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And Now, Ketchup Effect |
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Archives -
2007 Archive
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Written by B. Tyril
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Tuesday, 22 May 2007 |
Partly inspired by the example of the Icelanders, the Faroese Securities Market (VMF) may at last have succeeded in laying the cornerstones of what now is fast becoming a whole new, dynamic financial environment in the Faroe Islands.
A decade after the Faroese xSecurities Market as known as the VMF (Virðisbrævamarknaður Föroya) was commissioned to oversee the establishment of a new market for Faroese securities, the at first seemingly daunting task all of a sudden appears within reasonable reach.
For the better part of the past decade, the most difficult aspect of this job would seem to relate to the groundwork — fostering a public climate in which trading in shares and bonds and other financial instruments will be seen as not only legitimate and generally acceptable but as interesting and potentially attractive or worthwhile. Then, a few years ago, increasingly noticeable changes started to appear: Whereas earlier, skepticism or disbelief would be a normal response in discussions on a future Faroese stock exchange, today few will question the reality of a changed atmosphere in which securities trading is starting to look like a trend, increasingly familiar to ordinary people.
Few will assert that the activities of the VMF alone may have generated such change of hearts; some favorable combinations of financial events and timing may doubtlessly offer a key explanation. On the other hand, for those who had their doubts earlier, the VMF is now clearly seen as representing something more credible and tangible than it was say five or six years ago.
Among those financial events was the first listing of company shares, namely the initial public offering of Atlantic Petroleum Pf back in 2005. Other events include the recent announcements from the two Faroese commercial banks, Eik (previously known as Föroya Sparikassi) and Föroya Banki, respectively, of flotation plans; the latter of the two — currently own by a government fund — is in fact scheduled for privatization later this year (2007).
“I think we’ve had some luck,” said VMF President and CEO Sigurd Poulsen. “But we’ve also got some serious work done, and of course we still have a tough program. Part of what we set out to undertake had much to do with information — raising awareness by various means like reaching out to news media, for instance… That part seems to be working well, which is very important. Then we’ve had some fortunate events taking place in the financial sector: the banks starting to offer investment services very successfully, a lot of private company shares changing ownership, a lot of enthusiasm. And we have noted that the Faroes for sure has some investment ready capital.”
The owning company of the ICEX (Iceland Stock Exchange) — to which the VMF is linked and through which its listed items are traded — was recently purchased by Sweden’s OMX to join the securities markets of Copenhagen, Stockholm, Helsinki, Riga, Tallinn and Vilnius. This implies that the VMF’s linkage to the ICEX, now OMX Nordic Exchange in Iceland, is being integrated with the wider OMX Nordic Exchange concept.
On the October 2006 signing of the purchase agreement between OMX and ICEX owners EV (Eignarhaldsfélagið Verðbréfathing), ICEX President and CEO Thórður Fríðjónsson stated: “This agreement marks the beginning of a new era for the Icelandic securities market.
“ICEX will continue to focus on strengthening the market by seizing new opportunities presented by the combination with OMX. We believe that the interest Iceland has attracted during the course of this year underpins further growth and increased visibility will in turn kindle more interest.”
OMX’s acquisition of ICEX entailed that VMF’s shares in EV were translated into shares in OMX. The VMF has gained membership in a newly formed OMX advisory committee dealing with Iceland and Faroe, Mr Poulsen said. “Not only has VMF become well connected within the OMX Nordic Exchange system; more importantly, the new structure that will be implemented in the future provides a much greater exposure of our listed companies to potential investors.”
Mr Poulsen added: “The Icelanders have demonstrated the possibility of creating a well-functioning market in a very small community. You may say they have shown the way from a Faroese point of view; now integration with the OMX Nordic Exchange really presents some interesting perspectives.”
As to the VMF itself, its main purpose is to promote the trading of Faroese securities, Mr Poulsen pointed out. This task, he added, includes the facilitation of independent information about the securities trade and related subjects, as well as surveillance service to help ensure full compliance with regulations among listed Faroese companies.
Link to pdf presentation...
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