The European Bank for Reconstruction and Development (EBRD)
Federation of Euro-Asian Stock Exchanges
Hannes Takacs
Head of Equity Capital Markets and Capital Market Infrastructure Development, LC2, EBRD
“The LC2 Initiative aims to foster connected, diversified, integrated, inclusive and sustainable capital markets by supporting sector reforms through policy dialogue and technical cooperation projects.”
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The EBRD continues to support its countries of operations to create more efficient and self-sustaining financial markets through its Local Currency and Capital Markets Development (LC2) Initiative. In 2019, the LC2 Initiative began implementing its new strategy (2019-2024) and sharpened its focus on selected projects to bring lasting and effective capital market reforms in the currently 38 economies where EBRD invests.
Connected capital markets: The EBRD has been providing assistance to the Hungarian authorities in linking KELER Ltd., the sole central securities depository and a specialized bank in Hungary, to the central securities depositories of selected EU member states to improve cross-border trading, clearing and settlement. KELER successfully built a direct link with Bulgaria in 2019 and expects to connect to additional three markets in 2020/2021, subject to the necessary approvals and agreements.
Diversified investor base: Well-functioning capital markets require a broad and diversified investor base including foreign investors. A market classification upgrade from leading index providers is one way to attract additional foreign investors. The EBRD reviewed and assessed the status of the Latvian capital markets benchmarked against the qualitative and quantitative assessment criteria used by leading index providers and provided recommendations and a roadmap. The Bank also continued its policy dialogue with key stakeholders for a regional pan-Baltic index for Estonia, Latvia and Lithuania to stimulate additional capital inflows, while having initial discussions with Greece and Kazakhstan about potential EBRD support of index upgrades.
SMEs access to capital markets: The EBRD designed a national programme for the Latvian authorities in support of small and medium-sized enterprises (SMEs) capital market access. Following requests by the national authorities, the Bank designed similar projects for Lithuania and Estonia. In Slovenia and Greece, the EBRD started providing pre-listing advisory services to a selected number of SMEs interested in an initial public offering or a corporate bond issue. With EBRD support the Egyptian Exchange is in the process to re-design its SME Growth market to better serve issuers and investors.