On the initiative of NASDAQ OMX Armenia, an international conference on “Global Capacities of Local Markets: Infrastructure and Regulation” will be held in Yerevan on October 6-8. The conference is remarkable because it’s the first joint event of two regional stock exchanges and depositaries associations – European Central Securities Depositories Association (ECSDA) and International Association of Exchanges of the CIS countries’ (IAEx of CIS). The conference will host high-ranking representatives of stock exchanges and central depositories of CIS, Europe and Asia.   

The acting Director General of the NASDAQ OMX Armenia Karen Zakaryan spoke on the subject area   and outcomes of the conference in his interview to Mediamax and banks. am. 

- How was this initiative born and what results may the conference bear?

- You may probably know that NASDAQ OMX Armenia is an IAEx of CIS member and the ECSDA is Armenia’s central depository. These two regional associations didn’t have an occasion to present joint initiatives yet and I am proud to note that we managed to persuade the two associations to hold their annual meetings in Yerevan and organize a joint conference at the same time, aiming to discuss issues of mutual interest which require joint solutions. We think that the joint examination and solution to the problems will prominently contribute to the growth of effectiveness of the market infrastructures.

I particularly mean the process of international integration. We are used to view the capital market within the framework of its local capacities whereas any local market may use broad global resources if certain mechanisms are launched and our conference will focus especially on this subject. 

-What mechanisms do you particularly mean that may help Armenia’s capital market grow out of its narrow frames and integrate with global markets? What issues will Armenia focus on during the conference? 

- The so-called chaotic phase is the first phase of development of capital markets and their integration with global markets, i.e. any country’s investor can purchase securities circulating abroad through his broker and this process bears a spontaneous character. 

We think we can take a step forward in this process and facilitate the international trade of securities through close cooperation between stock exchanges and depositaries of various countries. Depositaries particularly can discuss the options of opening mutual accounts and the stock exchanges can consider the issues of parallel and repeated listings, interaction of the market participants etc.

- Can we assume that shares of a company listed on NASDAQ OMX Armenia will simultaneously be included into the  lists of the Russian MICEX, for instance, as a result of such a cooperation? 

-Sure. It is practiced worldwide and results from close cooperation in technological, legal and political spheres. During the conference, we will try to discuss these options as well.

- NASDAQ OMX Group itself has got a successful experience of stock markets integration. Doesn’t Armenian stock exchange and depository plan to integrate first with group’s other member and afterwards to expand this experience over other stock exchanges and depositories?

-Indeed, integration processes within NASDAQ OMX Group proved quite a successful practice. In particular, a joint membership procedure is operating on the stock exchanges of the three Baltic countries: becoming a member of Tallinn, Riga or Vilnius stock exchange, an investment company or a bank automatically becomes a member of the two other stock exchanges. The cooperation of depositories has created favorable conditions for clearing and mutual settlement of accounts. NASDAQ OMX Nordic where the stock exchanges of Sweden, Finland, Denmark and Iceland cooperate is another successful example of integration.

We are discussing the options of such cooperation. The first phase of integration is the technological one from which we have started. If everything goes off swimmingly, we are going to transfer a part of the corporate and state securities trade to a trade system applied on other NASDAQ OMX markets which will set up technological bases for circulation of Armenian securities on international stock exchanges. 

At the same time, technological integration needs to be followed by cooperation agreements between the regulators and states to achieve complete results.

-Merits of the integration process are obvious for Armenia. And what can we offer to our partners to get them interested in the cooperation with the Armenian capital market?

- I am sure the Armenian capital market has used only the smallest portion of its potential. We do have companies which will be very appealing to local and foreign investors if they enter the capital market. I think when we own all the necessary technological solutions our issuers will be even more interested in using these opportunities. In my opinion, their securities will be in demand among European investors as well.

-One particular question. The Yerevan Mayor has recently visited the Metro and in fact, admitted that construction of new stations is currently unrealistic as \'\'the construction of only 2 stations in the Ajapnyank district will cost $200-250mln in total\'\'. Do you think the sum will be attracted if it is decided to bring the Yerevan Metro on the IPO on OMX Armenia?

- Sure. All we need is to work out a proper investment program and put forward to investors weighty arguments on reliablity and profitability of investments. The situation gets complicated in case the reliability and profitability of investments are questioned.

- So why doesn\'t the state take this step ? The reason for the failure of the exchange privatisation of a number of enterprises with state participation was that they were not attractive for investors. Meanwhile, listing of the same Metro may pay high dividends...

-The state indeed plays rather a significant role in the development of the capital market: it can boost the speeds of the market development by its policy and initiatives. All the interested parties need to be more active and make efforts to turn the current potential into a tangible result.