HEX Group and Tallinn Stock Exchange enter into strategic co-operation

27.02.2001 TLN

HEX Group (HEX) of Finland and Tallinn Stock Exchange (TSE) of Estonia are entering into strategic co-operation, which will include ownership as well as operational aspects. The aim of the co-operation is to build a well-functioning securities market in Estonia and to significantly increase the visibility of Estonian companies and liquidity in the trading of their shares.

The co-operation will be based on HEX’s offer to acquire over 50% ownership in TSE, which will be achieved by purchases of existing shares as well as subscription of new shares in a directed offering. The directed issue will be decided at the Annual General Meeting (AGM) of TSE to be held on March 21, 2001. The TSE Supervisory Board has welcomed the cooperation plan among TSE, its shareholders and HEX, approved of the transactions needed to achieve HEX’s majority ownership and recommended that the shareholders accept HEX’s offer. A prerequisite for the arrangement is that acceptance is acquired from relevant authorities.

Operationally HEX offers TSE a trading system under a facilities management (FM) arrangement, thereby extending HEX’s network to Estonia. Creating a much larger home market will increase turnover and significantly enhance liquidity. International investors will gain easy access to Estonian securities.

As before, trading will be regulated by Estonian laws and clearing and settlement will take place at the Estonian Central Depository for Securities (ECDS), a subsidiary of TSE. Likewise, market activity will be supervised by TSE. In order to facilitate cross border clearing, preparations will begin for a link co-operation between ECDS and the Finnish Central Securities Depository, a subsidiary of HEX.

HEX supports a strong Estonian ownership in TSE also in the future and wants to develop the Estonian equity markets in co-operation with local participants. The ownership arrangements will be finalised as soon as possible after the share purchases and directed share issue have been concluded. Trading with Estonian securities in the HEX trading system will commence in the course of the year 2001.

"HEX sees that this initiative clearly supports our growth strategy by expanding HEX operations to tomorrow’s growth markets. The similarity in corporate structures of the two groups is likely to give synergies in operations as well as possibilities to share development efforts. HEX’s Finnish and international members comprise an extensive trading network, that will expand the group of investors with direct access to Estonian markets. This arrangement is globally unique in the marketplace industry and we should all be very proud of the achievement," stated Mr Jukka Ruuska, president and CEO of HEX. "HEX is willing to advance the capital markets of the whole Baltic region", he adds.

"Integrating the Estonian securities market into international structures is a major strategic priority for the Tallinn Stock Exchange. We believe that this would mean much easier access for investors and better visibility for local companies, therefore enhancing the liquidity and attractiveness of the Estonian capital market. We are hopeful that an arrangement can be reached with HEX that would be positive for all market participants and stakeholders. The co-operation with HEX would necessitate an end to TSE’s talks with the Norex Alliance," stated Gert Tiivas, CEO of TSE.

Jukka Ruuska
President and CEO of HEX

Gert Tiivas
CEO of TSE

Helsinki Exchanges Group (HEX) operates cash and derivatives market as well as takes care of the clearing and settlement for the trades at HEX. HEX has been performing extremely well during the past few years, the trading volume in euros nearly doubled in 1999 and more than doubled in 2000 compared to the previous year and was close to 1 billion euros/day on average last year. The Group’s business areas include also eHEX content services and outsourcing services for securities trading support functionalities.

HEX is one of the most international marketplaces in the world. International investors own approximately 70 per cent of the market value of Finnish stock exchange listed companies and the number of remote members has recently surpassed that of local members, the total number of members is over 40. The number of market infovendors connected to HEX has almost tripled since the beginning of last year and is already close to 100 vendors distributing HEX market data all over the world.

For more information, please see www.hexgroup.com.

Tallinn Stock Exchange (TSE) group is the central operator of the Estonian securities market infrastructure. TSE group and its subsidiaries provide the environment for trading in securities, clearing and settlement of securities transactions, listing services, market supervision, and maintain the electronic securities register in Estonia. TSE group is owned mostly by Estonian financial institutions – commercial banks and brokerage firms.

The market capitalisation of TSE-listed companies stood at 1.8 billion euros as of January 31, 2001. The average daily trading volume was 1.4 million euros in 2000.

For more information, please see www.tse.ee.

Additional information:

Eva Palu
Head of Investor Relations Dpt
Tallinn Stock Exchange
Tel: +372 64 08 840
e-mail: