Financial companies eye first private bourse in SEE

By Klaudjo Jonuzaj

Artan Gjergji Albanian Securities Exchange CEO

The private Albanian Securities Exchange (ALSE) was founded by Tirana-headquartered Credins Bank and American Bank of Investment (ABI Bank) with 42.5% shareholding interest each and AK Invest, one of the biggest non-banking financial institutions in Albania, with 15%. Credins Bank and ABI Bank hold 0.13% and 2.85% of the total assets of Albania’s banking system, respectively. Since the start of operations in February 2018 only government securities have been traded on the exchange. However, ALSE has a full operating license and once the full institutional infrastructure is in place, it can operate as an exchange for the full range of securities, including government bonds, corporate bonds, and company shares.

What has ALSE achieved since it started operation at the beginning of 2018 and what new challenges have emerged?

ALSE got a license in July 2017 and concluded the procedure of interfacing the system with the central bank within some months. So, we officially started operation on February 22, 2018. The results of the first months were better than we expected. The trading volume is more than 10 million euro in five months with a total of 53 transitions and trading securities volume of 72,648. ALSE has four members – Tirana-headquartered Credins Bank, American Bank of Investment (ABI Bank), International Commercial Bank, and Tirana Bank. As you know, the Albanian Financial Supervision Authority (AFSA) has set a condition on ALSE to trade only government securities during the first year of operation. Therefore, it’s easier for banks to trade government securities because they are custodians at the same time. On the other hand, it’s harder for brokerage firms because in order for them to trade in ALSE, they need to have a contract with a custodian. This is a technical issue that we managed to solve lately. Now, I guess soon we will have a few brokerage firms on board. This will increase the competition in the market, the trading volume and the number of transactions.[…]

Of course, our policy is to have intermediaries as much as possible in order to cut costs, meaning that the public and the investors will have lower costs in trading securities. This will also increase the effectiveness and efficiency of the market. […] In order to trade in ALSE, interested financial institutions should have a license from AFSA, comply with the legal framework, and then apply and comply with ALSE regulatory frame-work too. […]

When do you plan to start trading in corporate bonds and shares in addition to government securities on ALSE?

ALSE aims to expand the market with corporate bonds and shares. But, we should not forget the architecture of Albanian financial market is missing an important part, which is the central depository. […] So, this is a complex situation. It’s not only an issue related to the companies. Once that missing piece of the puzzle is in place, we will have the opportunity to have companies listed in our system. […] Of course, this is a new development for them. Albania never had an experience before with capital markets. […]

What is ALSE doing to encourage companies to start raising capital through the stock exchange and promote its platform as a marketplace?

When we started trading, we kept a low PR strategy profile in order to build trust step-by-step without rush. […] We are also trying to become part of the financial education. We signed a memorandum of understanding (MoU) with other eight associations dealing with the financial market including the Albanian Association of Banks (AAB), insurance companies, and investment funds, aiming to get involved in the financial education process. On the other side, ALSE have organised different conferences and lectures in universities trying to reach young people who study the economy because we see this as an investment for the future. […] ALSE is also working with the central bank and the AFSA in order to improve the legislation, the regulatory framework, and also help match the priorities of the payment system with the needs for development in the capital market. […]

In your opinion, companies of which sectors of the Albanian economy could be the first potential candidates to raise capital through ALSE?

The businesses that need capital in large amounts are producers, big investors or financial institutions. From our contacts and meetings, service companies, construction companies and those of financial sectors are the main businesses showing interest in raising capital through the stock exchange in Albania.