Yerevan /Mediamax/. Exclusive Interview with OMX Regional Manager Johan Fredholm to Mediamax Agency and Banks.am// portal

- On January 7 of 2008, OMX became the 100% owner of shares of the Armenian Stock Exchange (Armex) and the Central Depository of Armenia (CDA). What changes took place in this period of time?

- The first activity we have for now is to integrate these Companies into NASDAQ OMX Group.

The merger between OMX and NASDAQ was completed February 27, creating the new company The NASDAQ OMX Group. This means that Armex and CDA is now owned by the largest exchange operator in the world.

- When are you planning to finish this integration process?

- We have done similar acquisitions before and we try to have an integration project of one 100 days. Of course, some parts of these projects take longer time, but the main part of integration is a one hundred day project.

- What are the short-term and long-term programs of OMX in Armenia? In particular, what is planned for 2008?

- Obviously, there is a lot we want to do, but the key areas to get this market started will be to attract IPOs and get new listings of interesting good companies that people are interested in investing in. And in order to do that, we know that we have to make certain improvements to the way that market works, so that it becomes more efficient, more transparent and more trusted by investors.

We are right now improving the processes internally, and we are also looking for the candidates for the first IPOs here in Armex.

- In June 2007, the Senior Vice-President of OMX Group Henri Bergstrom stated in Yerevan the necessity of a “revolution” in the Armenian market of capital. He noted that at present the Armenian market of capital is at a state of reanimation, “when it is hard to breathe and feed, and the heart is in bad condition”. What is the state the market is in at present?

- Well, I now see a very strong will to get better. All the stakeholders, from the government regulatory side, to the brokers and other participants in the market: everyone is very keen on seeing a good development and we are of course very happy to be a part of this process, but it is something that we do together, with all the stakeholders in the market. So, there is a strong potential and it is really a good development that is starting now.

- OMX named as one of the problems of the Armenian market the limited assortment of services. The OMX representatives stated that it is necessary to start with the solution of problems in the sphere of infrastructures. What has already been done in the given sphere?

- One thing is the risk management or pre-deposition structure. We are looking at ways to change the rules in the system, to improve the process of pre-deposition, make it more flexible and later replace it with more sophisticated risk management procedures.

But then, really, the real lack in the market from the investment side is that there is not enough interesting shares to trade, and that is why we are very actively now working to improve conditions for IPOs here in Armenia.

- The OMX representatives also noted that one of the conditions for the development of the capital market can become the pension reforms in Armenia. How are the things going on in the given direction?

As I understand it there are plans to introduce a funded pension system in Armenia, which means people will put their money into pension funds that will have good opportunities to invest the money here in Armenia.

This will be very important for the market development, that the companies know that there is capital coming from the pension system to be invested here locally in Armenia. That will encourage companies to make IPOs, they will know that the funds are there, and of course the pension system itself will have many benefits for Armenia in terms of keeping capital within the country and of course also providing good returns for good pensions for the Armenian people.

- In Armenia, it is widely believed that the local mentality hinders the development of securities market. You have now worked here for about two months, what is your opinion concerning this?

- What I see, when I talk to companies, is that there is a new breed of business people here in Armenia who understand the benefits of being transparent, because you also have certain problems when you operate in the shadow. One of the big benefits of being transparent is that investors trust you to take care of their money, and that means that you can get access to much more capital than you can do otherwise. This enables you to grow faster and in the end compete successfully with companies that maybe have not understood this as quickly.

Also I should say that the Armenian mentality in my mind is also very much about being good business people and I think most Armenians will be interested in an opportunity to make good investments, and for that, the stock market will be interesting for all Armenians to want a good place to put their money and have the chance for good returns. So, in that way, the stock market fits very well with Armenian mentality.

The interesting thing is that it will be possible for Armenians to invest their money in Armenia, a market which has very good growth prospects. Another advantage for an Armenian investing here is that you have better knowledge about Armenian companies than you have about foreign companies. So, really, what we want to make sure is that it is possible to invest in Armenian companies, and that will also mean for the Armenian economy that the capital stays here, creating jobs and economic development in Armenia. There are a lot of good Armenian companies that I believe will be good investments for the future also for Armenian people.