by an outside consultant and that minority shareholders be bought ought with the highest price between an outside valuation and the share’s average price over the last quarter. What other proposals for a change in regulations have you submitted? A second important proposal concerns the antiquated obligation of shareholders to refrain from trading their shares for five days in order to participate in shareholder meetings. This is not required anywhere else and foreign investors cannot adhere to it. This way the shareholders’ assemblies are skewed or cannot achieve a quorum and are unable to reach important decisions regarding future plans. This is costly. You have announced the creation of a so-called «semi-regulated market» for small enterprises. When will it start operating? Has there been interest in the market? This market will offer opportunities to healthy small and medium enterprises and to small venture capital firms. Of course, this is a high-risk market with not very high liquidity. We need to consult with the Capital Market Commission to find the appropriate time. There has already been interest expressed in that market. There are similar markets in the London Stock Exchange, in Euronext and in Italy.