For one thing, the new law simplifies the rules on how European Union brokerages operate on the Estonian market. The law allows EU investors to launch operations from abroad, without setting up a representative office in Estonia as previously required. According to analysts, remote access will encourage more foreign firms to trade on the Baltic bourse.
"One of the most important aspects of the new law is that it opens the Estonian securities market and capital market and gives unlimited access to brokerages regulated by EU rules," said Veikko Maripuu, analyst at Suprema Investments.
By opening up the markets to more investors, the Tallinn stock exchange also increases its credibility abroad, Maripuu said.
"When the list dries up, it is not good in terms of transparency and liquidity . . . the more companies, the better. Competition is a good thing. It makes you work harder, and it results in better service for our customers," he said.
Gert Tiivas, chairman of the Tallinn Stock Exchange, also praised the new amendments and said that simplifying the rules for foreigners will boost volumes on the bourse.
"Significantly simplifying the procedure for licensing European investment firms is an important step toward implementation of the principle of free movement of services in Estonia," he said. "Removing the barriers of entry for foreign brokers should boost market activity and contribute to Estonia's reputation of an open economy."
Another change in the law regulates takeover bids of public companies. The amendment to the securities act stipulates that a person obtaining a controlling interest in a listed company has an obligation to make a takeover bid to all remaining shareholders.
"The lack of such regulation has been one of the most critical shortcomings in securities and market regulation so far, reducing investor confidence," Tiivas said.
The law introduces the concept of equal treatment for all minority shareholders and gives the stock exchange the right to block the takeover bid if companies fail to comply. The law prescribes a 100,000 kroons to one million kroons ($6,600-$66,000) fine for violating the buyout rules.
The Tallinn Stock Exchange adopted minority buyout rules in December which must now be harmonized with the new law and the Securities Inspectorate. An enforcement date for the regulations will probably occur within a month, said Eva Palu, head of investor relations at the stock exchange.
"The new amendments to the securities act have compensated for a lot of weak legislation in Estonia, especially having to do with small shareholders," Maripuu said. "The takeover codes already exist in Latvia and Lithuania – and in other developed countries. It was crucial for Estonia to move forward."
The 101-member Parliament passed the second and final reading of the law's amendments with 70 votes in favor. Other members either were absent or abstained from voting.
In addition to the new amendments, the Tallinn bourse is hoping "swift progress will be made on drafting the new Securities Market Act, which is long overdue."
In a statement, the Tallinn Stock Exchange said, "the new Act should bring Estonia's regulation fully in line with the requirements of the European Union, and meet the needs of the Estonian securities market."