The Association of the Members of the Athens Exchanges (SMEXA) expresses its opposition and concerns as to the draft Ministerial Decision and proposed measures to regulate the movement of capital concerning transactions on financial instruments in view of the reopening of the Athens Stock Exchange (ASE).
In specific, pursuant to the above draft Ministerial Decision and starting from the date of its issuance, the existing funds deposited in accounts held with Hellenic credit institutions can no longer be used by investors for the purchase of financial instruments; whereas the funds deposited in foreign credit institutions can be freely used for the purchase of financial instruments traded in the Greek regulated markets.
In principle, we welcome the relaxation of capital controls to facilitate foreign investors trading in the ASE markets but we strongly oppose any capital controls related to the use of existing funds deposited in the Hellenic banking system.
The restrictions imposed only on the transactions of purchase of securities, while leaving the transactions of sales free and unrestricted, will clearly favor the sales rather than the purchases of financial instruments thus creating market imbalance which could result in a loss of confidence to the market mechanism and integrity, ultimately harming the very role of the Hellenic Market.
This negative impact will reduce the role of the Greek capital market as a transparent, efficient and well recognized mechanism for capital raising from the medium size Greek companies and consequently the investment interest of institutional or collective funds for investing through the Stock Exchange, will be limited.
We feel that such market conditions especially when formed after state intervention do not coincide with the integrity and transparency principles of MAD and MIFid Directives.
The proposed measures constitute unjustified restrictions of the free movement of capital and the constitutional right of economic freedom and equality.
Moreover the said restrictions introduce in fact and as a consequence a constraint in the access to the financial market based on nationality and region of establishment, since most Greek investors are likely to have access only to Hellenic bank accounts, differentiating in practice between Greek and foreign investors.
In addition the proposed measures do not sit well with the doctrine of proportionality as established under EU and Hellenic law.
We have a firm view that a normal and unobstructed operation of the Athens stock exchange could better serve the goal of returning to normal operation, stability and confidence in the Hellenic banking system, the complexity of the proposed measures increases the operational costs of the market participants and the negative externalities caused overweight any potential short term leakage effect from the Hellenic banking system as described above.
For all the above reasons we strongly believe that no capital controls should be introduced for any transactions, irrespective of their cause (purchase or sale), that relate to the operation, clearing and settlement of the ASE markets.