The lessons and challenges of 2020: Athens

By: Socrates Lazaridis, CEO, Athens Exchange Group Dec 2020

What changed in your business and what stayed the same this year?

Ever since the World Health Organization declared Covid-19 a pandemic back in March and the emerging trend of widespread lockdowns as a policy response to help ease virus transmission, securing the market’s seamless operation in these testing times and the safety of our employees became a focal point of our action plan. We launched web-based services to our members to secure their own and their clients’ market accessibility, while operations became predominantly remote. The latter has required the development of new skills and habits to ensure effective allocation of resources and maintain operating performance. Our market is no stranger to volatility, to swings in prices and overall activity, however the continued growth of our corporate bond market did not seem to be impacted, with more issues coming to market this year, while we also recorded the completion of the largest issue in the bond market’s short history.

At the same time, we identified an opportunity for the launch of the Shareholder Rights Directive II (SRD II) related services, with the Axia e-shareholders meeting as the flagship, giving the opportunity to a large number of listed companies and their shareholders to enjoy ATHEXGroup premium services of voting, proxy voting and virtual general assembly.

What was the impact of the pandemic and/or the economic slowdown?

Economic estimates suggest that Greece will be one of the hardest-hit economies due to the pandemic given its exposure to tourism and significantly more constrained fiscal space compared to other countries. As a consequence, financial market valuations de-rated on the back of the dire economic backdrop resulting in underperformance versus other EU markets. Banking, which historically had been the index’s anchor sector, has dropped to single digits, marking the lowest levels in decades. Lower capitalisation has led overall to lower trading values, despite somewhat higher investor engagement. Volatility levels have also varied significantly due to the news-driven nature of the markets this year.

What has the pandemic taught you that you didn’t know pre-Covid 19? What’s the most lasting change that 2020 has brought?

The disruption in our modus operandi required the introduction of new tools for our daily routines. The speed and degree of adaptation of these new tools seems to be a direct function of one’s digital literacy. Those who have remained abreast of technological evolution and products were able to pick up and continue their work easier than others when we switched to a more remote working environment. This highlights, in our view, the importance of continued training and introduction of new technologies in the work place. At this point, we should not underestimate the increased awareness required in the workforce on matters of cyber security. With regards to what has changed, it is fair to say that we witnessed the conference call’s demise. We believe the incorporation of virtual meetings either inter-company or intracompany will remain part of the post-pandemic normal.  The necessity of business travel to engage with counterparties and stakeholders has also been demystified, as remote meetings have proven to be just as effective.

What was your most important project this year (regulatory or otherwise) and did it change due to Covid-19?

There were two main pillars of our planning in 2020 that could have been affected adversely given the pandemic. On the one hand, we had just completed a organisational restructuring at the end of the previous year, while also sought to validate our strategy while aligning it to the new structure. We completed this task amidst the first lockdown, and continue to streamline our operation and build additional momentum to capitalise on the strengths of our new structure. On the regulatory front, as a group we had pinned 2020 as the year we’d be seeking to be licensed under Central Securities Depositories Regulation (CSDR), while also incorporating and preparing our ecosystem for the SRD II changes. We remained steadfast on the execution of both, holding a series of webinars with our stakeholders on relevant changes. 

As for business development, the most important project has been the development of systems and services for the launching of the Hellenic Energy Exchange (HeNEX), which started operations of the electricity derivatives market during the first lockdown and its Target market (day ahead market, intraday market and balancing market) just ahead of the second lockdown. The trading and post-trading services of HENEX, ENEXClear and ATHEXClear were dry tested remotely and operated seamlessly thereafter.

What was the biggest challenge for the leadership team?

Our leadership team in its current configuration is relatively new and has been together since the previously mentioned organisational revamp that took place at the end of the previous year. The transformation effort is continuing, which has been very much more demanding when facing external headwinds. Maintaining motivation and gearing the organisation to an 80% remote operating mode required significant effort. Furthermore, having embarked on this transformation, significant commitment is required. However, we were able to pull through, and keeping in mind the words of Albert Enstein, “in the midst of a crisis, lies great opportunity”, we were able to launch a new service offering a virtual general meeting product. This proved successful, catering to the need to hold meetings when face-to-face gatherings were forbidden due to health concerns. We remain on course, while also seeking additional opportunities to amplify our transformation by enhancing our services across the value chain, for our members, investors and corporates.

What were your (personal) best and worst moments of 2020?

One of the worst moments was the realisation of a positive Covid-19 case within our organisation, thus requiring the establishment of on-premises testing and overall Covid-19 readiness. The testing was not only for those exposed to our colleague, but much more widely for our employees, given that during that weekend we were holding a mock session for a final test of a new version of our trading system. This new version was crucial so that our members would also be in a position to operate on a remote basis. The best moment, was seeing the aforementioned through without any bumps in the process.

What do you see as the key themes for 2021?

Assuming we are in the final laps of the current pandemic and we manage to formulate a comprehensive response and put associated health risks behind us, we believe that we could witness an increase in both bond and equity issuance to boost growth, especially in Greece, where there’s a significant investment gap carried over from the country’s multiyear depressed economic activity. A catalyst for this, we believe, is the commitment of significant financial resources at the EU level in the form of the Recovery and Resilience Facility and the NextGeneration EU in general. Matters of sustainability will continue to be in the spotlight, given that the aforementioned resources, to a significant extent, are earmarked for the union’s green transition as well as continued digitalisation of economic activity.

On the business development side, the further development of services to the Hellenic Gas Transmission System Operator, DESFA  – regarding balancing market auctions and LNG capacity auctions – as well as gas-related products in the Hellenic Energy Exchange, HENEX, are taking priority along the extension of the common platform concept that has been running smoothly with CSE to other interested markets.

Last but not least, we expect the post-pandemic era to introduce new flexible ways of work for the workforce, taking into consideration the different needs and aspects of the various functions, aiming to increase efficiency and productivity.