Spyros Capralos Chairman of the Athens Exchange

P.M. Communications: Public confidence in the stock market has improved markedly since you assumed your post just over a year ago. Please share with the readers of The Telegraph the extent of your regulatory reforms.

Mr. Spyros Capralos: It is not just us here at the Stock Exchange, the Capital Markets Commission in its role as regulator and the Ministry of Economy have also played an important role. The government has passed new laws regarding transparency and we have now adopted all the regulations that are part of the European Union directives in order to prevent market abuse. On our side, we have changed the way the exchange operates. We have changed the working hours to bring them more into line with Western European standards. We have also adopted the internationally recognized FTSE Dow Jones Industry Classification system. This makes things more user-friendly for anyone looking to invest in the Athens Stock Exchange and is an important development, considering that over 50% of the transactions on the ASE are now carried out by people outside of Greece.

We are providing more transparency and running the exchange according to international standards and along lines familiar to Western European investors. We are also obliging the companies to adhere to International Financial Reporting Standards (IFRS) to facilitate the analysts and investors to make their decisions. It seems to be working. The international markets believe we have a lot of potential which is why in 2005 there was a net inflow of over Euro 5.2bln into Greece. This year has started very well. Already, in the first fifteen days of 2006, we have seen a net inflow of more than Euro 350mln.

P.M. Communications: This growth in foreign investment has been facilitated by your development of a more user-friendly stock exchange through the adoption of the internationally recognized FTSE Dow Jones Industry Classification Benchmark, for instance. Can you elaborate?

Mr. Spyros Capralos: It is now much easier for investors to find the share price of any company because it's all done alphabetically. Now, the shares are divided into three main categories: large-cap, mid-cap and small-cap. There are about 200 companies in the latter two categories. Then, we also have the companies that are under supervision for a variety of operational reasons. We have eliminated some companies from the exchange, as they are not the kind of companies that are desirable as clients of the exchange. By cleaning up the market in this way, I think both international and local investors are more confident in the market. We have seen a huge increase in the number of transactions taking place in the exchange. Last year, we had an average daily turnover of Euro 210mln, compared to 140mln in the previous two years. Since the start of the year, we have been averaging close to Euro 400mln.

P.M. Communications: There has been a massive turnaround in investor confidence considering that back in 2000 when the Athens Exchange suffered its crash, there were accusations of mismanagement and a lack of transparency. Even now, some local investors continue to be cautious regarding the growth of the Athens Stock Exchange. How would you convince your potential investors that the kind of crash that happened in 2000 could not happen again?

Mr. Spyros Capralos: It is impossible to predict the future. A major international shock could, of course, negatively impact the ASE. However, all the measures being taken by the different institutions are moving in the right direction. Now, nobody can trade without putting their money on the table, so to speak. This has created an environment, where although we still have a few speculators (which of course every market needs), we now have people who are ready to commit and to invest money. In 1999 and 2000, people had thirty days to come up with the money when they were borrowing, buying or selling shares, which left room for irregularities at the market. I think that that's why we cannot have the same crash again. There may, of course, be some corrections in the market, and this is normal, but, at the end of the day, it is market forces and the companies' profits and plans that determine whether the price of the share goes up or down. Having a much larger volume of transactions and a much bigger number of investors has also helped the ASE to mature.

P.M. Communications: The market was recently upgraded from emerging to mature. What criteria did the ASE fulfil in order to achieve this reclassification?

Mr. Spyros Capralos: I think that international organizations have recognized that the Athens Stock Exchange market is now operating like any other mature market around the world. That said, we do still have a very attractive emerging market element because, by investing in Greece, people know that they are investing in companies that are not only targeting the 11mln population of Greece, but also the 150mln market of Southeast Europe. International investors, who only used to invest in the top banks or a few public state-controlled companies, have now shifted their attention and invest in a larger number of companies within the top eighty. I think this trend is very positive and an indication of the good value that a lot of our top companies offer.

P.M. Communications: The Athens Exchange was the 2nd most profitable bourse in Europe last year and already this year its average turnover is up to Euro 400mln a day. How far do your ambitions go?

Mr. Spyros Capralos: It's difficult to know how long this growth in volume is going to last. I think it's too optimistic to say that we'll maintain an average of Euro 400mln a day turnover for the whole of 2006 but I think it is safe to say that we will have a considerable increase in our volume of business. The rest is up to our companies and how open-minded their management is. They must attract investment by presenting themselves in the international capital markets.

P.M. Communications: I want to introduce the next question with your words. You said, and I quote: "Now is the right time to discuss as to how we can unite our forces in order to attract, together, foreign investors to our markets. Our common vision must be the creation of a large, unified capital market in South-eastern Europe." Cross-border trading between regional markets is very low at present. What steps are you taking to achieve your vision?

Mr. Spyros Capralos: At the Athens Stock Exchange we are taking measures to facilitate cross-border transactions. We have already signed an agreement with Cyprus and, as of the beginning of April this year, we are going to be trading the shares of both Cyprus and Greece from the same trading platform. Before this Cyprus had very complicated rules and regulations that frustrated investors' desires for quick and easy access to the market. This common platform will enable bring much more international exposure to the market of Cyprus and that will be the test-case to prove to all our other neighbours that through the Athens Stock Exchange they can attract international investors with all the benefits that they bring.

P.M. Communications: Do you feel that Athens should aspire to be the financial hub for the capital markets in the region?

Mr. Spyros Capralos: I think that Athens can play the role of financial hub, not only because our rules and regulations are already in line with those of the European Union, but also because the Greek capital market is a mature capital market. Those countries surrounding us will progress much more quickly by combining with us. That's my position and I hope that I will be able to convince the people in the market.

P.M. Communications: As General Secretary for the Olympic Games and Chairman of the Athens Stock Exchange, both of your last two positions have been of great strategic importance for Greece. How do you perceive your new role and your responsibilities here in the Athens Stock Exchange? What do you see as your priorities, here?

Mr. Spyros Capralos: They are two completely different jobs. The Olympic Games was the biggest and most internationally-visible project ever undertaken by Greece. It helped improve the image of Greece in the outside world. With all the criticism about the state of preparations in the lead up to Athens 2004, it was a major satisfaction to all of us involved, when Greece successfully staged such a successful event. After all, it is not just a sporting event; the Olympics pose a massive logistical challenge.

Here it's a different job. Here, I run the whole of the capital markets. I don't run only the Athens Stock Exchange, I am in charge of everything to do with derivatives, settlement, clearing and registry. Something that perhaps a colleague of mine in the London Stock Exchange may not have to deal with. At the same time, it's very challenging. Greek stocks are very popular with international investors because of the massive gains they are making in terms of profits and turnover and their potential for growth. However, because of the crisis in 1999 and 2000, we need to restore the confidence of Greek investors in the Athens Stock Exchange. At the same time, we need to create value for the shareholders of Hellenic Exchanges (HELEX) and this is what we are doing. Last year, we managed to reduce our general expenses by more than 10% whilst increasing our volume of business by 50%. This year, once again we will further reduce our expenses whilst increasing our revenues from the ongoing growth in trading volume.

P.M. Communications: Your investors must be very happy indeed.

Mr. Spyros Capralos: I think they are and we see that reflected in the price of the stock, which has done much better than the average share on the stock exchange.

P.M. Communications: And do you see any parallels between your two roles in terms of the international image of Greece. I would argue that the changes you have introduced here at the Athens Stock Exchange and the success you are enjoying with foreign investors are also another means of projecting the image of a modern and dynamic Greece. Do you feel that both of your roles could be seen in this way?

Mr. Spyros Capralos: I think the whole country is modernizing, and is projecting a much better and stronger image to the outside world. That is an effort that needs to continue because we must sustain the progress that has been made and continue to move forward. It's not a matter of staging one event and then taking it easy, it is a continuous effort. Everybody has a role to play in that: the government, the politicians, the market, the regulators and all the companies and individuals that are part of this country. I think that Greece has taken a step forward. The success of the Olympic Games was something that gave a tremendous boost to the country and especially to people's confidence. It showed that we can achieve even the biggest and most important goals.

P.M. Communications: I would just like to give you the opportunity to send a last message to the readers of the Telegraph about the Athens Stock Exchange or the prospects.

Mr. Spyros Capralos: U.K. investors are one of the most important investors in the Greek economy through the Athens Stock Exchange. I'm sure they are happy with the returns having invested heavily through the exchange for the last three years with good results. I hope that they continue to invest here and that they feel confident that we are doing the right things and moving forward. There are many challenges ahead in the years to come both in terms of European directives and the efforts of Greek companies outside of Greece.