ISE and Malta launch securities market

THE IRISH Stock Exchange has joined forces with the Malta Stock Exchange to launch a new market for debt securities.

The European Wholesale Securities Market will trade in wholesale fixed income debt securities and will operate out of Malta.

While primary market infrastructure, listing, promotion and other corporate services will be provided by the Irish Stock Exchange, the market will be authorised and supervised by the Maltese regulator.

Irish Stock Exchange chief executive Deirdre Somers said the decision did not “represent in any way a reflection on the Irish regulatory regime”. “We have an excellent relationship with the financial regulator,” she said.

The Irish exchange has said that the new venture, of which it owns 80 per cent, will enable it to succeed at a time when capital markets were becoming increasingly global.

Ms Somers said: “Globalisation is going to continue, there is a blurring of national boundaries. No one cares any more where you are listed and where you are traded.”

Describing the exchange’s existing operations, Ms Somers said the domestic market represented “a relatively small part of our income stream”.

She said with the fixed income part of the exchange’s business its greatest source of revenue, the exchange had been “looking for some time at ways in which we could innovate in that business”.

She said the exchange had chosen to work with Malta because it was in the EU and could provide access to new markets.

“All of the markets that currently serve the fixed income market are in northern Europe, so we are hoping this will give us greater geographical access into the Middle East and the Mediterranean.”

Ms Somers said the total size of the debt securities market, which has centres in London, Luxembourg and Dublin, was 117,000 and had “scope for a new market and a new brand”.

The new market is aimed at issuers wanting a European listing for distribution to European investors, law firms, accounting firms and arranging banks. Ms Somers said there will be “no retail element to the market”.

Asked how it would affect those currently listed on the Irish Stock Exchange she said: “There is no dual listing. This is a new market with nothing on it. We’re going to build it from scratch.

“There will be no dilution of what we currently have.”

Asked if the new market would cannibalise from the exchange’s existing clients, she said that “existing market issuers were very loyal to the ISE”.

She said the new market, which would feature structured products such as asset-backed and credit-linked securities, was instead likely to attract new entrants. The exchange said it also hoped to poach business from London and Luxembourg.

On the targets for the new market, Ms Somers said: “In three to five years, we believe we can have 20 per cent of our total fixed income from this base.”

“If this works, in future we would love to do something with a Middle Eastern exchange.”