Today (Aug. 3) marks a big day for Greece as its financial markets open back up again after being shut down for the past five weeks when the country had implemented capital controls as the battle with creditors waged on. While the markets are back open, there will still be restrictions on how they operate, Bloomberg reported.
Under the current regulations, traders in Greece can buy stocks, bonds, derivatives and warrants only if they use new money, such as funds transferred from abroad, cash-only deposits, money earned from the future sale of shares or from existing investment account balances held at Greek brokerages, according to rules laid out by the Finance Ministry. While those within the country face restrictions, foreign investors won’t be held to the same regulations as long as they were active in the Greek markets before the capital controls were imposed last month.
Still, this is a positive step for Greece. According to Bloomberg, the five-week suspension in the markets was the largest halt on trading in the Athens Stock Exchange since the 1970s. That suspension also has left local investors without prices in the $41 billion equity market following the market close on June 26.
“I think the markets opening is another small positive sign that conditions are normalizing in Europe,” Jason Benowitz, a New York-based senior portfolio manager at Roosevelt Investment Group Inc, told Bloomberg. “In Europe overall, we’re starting to see signs of life and QE beginning to have an impact. Greece’s last-minute negotiations and referendum put a pause in the healing, and now it can resume.”
Also, as part of the regulations imposed on the reopening of the market, at least for the first three days, stock trading will be halting if a particular stock rises or falls by 7 percent within a 10-minute period, regulators said, which is still a decrease from the previous limit of 10 percent in five minutes.
But the Finance Ministry’s regulations could also result in a “loss of confidence to the market mechanism and integrity” because it might make it easier to sell securities than buy them, the Association of the Members of the Athens Exchanges reported.
“The restrictions imposed only on the transactions of purchase of securities, while leaving the transactions of sales free and unrestricted, will clearly favor the sales rather than the purchases of financial instruments,” the group said in an emailed statement to Bloomberg.