Bloomberg News

EU Tax Would Stunt Baltic Market Development, Exchange Head Says

December 06, 2012

Baltic capital markets, among the least active in Europe, would lose even more liquidity if a tax on financial transactions proposed by the European Commission is imposed, Nasdaq OMX Group’s regional vice president said.

“We believe it would have a very, very negative impact” on stock and bond markets in Lithuania, Latvia and Estonia, Arminta Saladziene, head of Baltic Markets at the Nasdaq OMX, said by phone today in Vilnius, the Lithuanian capital.

European Union Tax Commissioner Algirdas Semeta, a former Lithuanian finance minister, is a proponent of the move to create a financial-transaction tax for willing EU nations. Estonia is one of 11 countries that have signed on to the plan, for which the Brussels-based commission needs agreement from all 27 member states and the EU parliament.

The proposed tax of 0.1 percent on stock and bond trades is more than twice the transaction fee now charged by Nasdaq OMX for trades on its exchanges in Vilnius and Riga, Latvia, and several times bigger than the 0.015 percent fee in Tallinn, the Estonian capital, according to Saladziene.

The total market value of companies whose shares trade on the three Baltic bourses was 5.4 billion euros ($7.1 billion) at the end of November, according to Nasdaq OMX’s website.

Shares worth 18 million euros changed hands last month in the three markets. By comparison, the Warsaw Stock Exchange in neighboring Poland reported 15.4 billion zloty ($4.9 billion) worth of equity trades on its Main Market in the same period.

Market Development

“Different countries face different situations,” Saladziene said. “The Baltic markets are really still being created and first of all need measures that will help them to grow and ensure liquidity.”

A few Baltic companies, such as Agrowill Group and Avia Solutions Group of Lithuania, have sought greater access to investors by listing in Warsaw. Inter RAO Lietuva AB, the Baltic unit of Russia’s state-controlled electricity company OAO Inter RAO UES, is selling shares to trade on the Polish exchange in an initial public offering this week.

Besides shares, the exchanges in Vilnius and Riga also had 2.8 billion euros of listed government and corporate bonds at Nov. 30, which generated turnover of 26.6 million euros last month in an average of 2.9 trades per day.

To contact the reporter on this story: Bryan Bradley in Vilnius at bbradley13@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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