15th anniversary of securities market in Latvia

26.08.2010 RIG

15 years ago trading in securities was launched on the Riga Stock Exchange and the first trade was settled by the Latvian Central Depository. Setting up a stock exchange was indispensable for economic development, or else Latvia without its own securities market would not be eligible as part of the modern global economy. 

First trading day and opening of the stock exchange trading

The first trading session took place in the summer of 1995 in the premises of the historical stock exchange building located in the ancient town of Riga, Doma square. The start to trading was given by ringing a bronze bell – a gift from the Paris Stock Exchange. The stocks of four companies were traded on the first trading day with total turnover amounting to 186 lats, while the turnover in bond trading was 4,040 lats. Initially trading sessions were held once a week on Tuesdays and brokers had to deliver in person their pre-prepared orders on diskettes. The trading model then was quite dissimilar to the continuous electronic securities trading today – now banks and their clients are able to access the system via internet irrespective of their current physical location.

Further developments

Since then, the exchange has become part of NASDAQ OMX, world’s best-known stock exchange group; aggregate turnover in equities amounts to 2.3 billion lats; 560 auctions have been organized, with the placement value of shares and government bonds totaling to 2.6 billion lats. The Latvian Central Depository has settled transactions at total value over 8 billion lats, as well as manages over 1 million accounts for the participants of the second pillar pension system.

Setting the values

15 years ago Kārlis Cerbulis, the first President of the Riga Stock Exchange, explained to media the key principles of stock exchange and securities depository business. He underlined that the Riga Stock Exchange and the Latvian Central Depository would provide a safe and reliable infrastructure to investors, listed companies and business partners, and that trading and price formation on stock exchanges would be transparent and open. He also promised that the stock exchange would see to it that banks follow the principles of fair trading, and that shareholders would not be deleted from the registers maintained by the Latvian Central Depository. He pointed out that the exchange could not provide any guarantees as to company performance or prevent them from going bankrupt: what the stock exchange can assure is that investors have access to sufficient information about these companies.

Development of the stock exchange

Daiga Auziņa-Melalksne, the Riga Stock Exchange President since 2005, says: „Glancing back to the days of inception of the stock exchange and depository, I am proud to say that we have honestly fulfilled our promises and justified the hopes. And we have achieved even more. Today we are part of NASDAQ OMX, the largest stock exchange group on the world and a globally recognized and trusted brand name, offering high quality service and expertise. The stock exchange clients are using a trading platform that meets international standards. We have established joint Baltic market, making the shares of Latvia-listed as well as Baltic-listed companies as investment target. The membership of the stock exchange and the depository comprises the leading Nordic and Baltic banks, thereby making securities trading possible to practically any person in the Baltic and Nordic countries. Stock exchange and depository have become safe and reliable partners to the government by assuring transparent Treasury auctions of government bonds and maintaining the individual accounts for the second pillar pension system participants. We have actively been promoting the issue of good corporate governance and the transparent business environment in Latvia. ”

Future

The CEO of the stock exchange stresses that the market needs to be developed further. To become a full-fledged market, the listing of companies that are attractive and interesting to investors is exceedingly important. To attain this goal, a support is required from the government and banks, the latter being intermediaries between companies and investors. The development of the exchange goes hand in hand with economic development, and the stock exchange and capital market possess a potential to foster economic growth.

„We may love it or hate it, but the stock exchange is, to a large extent, a mirror image of the Latvian economy. If Latvia is an ambitious, transparent and honest sovereign, we shall have a prospering stock exchange. This is our common goal, and it brings together the stock exchange with investors, clients and cooperation partners as well as with Latvian citizens”, says Daiga Auziņa-Melalksne.

 

15 years of history:

The first securities trading session in Latvia was held on July 25, 1995 – this was the official launch of trading on the Riga Stock Exchange. Trading took place once a week on Tuesdays, and brokers’ physical presence at the RSE was needed to submit trading orders. Latvian Central Depository settled the first securities trade in Latvia.

Since May 1996 trading took place twice a week – on Tuesdays and Thursdays; since October three times a week – on Tuesdays, Wednesdays and Thursdays; since December four times a week – from Tuesday till Friday. In 1996, the RSE with a support from the Paris Stock Exchange implemented trading software enabling remote trading.

Starting with February 1997, trading sessions on the RSE are run on each business day. That year Riga Stock Exchange was among pioneers in Europe to launch continuous trading at variable prices. The very same year the Latvian Central Depository became a member of the Association of National Numbering Agencies, thus obtaining the right to assign ISIN codes – internationally recognized securities registration numbers.

A year later the RSE started cooperation with the Nordic and Baltic exchanges with a goal to open the Latvian securities market to international investors.

In 1999 the Riga Stock Exchange website was nominated by The Wall Street Journal as the best in Central Europe.

In 2000 the stock exchange ran its 1000th trading session. Riga Stock Exchange became a Corresponding Exchange to the Federation of European Stock Exchanges. A year later the implementation of internet-based trading platform i-broker was completed, allowing direct client access to the trading system. Latvian Central Depository started cooperation with Euroclear, and Latvian investors now were able to keep their securities of foreign issuers in Latvia.   

In August 2002 a major European stock exchange group, HEX Group (Finland), became the main shareholder of the RSE. A year later HEX Group merged with OM Group from Sweden, thus creating OMX, a major stock exchange group in Europe.

In 2003 the Latvian Central Depository became an agent for the second pillar pension system participant accounts.

2004 was the year when joint Baltic market was created, comprising stock exchanges and securities depositor ies of three Baltic countries.

In 2005 the RSE developed an infrastructure for auctions: now primary placement auctions of lats-denominated government debt securities were run on the stock exchange trading platform.  

In 2006 the Riga Stock Exchange launched the Baltic Market Awards, an annual project towards enhancing investor relations in the companies listed on the Baltic Market.

In 2007 OMX Baltic Membership was introduced, meaning that legal membership status in any of the Baltic stock exchanges makes domestic as well as foreign banks eligible to trading with securities listed on any of the Baltic stock exchanges.

In 2008 OMX, the parent company of the Riga Stock Exchange and Latvian Central Depository, combined with the largest US electronic securities exchange The NASDAQ Stock Market, creating the world’s largest exchange company, The NASDAQ OMX Group.

A year later, in 2009, the Riga Stock Exchange changed its name to NASDAQ OMX Riga. In 2009 the Exchange extended the trading session till 16:00.

This year NASDAQ OMX Riga continued to enhance its services by introducing a new global trading system for equity trading INET, used by investors in the USA and worldwide.

 

About NASDAQ OMX

The NASDAQ OMX Group, Inc. is the world’s largest exchange company. It delivers trading, exchange technology and public company services across six continents, with approximately 3,600 listed companies. NASDAQ OMX offers multiple capital raising solutions to companies around the globe, including its U.S. listings market, NASDAQ OMX Nordic, NASDAQ OMX Baltic, NASDAQ OMX First North, and the U.S. 144A sector. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and exchange-traded funds. NASDAQ OMX technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries.  NASDAQ OMX Nordic and NASDAQ OMX Baltic are not legal entities but describe the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. For more information about NASDAQ OMX, visit http://www.nasdaqomx.com. Please follow NASDAQ OMX on Facebook (http://www.facebook.com/pages/NASDAQ-OMX/108167527653) and Twitter (http://www.twitter.com/nasdaqomx).

 

Media contacts:

Āris Dreimanis

+371 6721 2431

aris.dreimanis@nasdaqomx.com