A foreign currency and securities exchange launched in 1920 in Tallinn was the predecessor of the Tallinn Stock Exchange. Until 1928, a listing committee of bank representatives quoted security prices once a year, on the last day of the year. Starting in March 1934, prices were quoted once a month, on the last day of the month. The exchange closed in March 1941 after Soviet occupation of Estonia.
Early 1990s: Development of the legal and institutional framework
After restored independence in 1991, Estonia undertook to create a securities market from the ground up. Key tasks were to start the privatization process and develop an entirely new base of legislation. The Securities Market Act of 1993 provided the legal foundation for securities transactions and a properly functioning securities market.
In 1994, the Investment Funds Act was adopted and the Estonian Central Securities Depository was established. The initiators of this regulated environment for electronically registering shares and clearing securities transactions were seven Estonian commercial banks, the Ministry of Finance, the Bank of Estonia, and Hüvitusfond (the State Compensation Fund). Bonds issued by the Tallinn City government became the first securities included in the Central Register of Securities on November 18 of that year.
1995-2000: First steps of the Tallinn Stock Exchange
With the Estonian CSD in place to support development of a secondary market with electronic trading, the Tallinn Stock Exchange was founded in April 1995 by 10 commercial banks, nine brokerage firms and three state institutions (Hüvitusfond, the Bank of Estonia and the Ministry of Finance), all with equal holdings.
The exchange opened for trading on May 31, 1996, with 11 securities listed. June 3 was the first calculation day for the TALSE index, which on June 17 fell to its all-time low of 84.24 and on August 29, 1997, reached its all-time high of 492.97.
In 2000, to improve the efficiency of market infrastructure, owners of the Tallinn Stock Exchange and the Estonian CSD formed a group with joint strategic management. In October of that year the first Rahakompass (Money Compass) fair was held, introducing savings and investments to private persons.
2001-2005: From HEX to OMX and a Joint Baltic Market
In April 2001, Finland’s HEX Group acquired strategic ownership of the Tallinn Stock Exchange Group and in February 2002 Estonian securities began to trade in the HEX trading system. Early 2002 also brought a new Securities Market Act to harmonize Estonian legislation and regulation with EU norms, and unification of three previous market regulators into the Estonian Financial Supervision Authority (FSA)
The second pillar of the Estonian pension system was launched in May 2002, and the funded pension system quickly became an important long-term resource for the local capital market. In July, funded pension indices (EPI) were launched by the Estonian CSD. The Guarantee Fund Act came into force at the end of 2002 to guarantee protection for funds of depositors, investors and unit-holders of pension funds. And an electronic central register maintained by the CDS with all shares of joint-stock companies operating in Estonia brought greater transparency to the country’s business climate from mid-2003.
The exchange got a new owner in September 2003 – OMHEX, which was created by the merger of Swedish bourse operator OM and Finnish HEX and a year later changed its name to OMX. The Tallinn Stock Exchange then adopted the SAXESS Nordic-Baltic trading platform used also by exchanges in Sweden, Denmark, Iceland, Finland and Latvia. Lithuania adopted the same trading system in 2005 after becoming part of OMX through privatization.
Thus a joint Baltic market was created, with a Baltic List, a Baltic index and a new Baltic market website. Launch of an auto-match submarket for debt securities on the Tallinn and Riga exchanges in August 2005 was another step to harmonize Baltic cash markets.
2006-2007: Governance Code, Baltic Awards, First North, Etc.
A corporate governance code took effect on the Tallinn Stock Exchange at the start of 2006. The same year, the three Baltic exchanges launched the Baltic Market Awards competition, which each year recognizes outstanding market participants for the quality of their information disclosures and investor relations. The Baltic index family was created using OMX Group index calculation rules, OMX Baltic membership was introduced to unify access to the Tallinn, Riga and Vilnius exchanges, and the new Baltic Fund Center made information about funds more transparent and investment in them simpler.
During 2007, market practices of Baltic exchanges were harmonized with the EU’s Markets in Financial Instruments Directive (MiFID), the Baltic Secondary List was introduced in place of the former Investor List, and the First North alternative market started up in the Baltic countries. Additionally, members of the Baltic stock exchanges and central depositories were enabled for cross-border settlement of over-the-counter transactions against payment (OTC DVP), and index futures based on the OMX Baltic 10 index (OMXB10) began trading on the OMX Nordic derivatives market.
Also in 2007, Tallinn Stock Exchange launched its Invest Mentor program, which fosters interest in and knowledge about investing among the wider population, and annual awards for the best Bachelor’s and Master’s theses on topics concerning the Tallinn Stock Exchange or the Baltic securities market.
2008-2011: NASDAQ’s Arrival and Further Market Development
In February 2008, NASDAQ Stock Market, Inc. merged with the Baltic and Nordic exchange group OMX AB to create the NASDAQ OMX Group, Inc. That same year the Baltic exchanges opened the Baltic Funds List for quoting and trading of investment fund units.
In 2009, NASDAQ OMX Baltic exchanges extended their trading period by two hours to improve access for foreign investors and announced plans to create a single market for trading in Euros.
During 2010, NASDAQ OMX Tallinn rose by 73%, the best result among European stock exchanges and a record for the 15-year-old Tallinn exchange, the seven Baltic and Nordic securities markets moved to the INET trading system INET to harmonize with best international practice, and NASDAQ OMX became the sole owner of NASDAQ OMX Tallinn Stock Exchange.
In 2011 it became possible to trade and settle in euros on the Tallinn and Vilnius stock exchanges, and cooperation with Citigroup enable members of the Nordic and Baltic stock exchanges to enter transaction orders on North-American securities markets.
Management since 1998
Kaarel Ots Board member, CEO 2016-...