October 19, 2017 / 9:34 AM / 2 years ago

New Albanian securities exchange sees trading start by year end

TIRANA (Reuters) - A new, private securities exchange in Albania should be up and running by year end after getting the central bank’s go-ahead, its chief executive said on Wednesday.

It will start with trading government debt and then move on to other assets, Artan Gjergji, head of the Albanian Securities Exchange, or ALSE, told Reuters in an interview.

The goal is to create a capital market in Albania, which is still struggling to modernize a quarter of a century after a particularly insular style of communism ended. It was followed almost immediately by unrest linked to a collapsed pyramid schemes.

With the long-dormant Tirana Stock Exchange now suspended, ALSE was brought into being by a group of Albanian financial market professionals backed by three Albanian-owned banks, primarily Credins Bank.

The Financial Supervisory Authority has given ALSE a full license but with the country lacking a central depository of non-government securities it will have to trade T-bills for a year.

“We shall be ready legally and technically by November and shall go live hopefully within this year, and we shall invite all the banks and brokers to trade, for now, treasury bills and bonds,” Gjergji said.

“By March, before the next summer, we shall welcome them to trade all other kinds of securities, list shares, an IPO or corporate bonds of Albanian companies, which might have the potential to get listed,” he said.

Gjergji said ALSE had adopted Quick Trade, an electronic trading system currently being used by 10 bourses around the world, including five in the Balkans.

ALSE will have no trading floor, but the system allows for continuous trading or auctions, he said.

TRAINING ALSE is housed in a large hall in a Tirana apartment building. A dozen young women and men are being trained there by fellow stock exchange staff, including some from the Bulgarian Stock Exchange.

A former employee of the Tirana Stock Exchange and its financial overseer, Gjergji identified the lack of an electronic trading system as one of the reasons that doomed the Tirana Stock Exchange.

It was a place where a foreign journalist once described it as being “so quiet you could hear a share drop”.

Gjergji pinned its failure on successive governments for not trading or privatizing shares of state-owned companies in the stock exchange, like “other post-communist governments from neighboring Macedonia to Moscow” did.

Albania launched its old stock exchange in May 1996, shortly before the fraudulent pyramid investment scams.

Some of those investors lost houses and herds of cattle when they sold their possessions to get a 300 percent return on their investment in 90 days.

People like this tend to see securities trading as fraud, making it an uphill struggle for Gjergji’s team to persuade them otherwise.

“Even with the regulators we faced some resistance to a revolutionary idea although the legislation exists; we had to open the eyes to the market operators and even the regulators that this (bourse) is needed and will be coming sooner or later,” he said.

Right now he believes it is the best time to launch the bourse as money is seeking alternatives for investment given the low deposit rates, the over liquidity of the banks who have tightened their lending criteria and the need of businesses for cheaper funding in a growing economy.

“All the elements were there, only the bourse was missing. It is not going to be easy, but we have now done most of the job, and businesses are starting to get interested about the bourse,” Gjergji said.

Reporting by Benet Koleka Editing by Jeremy Gaunt

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