Stock Lending - Short Selling
It should be noted that said product and short selling already apply only for the market makers - members of the ADEX as a counter balance for the risk they undertake on the ADEX.
In the frame of the greek capital market development, the ASE, in cooperation with the ADEX, ADECH and CSD, will provide the investors with the investment tool of short selling for shares listed on the ASE, with a simultaneous or previous stock lending to be sold from the ADECH. The stock lending from the ADECH is made through the realization of an agreement of purchase of shares with a Stock Reverse Repo through trading of the corresponding product. The new investment tool is expected to present multiple advantages as regards the liquidity and reliability of the market. More specifically, it is expected to help in the rationalization of prices of shares and the restriction of their extreme fluctuations, since even investors whose portfolio does not include shares will be in a position to express freely their expectations as regards these shares. At the same time, this new product will contribute to the more rational connection of the price of the derivatives market with those of the ASE. Short selling through borrowing constitutes a valuable tool of effective portfolio management internationally. Finally, through the product of securities selling agreement to ADECH with a stock repo of the ADEX, investors with long-term portfolios will be in the position to lend their shares to ADECH, expecting further income (resulting from interest) from their investment.
In the frame of the expected upgrading of the greek capital market, the authorities and agencies of the greek capital market proceed to decisions and regulations as regards the use of this investment tool. More specifically, on May 10, 2001 the CMC Board of Directors approved a Decision regarding the necessary amendments in the regulation of the DSS operation concerning the clearing of short selling and products of borrowing of securities on the ADEX. Following this, the ASE Board of Directors will recommend to the CMC Board of Directors the method of realization of short selling. The CMC will approve the Decision regarding the way of realization of short selling. Finally, the Boards of Directors of the ADEX and ADECH will decide on the necessary amendments in the characteristics of products of borrowing that are related to the clearing, as well as the shares that will initially constitute underlying securities for these products.
It must be noted that the use of the above investment tools by the investing public will start gradually, as knowledge of the operation of these tools is required and an amount of time will be required before it is used to a satisfactory degree.
Apart from taking the above actions, the executives of the ASE, ADEX, CSD, ADECH and ASYK are concluding the last regulations in the systems of trading and clearing, both of the securities market and of the derivatives market, so that no problems will arise in the use of these products. In the frame of the preparation, a final series of systems tests has been programmed and it will be run by the executives of said companies from May 17, 2001 up to May 22, 2001.
In addition, the relevant general and detailed directions regarding short selling and borrowing will be completed in the next few days and they will be forwarded to all the Members of the ASE, ADEX and ADECH, as well as the DSS Operators and Custodians next week. Also during the week from 21.05 - 25.05, new training presentations are being planned by the executives of the above companies for the executives of the securities companies - members and journalists so that the investing public is informed. Simultaneously, in the frame of informing the investing public, the ADEX is scheduling for June seminars free of charge for those who are interested in short selling and stock lending.
For more information regarding the products of stock lending, the public may visit the ADECH website, http://www.adex.ase.gr.