LITHUANIA: Nasdaq OMX gains 100% of securities depository18.01.2012, 16:42
US stock exchange operator New York-listed Nasdaq OMX Group has in January won Lithuanian central bank's tender to acquire a 60% stake in the country's central securities depository CSDL.
CSDL is a central register of shares and other securities issued by public companies registered in Lithuania and the Lithuanian government.
Worth LTL 13m, the deal allowed Nasdaq OMX to gain full control of the depository as the world's biggest stock exchange group had already owned 40% of the company through a 30% stake held by Nasdaq OMX Helsinki, and 8% through Nasdaq OMX Vilnius, stock exchange operators of the respective markets. The 60% stake was also purchased by Nasdaq OMX Helsinki.
The acquisition completes Nasdaq OMX Group's programme of building an integrated pan-Baltic marketplace that includes both the securities trading platforms (these are the three Baltic exchanges) and the depositories that are post-trade businesses through which clearing and settlement of securities trades is provided. The Estonian and Latvian depositories have been a part of Nasdaq OMX's Baltic business for several years.
"The integration of securities exchange and depository business allows to create a stable and robust system that offers market participants higher quality services and will result in a better market model in the Baltic countries," says Mindaugas Bakas, president of CSDL, to news2biz.
Plan to keep fees from rising
"For foreign financial institutions or investors who want to have access to our markets, it is important not only to trade smoothly, but also to execute settlement transactions smoothly. Joint ownership will allow us to offer new clients joint approach and comprehensive information about trading and settlement processes in our financial markets. Estonian and Latvian experience also shows that there are organizational synergies with reduced costs on support functions, which make it possible to keep the fees at present level or lower some fees despite increasing costs," Bakas says.
"From the point of view of market participants, the important aspect is that the depository will be managed by a reliable, financially stable and prudent operator. So here Nasdaq OMX is the best choice," says Alius Jakubelis, managing director of Orion Securities, the biggest independent securities brokerage in the Baltics, to news2biz.
"We expect the new owner to launch new capital market development initiatives and continue with the going ones, such as the transfer of accounting of shareholders of closed stock companies to depository and securities market participant accounts, etc."
Bakas agrees: "The Estonian depository has recently installed a new state of the art system, meanwhile the Lithuanian and Latvian depositories have different technological solutions (in-house CSD systems). Obviously, our natural next step will be to search for a common efficient IT solution for all Baltic CSDs."
Russian hopes ditched
Interestingly, the Lithuanian depository stake sale tender was in fact the second attempt by the central bank to sell it. The first one took place in 2009 and attracted two bidders, Nasdaq OMX and Finasta, an investment bank owned by the now bankrupt Russian-controlled Lithuanian bank Snoras. The central bank then called off the sale citing unacceptably low bids.
"I believe in 2009 the sale was cancelled only because Finasta had to be declared the winner because of its higher bid. No one in the market would have wanted such an outcome, the post-trade settlement and clearing house and securities custodian falling into the Russian hands," another commentator close to securities exchange business anonymously told news2biz.
In 2010, CSDL reported LTL 4.7m in sales revenue and LTL 4.2m in other activities with an LTL 5.6m net profit.