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Tuesday 6 December 2016

Greece Crisis: Greek stock market to reopen this week after ECB approval

* Restrictions in place for local investors
* Decree on timing expected, timing not clear
* Athens Stock Exchange has been closed since June 29

Angeliki Koutantou and Lefteris Papadimas

Published 28/07/2015 | 21:03

A worker at the Athens Stock Exchange stands in the reception hall as an electronic board displays stock prices. Getty Images
A worker at the Athens Stock Exchange stands in the reception hall as an electronic board displays stock prices. Getty Images

The Greek stock market will reopen on Wednesday or Thursday after a month-long shutdown but with restrictions on trading by local investors at the request of the European Central Bank, the Greek securities regulator chairman told Reuters this evening.

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The Athens Stock Exchange (ASE) has been shut since June 29, after the government closed its banks and imposed capital controls to prevent them from collapsing in the face of mass withdrawals.

Greece's Prime Minister Alexis Tsipras reacts during an emergency parliament session in Athens. Photo: AP
Greece's Prime Minister Alexis Tsipras reacts during an emergency parliament session in Athens. Photo: AP
Greece's Prime Minister Alexis Tsipras is seeking parliamentary support for bailout reforms (AP)

Greece sent a first proposal to the ECB last week to reopen the stock market as soon as possible because it risked its place in global securities indexes if it remained closed for too long.

Read more here: Greece crisis: German advisors want mechanism for a country to leave euro zone  

But the process was delayed because the ECB wanted assurances that Greek investors would not pull money out of banks to convert them to shares or bonds, putting a further strain on the country's struggling lenders which depend on the ECB's emergency funding (ELA) to remain afloat.

Earlier today, Greece gained the European Central Bank's approval to reopen its stock market with no restrictions for foreign investors but with limitations for local ones.

Greece's energy minister and head of the far-left flank of ruling Syriza party Panagiotis Lafazanis (R) points while talking with former Greek Finance Minister Yanis Varoufakis during a parliamentary session in Athens, Greece July 15, 2015. Prime Minister Alexis Tsipras battled to win lawmakers' approval on Wednesday for a bailout deal to keep Greece in the euro and avoid bankruptcy, as the IMF pressured Greece's creditors to provide massive debt
Greece's energy minister and head of the far-left flank of ruling Syriza party Panagiotis Lafazanis (R) points while talking with former Greek Finance Minister Yanis Varoufakis during a parliamentary session in Athens, Greece July 15, 2015. Prime Minister Alexis Tsipras battled to win lawmakers' approval on Wednesday for a bailout deal to keep Greece in the euro and avoid bankruptcy, as the IMF pressured Greece's creditors to provide massive debt
Greece's Prime Minister Alexis Tsipras delivers a speech during an emergency parliament session in Athens (AP)

"The commission will convene tomorrow morning to decide if the Athens Stock Exchange will reopen on Wednesday or Thursday," the chairman of Hellenic Capital Market Commission Konstantinos Botopoulos told Reuters.

Read more here: Greek loan talks held amid tax data plans claim  

A ministerial decree on the bourse's operations is expected to be issued, opening the way for trading.

Greek regulators on Monday offered the ECB two plans for the re-opening: one allowing unrestricted trading, the same as proposed last week, and a second that imposed restrictions on trading by Greek investors to prevent capital fleeing banks, sources said earlier.

Protests In Athens As Government Works To Secure Bailout...Riot policemen clash with protesters trying to reach the entrance of the Greek Parliament building during a 24-hour general strike in Athens, Greece, on Tuesday, Feb. 7, 2012. Greece's government and international creditors are working on the final draft of an agreement on budget and structural measures needed to free up a second aid package, a Greek official said. Photographer: Kostas Tsironis/Bloomberg via Getty Images...I
Protests In Athens As Government Works To Secure Bailout...Riot policemen clash with protesters trying to reach the entrance of the Greek Parliament building during a 24-hour general strike in Athens, Greece, on Tuesday, Feb. 7, 2012. Greece's government and international creditors are working on the final draft of an agreement on budget and structural measures needed to free up a second aid package, a Greek official said. Photographer: Kostas Tsironis/Bloomberg via Getty Images...I
Greece's Prime Minister Antonis Samaras (L) and Ireland's Prime Minister Enda Kenny talk at a European Union leaders summit in Brussels October 19, 2012. EU heads of states and government took a big stride towards establishing a single banking supervisor for the euro zone, striking a deal under which the bloc's rescue fund could start recapitalising ailing banks next year, a French government source said. REUTERS/Sebastien Pirlet
Greek Prime Minister Alexis Tsipras (centre) arrives at Syriza party HQ for a meeting with senior party officials in Athens (AP)

Botopoulos said the ECB approved the second plan. "What we have won in the negotiations is that the restrictions will last for a limited period of time," he said.

WHAT HAPPENS?

A European official said the process for the reopening of the market was delayed due to fears that it could result in a crash, as well as continued uncertainty about Greece's political future and that of its banks.

Read more here: Greece crisis: Creditors now demanding third wave of reforms before bailout loans release  

"What nobody knows is what happens if you reopen. Is there going to be dumping of Greek assets? No one can say that everything is under control," the official said.

A senior official at the regulator said local investors would be allowed to buy shares by using existing cash, such as that stored at home for security in the face of the crisis or money transfers from abroad, and not by withdrawing money from their Greek bank accounts.

Some market participants had warned that unlimited trading for domestic investors would have posed a serious risk for lenders.

Read more here: Greece's former Finance minister Yanis Varoufakis confirms covert plan to hack tax codes  

"The problem is that if the trading starts without restrictions, then many Greeks could withdraw their deposits and turn them into shares or bonds," Takis Zamanis, chief trader at Athens-based brokerage Beta Securities, told Reuters.

The European Securities and Markets Authority (ESMA) said a ban on the short selling of Greek shares, as requested by the Greek securities regulator, would remain in place. The ban, which also affects electronic trading of Greek government bonds, is set to stay in effect until Aug. 3.

Read more here: Europe braces itself for a revolutionary Leftist backlash after Greece  

Greece's main equity index was down 16 percent from its 2015 peak, hit in February, when the bourse was shut down.

FTSE Russell, which compiles indexes across major asset classes, said last week it was retaining Greece securities in its indices for another 10 business days to see if the Greek bourse reopened.

Reuters

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