The National Stock Exchange of Lithuania announced the development of a new modern, internationally compatible trading system. But NSEL President Rimantas Busila used a news conference heralding the final phase of this project to discuss some of the more difficult issues confronting Lithuania's lethargic capital market.
The first thing he took aim at was bad press.
"Despite the articles appearing in the papers from time to time that describe the market as being persistently low in trading volumes, I can say that the market and the stock exchange have a lot of potential," Busila said. "The general trading volumes of the National Stock Exchange amount to 2.3 billion litas and the past year equity comprised 54 percent. In contrast to all the economic developments in the second half of last year, the situation in the stock exchange was stable."
He compared market figures from late 1998, after the Russian financial crisis and ruble devaluation helped NSEL levels dip by 40 percent, with results in 1999. The market, he said, did not go below the lowest levels recorded in 1998. The indexes of Lithuania's most active companies, moreover, increased 14 percent while the market capitalization hovered at 13 billion-14 billion litas ($3.25 billion - $3.5 billion).
Busila asked for more cooperation from the State Property Fund, responsible for conducting privatizations. He implored Stasys Valentukevicius, general director of the fund to allow shares of the state's biggest industries that aren't sold to strategic investors to be sold on the NSEL. Valentukevicius, Busila said, has been resistant to this.
"I cannot imagine our market without shares from such big companies as Lietuvos Dujos and Lietuvos Energija, not to mention Lietuvos Telekomas," Busila said.
Busila added, however, that he was optimistic that discussions between the NSEL and Valentukevicius regarding the privatization of remaining shares of Lietuvos Telekomas will bear fruit for the stock exchange.
Another problem with Lithuanian capital markets, Busila reported, was a lack of institutional investors.
"I have in mind mutual fund investment companies and insurance companies," he said. "Somehow we are not discussing their participation in the market."
Oh yeah, about that new trading system. Costing $340,000, the system was set-up by the US Pragma Corporation, and uses galleys of Gateway workstations and allows for easy connectivity within the NSEL and to other international stock exchanges. Full implementation will occur by June 2000.
"The new system is reliable, fast and flexible. It is a contemporary technical solution. Furthermore, this system is much more user-friendly and allows the market participants to develop their own automated participants," said Busila.
EU integration was foremost in the stock exchange's mind when developing the system. "We always tried not to forget that we were in Europe," said Antanas Gurskas, the NSEL information technology director.
By comparison to the exchanges of the other Baltic States, this system makes Lithuania look like it is at the cutting edge.
"In Latvia they use the same trading system that we used before," he said.
The new system will, Gurskas says, assist an eventual unified Baltic exchange, and facilitate the joining of the Baltic exchanges into the NOREX exchange. But, he warns, these plans will not come about solely from technological improvements alone.
"We have to similarize our laws," he said. "From a technical point of view, we have three different trading systems. Our work developing our new system directed us into another direction with regard to the Riga stock exchange."
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