International

Greek bourse to reopen with constraints

A Greek flag flutters outside the Athens stock exchange , Greece, July 27, 2015. REUTERS/Ronen Zvulun

ATHENS: The Greek stock market will reopen Wednesday or Thursday after a monthlong shutdown but with restrictions on trading by local investors at the request of the European Central Bank, the Greek securities regulator chairman told Reuters Tuesday.

The Athens Stock Exchange has been closed since June 29, after the government closed its banks and imposed capital controls to prevent them from collapsing in the face of mass withdrawals.

Greece last week sent an initial proposal to the ECB to reopen the bourse as soon as possible as it risked losing its place in global securities indexes if it remained shut for too long.

But the process was delayed because the ECB wanted assurances that Greek investors would not pull money out of banks to convert them to shares or bonds, putting a further strain on the country’s struggling banks, which rely on ECB’s emergency funding to remain afloat.

Greece Tuesday gained the European Central Bank’s approval to reopen its stock market with no restrictions for foreign investors but with limitations for the local ones.

“The commission will convene tomorrow morning to decide if the Athens Stock Exchange will reopen Wednesday or Thursday,” the chairman of Hellenic Capital Market Commission Konstantinos Botopoulos told Reuters.

A ministerial decree on the bourse’s operations is expected to be issued, opening the way for trading.

Greek regulators Monday offered the ECB two plans for the reopening: one allowing unrestricted trading, the same as proposed last week, and a second that imposed restrictions on trading by Greek investors to prevent capital fleeing banks, sources said earlier.

Botopoulos said the ECB approved the second plan. “What we have won in the negotiations is that the restrictions will last for a limited period of time,” he said.

A senior official at the regulator said local investors would be allowed to buy shares by using existing cash, such as that stored at home for security in the face of the crisis or money transfers from abroad, and not by withdrawing money from their Greek bank accounts.

Some market participants had warned that unlimited trading for domestic investors would have posed a serious risk for lenders.

“The problem is that if the trading starts without restrictions, then many Greeks could withdraw their deposits and turn them into shares or bonds,” Takis Zamanis, chief trader at Athens-based brokerage Beta Securities, told Reuters.

The European Securities and Markets Authority said a ban on the short selling of Greek shares, as requested by the Greek securities regulator, would remain in place.

The ban, which also affects electronic trading of Greek government bonds, will stay in effect until Aug. 3.

Greece’s main equity index was down 16 percent from its 2015 peak, hit in February, when the bourse was shut down.

 
A version of this article appeared in the print edition of The Daily Star on July 29, 2015, on page 6.

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