This article was authored by Bjørn Sibbern, President, European Markets at Nasdaq
Deeply affecting the entire society, with investors, companies and individuals across the world, the global Covid-19 pandemic poses one of the most significant threats to the European economy we have seen in decades. While there is no universal solution on how to mitigate the situation, I am confident that we – through the cooperation between government authorities, members, listed companies and other key stakeholders in financial markets across Europe – should be able to manage thru the economic effect of Covid-19 and restore a strong financial ecosystem.
In the following paragraphs, I will summarize Nasdaq´s view on the current state of the European markets. In addition, I will highlight some things that we as a company and key financial infrastructure player is doing to support the local communities that we operate in.
Open Markets Help Battle Uncertainty
First, the discussion on how exchanges and the authorities that oversee them should handle declining share prices has been vivid across Europe and the rest of the world. Calls to shut markets or ban certain elements of trading, such as short-selling have been heard loud and clear.
I hope that the view of Nasdaq, as well as most of our peers across the continent, has been equally clear: to interfere with the functionality of exchanges and limiting companies’ ability to raise capital will not help anyone. Luckily, so far we have seen most regulators agreeing with this and we are happy that all of our markets across eight European countries have been able to run without interruption.
Nasdaq is determined to do our part to keep the wheels of the economic engine running throughout these difficult times, and we plan to continue making sure to maintain the technology and human capital needed to operate our markets.
Investors and companies right now need certainty. In tumultuous times, it is more important than ever to maintain open and transparent market places, where investors can get in and out of positions while companies are able to raise critical growth capital.
Enabling continued growth for SMEs
As one of Europe’s most active markets for IPOs and new listings, Nasdaq’s European markets has helped hundreds of companies – in particular SMEs – raise over 10 billion Euro in growth capital in recent years.
However, our responsibility doesn´t end after the listing ceremony. We are currently taking extra measures to ensure that our markets not only run efficiently but also provide enough liquidity for trading in all companies, large and small. For example, we currently monitor actual liquidity in addition to factors such as free float and number of shareholders.
We are also, together with other stakeholders in the Nordic financial ecosystem, in dialogue with local authorities on possible efforts to help small and medium sized companies affected by the current crisis. SMEs play an important role in creating jobs and growth across the economy, and will be even more important in a post Covid-19 environment. We are therefore reviewing all possible ways to support SMEs in these difficult times. Possible actions include a way of offering listed companies public funding as equity capital.
Helping our Listed Companies Navigate an Uncertain Environment
Unprecedented times mean new and often unique challenges for public companies. Authorities and regulators need some flexibility as well as acknowledge the fact that managing the obligations as a publicly listed company might be harder than ever before.
To help companies to navigate through these uncertain times, Nasdaq is providing regular updates and webinars for its issuers where topics range from postponing or hosting virtual AGMs, to how information disclosure should be handled. Nasdaq has also increased availability of its European surveillance function to 24/7.
A summary of all resources and information available to Nasdaq listed companies globally is available here.
Encouraging and Supporting Efforts to Battle Covid
Nasdaq recently announced its philanthropic support in response to the Coronavirus COVID-19 pandemic. With our global community experiencing this unprecedented time in history together, Nasdaq is taking action to commit cash and in-kind donations totaling $6 million to COVID-19 response and relief efforts to provide immediate assistance to those who are most at risk.
In addition to our own efforts, we also make sure to encourage other initiatives within the Nasdaq family and we have been really pleased to see the great, creative solutions that many of our listed companies globally have launched. One additional such initiative is the Nordic Investment Bank who has recently issued and listed bonds aiming to help finance measures taken to curb the immediate impact of the Covid-19 pandemic on the economy and society. To support more initiatives like this, Nasdaq has waived the listing fees of the Nasdaq bond markets in Copenhagen, Helsinki and Stockholm for bonds that are issued to explicitly finance such projects.
Looking to the Future
Although it is hard in the midst of a crisis, we also need to be able to look forward and plan for a world beyond Covid-19.
After almost decade of stable, economic growth the economic development of the last few weeks risk creating dramatic and long-term effects through bankruptcies, increasing unemployment and weakened pension and welfare systems. Exchanges, as integrated parts of the wider financial and societal ecosystem, play a key role when the efforts to not only managing thru but also help recover from the effects of Covid-19.
I promise that Nasdaq will continue to do what we can to provide our employees, investors, listed companies and local communities with support and resources to push through these difficult times and prepare for a recovery.
The views represented in this commentary are those of its author and do not reflect the opinion of Traders Magazine, Markets Media Group or its staff. Traders Magazine welcomes reader feedback on this column and on all issues relevant to the institutional trading community.