THE 4TH ANNUAL CAPITAL LINK FORUM CONFERENCE
Monday October 30, 2000

Dr. Stavros B. Thomadakis

Chairman

CAPITAL MARKETS COMMISSION OF GREECE

The recent rapid growth of the Greek capital market has been reflected in many features of the operation of the Athens Stock Exchange. During the excessively bullish phase of the market in mid-1999, trading volumes exceeded the 1 billion dollar daily mark, active private investors reached record numbers approaching one million, and brokers made record profits. The bullish phase came to a slow reversal in the last quarter of 1999 and gave way to a bear market in 2000. Trading volumes have been cut by about a third, active private investors gave gradually decreased to a more natural level of 100-200 thousand and brokers' profitability has declined. Despite the large fluctuation form bull to bear market, the primary market for new issues has been very active and in the period from January 1, 1999 to June 30, 2000 a record of about 15 billion dollars was raised from the stock exchange. Thus, the market has indeed proved to be a valuable and important source of finance for Greek companies, whose profitability record appears also very satisfactory as a whole.

The major concern and primary objective of the regulatory authority during this very active phase of development was twofold; on one hand, the system had to be safeguarded from transaction failures, intermediary illiquidity, settlement problems. On the other hand modernisation had to be pushed through despite the pressure of high volumes and the self-satisfaction engendered by temporary high profits. These two goals have been basically attained but important aspects of them are still pursued. I will mention in turn attainments and remaining plans.

Besides the fact that the Greek market withstood as a system a great fluctuation in values and volume of business, the attainments on the regulatory and structural front were the following; completion of electronic settlement (dematerialisation of stocks as we call it), organisation and operation of the Athens Derivatives Exchange and Clearing House, the formulation of a ''New Market'' for small and medium dynamic and innovative firms, very elevated transparency arrangements for newly listing and listed firms, for major shareholders, for takeover bids and for market insiders.

The future plans are a set of measures announced by the Capital Market Commission in April 2000 which are in the process of implementation. I will mention the main headings, and offer some detail subsequently; code of conduct for listed firms and major shareholders, issue of new regulation of margin trading, provision for the operation of market makers on the Athens Stock Exchange, creation of a Capital Market Ombudsman for retail investors, legislative and regulatory reform of corporate governance.

The Code of Conduct for listed firms is in the stage of public consultation. It will include requirements for publicity about corporate events, disclosure of insider trades, requirements for internal audit services in listed firms, publicity of cash flow statements and annual reports of standard type.

The implementation of margin trading has been provided for by recent law and the Capital Market Commission is in the progress of preparing and issuing for consultation specific rules for initial, maintenance margins and margin calls.

The Capital Market Ombudsman is going to be a self-regulatory arrangement for the processing of investor complaints and the conciliatory resolution of conflicts between firms and clients. The Ombudsman will be organised and finance by the business organisations of the Stock Exchange and the Capital Market Commission will play a high supervisory role.

Finally, legislative and regulatory initiatives in the area of corporate governance are under way. A law-preparatory committee has been formed with a mandate to introduce changes in the governance of listed firms, and particularly, to create internal supervisory arrangements, independent membership of Boards of Directors, rules for minority protection, inter alia.

ORGANIZERS