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Baltic States: Mega Stock Exchange Visions May Come True

  • Monika Garbaciauskaite

Vilnius, 4 November 1997 (RFE/RL) -- Sweden is pushing a bold initiative for the creation of a single Nordic stock exchange, which would include the three Baltic States.

According to supporters of the idea, a single capital market for the entire region would give the Nordic countries a financial constellation with the necessary muscle to compete with the most powerful West European markets, and it would thus attract much more capital to the region.

Rimantas Busila, the chief of the Lithuanian Stock Exchange, told RFE/RL that the idea had long been under discussion between brokers and finance specialists.

Under the Swedish-backed plan, which also has the support of Denmark, the common exchange would be situated in the Danish capital, Copenhagen. It would officially be called the Nordic Exchange (NOX) and would use an electronic trading system like that used by the Stockholm Stock Exchange.

The Swedish agency dealing with stock market issues has sent formal invitations to the various Baltic stock exchanges to discuss the proposal. It's envisaged that a single stock market could become a reality within two to three years. According to the plan, the NOX would initially include the Swedish, Norwegian, Danish and Finnish stock markets, and the fledgling Baltic markets would join later. Swedish officials estimate the annual turnover on NOX would be of the order of $150 billion.

The Latvians are enthusiastic to the idea of NOX, but neither the Estonians nor Finland have given any clear response so far. Considering that Estonia is the dominating presence in the Baltic financial world, that could be seen as a potential damper to the plan from the Baltic perspective.

The Lithuanians are willing to consider the NOX idea, but are nevertheless cautious. Busila of the Vilnius exchange says there are a lot of economic, financial and political questions that must be solved before Lithuanians are ready to take final decisions. He notes that under the NOX plan, there would be no actual share trading any more on the Lithuanian Stock Exchange, and that the data base would move to Stockholm. Therefore Lithuanians would become merely "consumers at a distance", as Busila puts it. He says however, if Vilnius was allowed still to trade foreign treasury bills and treasury notes, the single market idea would be suddenly more attractive.

The idea for one mega stock exchange comes at a time when the three separate Baltic stock exchanges are moving towards harmonization of their rules and procedures with each other, with a view to pan-Baltic integration at a future date. Officials of the three Baltic stock markets signed a protocol of intent in Riga September 30 expressing their intent to share their experience in the sectors of securities market development, oversight, supervision and regulations.

Latvian stock exchange officials reportedly favour going ahead with the Baltic integration process ahead of joining the NOX. Busila said however he does not think that is necessary as an intermediate step.

At any rate, the outlook is for greater integration of financial markets, whether at a purely Baltic level or encompassing the Nordic world.