Yearbook 2019
Suppose you have a bank account without an online banking app and card and whenever you need to make a transaction, you have to go to the bank. The same goes for a broker account – you have it but without a direct access to the trading platform.
Since none of the current market members offers such technology, we have decided to modernize the trading platform used now, and member brokers will be able to leverage our technology to give their clients access to the exchange. We will do it at a much lower price as we believe this will help develop the market, joining forces with brokers.
Without investment banks it is impossible to increase the number of issuance and without a brokerage firm it is useless to speak about secondary liquidity. These processes are tightly interconnected. The new technology will also enable international brokerage firms to connect to Armenia Securities Exchange, opening the market tolarge foreign investors. We hope to launch the upgraded technology in the second half of next year.
- What are other changes planned in the stock exchange?
- We intend to replace the auction technology for government bonds and in February 2020, individuals will be able to participate in Gbond auctions directly through dealers. The crowdfunding platform we are working on will give startups an opportunity to raise capital up to one million US dollars. The same platform will also include an investments sub-platform where we will sell European ETFs. These instruments offer good returns and they must become available for Armenian investors.
- Where has AMX reached in pursuing its goals?
- We have now focused on making the exchange accessible by leveraging new technologies. Simultaneously, we collaborate with well-known foreign exchanges and host their delegates in Armenia.
Another objective is to facilitate cross listings for local companies, allowing them to easily list their securities on European platforms. Russian, Kazakh and other foreign companies will also consider using this opportunity as they cannot list in Europe directly. Listing with us will be easy and less expensive. Once we sign the agreements with our European peers, we will work to become a gateway for regional companies to European capital markets.
Realistically, I cannot say that we aim to become the leading exchange by any standard. Our aim is to find our niche and be number one, for instance, in providing individual investors an opportunity to buy and sell bonds and American ETFs online.
What is left to do is to amend the rules and regulations and ensure accessibility. I believe we will be able to position ourselves well for delivering this service. Kazakhstan has established Astana International Financial Centre to provide the same service but I believe Armenia has more potential.
The current government prioritizes the development of financial sector and capital markets. This helps us feel more confident negotiating with foreign partners. The amendments initiated by the Parliament are another positive signal. A foreign investor looks to work in an interesting and profitable market and when they see a country’s policymakers take steps in this regard, the positive story we tell them becomes more credible.
- How important do you think it is to promote the concept of employee stock ownership in Armenia? How can Armenia Securities Exchange and Central Depository of Armenia help in this regard?
- Employee stock ownership is an excellent instrument for tech companies. In this respect, Armenia has a comprehensive law on securities that partially regulates the use of this financial instrument. Yet, the major regulation laying down the rules and principles for employee stock ownership is the law on joint-stock companies that I believe needs amendments.
Tech companies that will restructure as open joint-stock companies and issue stock options can then use options as incentives. This will empower employees to be more productive and dedicated because the more developed the company, the higher the stock price.
Issuing employee stock options will have only positive effects on the economy. But the promotion of the concept also requires creating tax incentives for companies. Employee stock ownership is not common practice in Armenia because companies are not well-informed. We plan to hold discussions with them to advance the concept locally.
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