Amman Stock Exchange Posted
FEAS holds an interview with the Chief Executive Officer of Amman Stock Exchange Mr Mazen Wathaifi. Ms Armenuhy Hovakimyan, FEAS Deputy Secretary General spoke with Mr Wathaifi about ASE’s main projects, “work from home” routine, how COVID-19 affects the market and more.
Armenuhy: Hello, this is FEASNews, and I am Armenuhy Hovakimyan, the Deputy Secretary General of the Federation of Euro-Asian Stock Exchanges. Working from home, working from Yerevan but visiting different countries. Today is Jordan day, the country of the FEAS region. And my guest today is Chief Executive Officer of Amman Stock Exchange Mr Mazen Wathaifi. Mr Mazen thanks for joining me.
Mazen: Thank you very much. This is actually a wonderful opportunity for me. Thank you very much for having me in this interview. Thank you very much for this invitation, I really appreciate it. I wish all the best for all the members of FEAS and the whole world.
Armenuhy: Thanks for your kind words. Mr Mazen, Amman Stock Exchange is a founding member of FEAS. You joined the Amman Stock Exchange as a CEO last year. Meanwhile, you are in the capital market for more than 35 years. As soon as you joined the Stock Exchange and then in some six or five months the crisis. This health crisis came, which led to the market crisis. Amman Stock Exchange was closed, the market was closed in Jordan for more than fifty days, but now you are operating pretty well. The stock exchange is operating and you overcome these obstacles pretty well. Please, tell us, what are the key strategic initiatives that Amman Stock Exchange is working at this moment? How the strategy has changed related to this crisis?
Mazen: Thank you very much for the question. As you have just mentioned, all the fifty days the trading was suspended at the Amman Stock Exchange due to the crisis and due to the shutdown and lockdown of the whole activities at the country.
There was a decision to suspend trading at the Stock Exchange. After the comeback of the economic activities, actually, there was a resumption of trading at the Amman Stock Exchange. Since the resumption on the 10th of May, the market has now come back to its stability. We have trading now, we have normal trading, up and down as usual.
We have responded to this crisis by putting initiatives to strengthen the activities in the market and also to face this challenge.
As you know, the whole world now is facing challenges caused by this pandemic, which affected the whole world. The Amman Stock Exchange is not an exception. So we put in place a number of initiatives in order to enhance the regulatory and the technical regulatory frameworks of the market, in cooperation, of course, with our regulator, which is Jordan Securities Commission (we call them the capital market institutions, the regulator, SDC (Securities Depository Center) and Amman Stock Exchange)
As a stock exchange we have, of course, projects and the main project that we are working on now is the Optiq trading system. We have a contract with Euronext in order to launch a new training system: Optiq which is a world class trading system. That will enable the stock exchange and the investors to trade and also to implement the new technologies in trading activities. Like new applications through mobiles, through laptops, through all these means.
Especially nowadays, you know that people are using technology in order to avoid interaction, human interaction. So the system actually will be ready to be launched. We expect to launch during the last quarter of this year, hopefully in September.
The other project is the XBRL system, which is the Extensible Business Reporting Language, which is an international language of disclosure in order to enhance transparency and disclosure in the market. So we have finalized all arrangements for the launching of this system. It will be a bilingual system, in Arabic and English which will enable investors to see all the disclosures by listed companies through the website of the regulator, the Jordan Securities Commission and the Amman Stock Exchange.
Also, we are working now on the VMWire system, in order to upgrade the technical infrastructure of the Amman Stock Exchange. Enable stock exchange to implement new technologies in the market also to enhance the cybersecurity in the market, to prepare ourselves for the upcoming era, or what we call, post-corona hopefully.
Also, we have upgraded our website, an interactive one, in order to enable investors to see all the disclosures, all the necessary information, to make their decisions based on this information.
We have launched social media, our Twitter, Facebook, Instagram, Youtube, LinkedIn, etc, in order to interact with the investors and with the public.
Three years ago we designed a roadmap, the capital market roadmap, in cooperation with EBRD. We have a strategic map now covering the three institutions: the regulator, the Securities Depository Center and the Amman Stock Exchange.
This roadmap contains recommendations and activities that should be taken by these three institutions including ASE in order to upgrade the regulatory frameworks of the capital market of Jordan.
We have implemented a number of these segmentations, and now we are implementing the other recommendations of this roadmap.
ASE is working on producing new products in the market, like ETFs, the securities market has been changed and also the Securities Commission introduced a new regulation for the mutual funds, in order to enable the establishment of other types of mutual funds, other than the traditional ones, like the ETFs, etc.
We are working on introducing this new type of instrument.
In addition to this, we are working on the project that we call the “issuers outreach”. For attracting new listings in the market, in order to enhance the depth of the market and to have the new companies, especially the most successful ones, to attract them to be listed in the market.
Also in order to enhance the corporate governance, implementation and compliance by listed companies, we have a project to introduce what is called ‘scorecard’. Which is to specify the extent of compliance of listed companies with the corporate governance rules issued by the regulator. By the way, before I joined the Stock Exchange I was a commissioner in the Securities Commission, I chaired the committee for the new corporate governance rules and it’s worth mentioning that issuing these rules, actually, upgraded the ranking of Jordan in World Bank’s ‘Doing Business Report’ under the minority shareholders rights. The ranking of Jordan jumped 60 positions in two years.
Mazen: Yes this is one of the main accomplishments of our regulator and the operator. Since, you know, that was in cooperation with the Stock Exchange, this is a major accomplishment by the capital market institutions.
Also in order to establish the ETFs in particular and also to enhance the level of transparency, we are working on introducing new indices in the market. Last year we introduced the ASE20, the blue chips index. This is actually an introduction or let’s say the base for the ETF.
These are actually the main projects that we are working on. We are still working on introducing new projects. These pandemic created major challenges for economies, for countries, for individuals.
Armenuhy: You as a stock exchange, the Amman Stock Exchange is doing a fantastic job during even these hard times. So many projects and you didn’t even stop them. It is amazing how simultaneously you are doing both technological ones, regulatory ones with new products. This is amazing, and by the way, your stock exchange is one of the most efficiently working stock exchanges. We are doing our research also.
The Amman Stock Exchange is great, and you mentioned a lot of projects that I am going to ask about, but first, this question came from my mind. You are coming from the regulator and now you are in a stock exchange, are there any miss matching thing, are you happy with your last job and do you deal with the requirements who managed there and now as a stock exchange you need to comply with these requirements? How are you dealing with the contradictions, this is always interesting?
Mazen: Yes, this is very interesting and this is a very difficult question. Let me tell you about something, about three months ago, when I joined the stock exchange, one of the directors of the departments, he came and told me about a provision in one of the instructions. He mentioned that this is a requirement from JSC, and I said “What? They shouldn’t have done this!”.
No, but actually it’s tough. When you change positions you recognize that you have to work in a number of areas in order to be a regulator. Especially regulators need to be experts in running things related to the capital market. Of course, the operator and the parties and the supervisor of the regulator try sometimes to escape and to go over, but no.
The answer actually is that I do understand what the regulator needs and what is the purpose of that.
Armenuhy: Investor Protection.
Mazen: Yes. Maybe sometimes as an operator, you look at the provision of certain instructions and law that this is difficult for me, but no, it’s always for the benefit of the market and the benefit of investor protection. So I do understand the sentiment of the regulator and the operator and the other parties, the supervision of the operator. And I also understand what the regulator needs and I comply.
Armenuhy: So there is a good synergy now at your capital market. So knowing about one of the initiatives and objectives of the Amman Stock Exchange, the Islamic Index. What is done, if something is done there, and what should be done in reaching this Islamic Index?
Mazen: Before I joined the ASE last year, a committee was formed in order to establish, or to categorize, classify the stocks and the shares with the compliance, with Sharia rules and Islamic Financial rules. The committee was composed of scholars, representatives from the capital market institutions, from the universities, professors, experts. They reached the classification and categorization draft, they categorized and classified certain shares and stocks that are in compliance with the Sharia requirements.
They referred the draft to the Board of Directors of ASE. The board now formed a committee from the board, and I am myself one of the members of this committee in order to study the results of the work of this specialized committee that has worked on the classification and categorization of the shares and stocks that are in compliance with the Sharia principles and requirements and hopefully in the upcoming short period there will be approved. According to these results, the Stock Exchange will build the Islamic Index.
Armenuhy: Good! So this project is ongoing and we are waiting for this. We at FEAS are also waiting for the results.
Coming back to the market and to the issuers. You mentioned that you are working with them and making technological things, also, technological enhancements for them. As of June 16, you managed to have 97% of reporting of issuers. This is a really good percentage. As we know, during this pandemic a lot of delays are there with the reporting, but Amman Stock Exchange managed to gather out of 184 listed companies 97% of the reports, Great Job!
How you managed this, how you managed to work with listed companies in this situation to have this great results of reporting?
Mazen: Let me tell you first, that when the trading was suspended during the suspension of trading we never stopped working. We have established an emergency, contingency plan in order to work remotely. Before we closed the stock exchange, we had prepared this plan and the needed infrastructure for launching what we call the remote work. Each department was ordered and directed to follow certain steps in order to continue working remotely. We’ve followed the needed requirements from the listed companies and continued working through the departments. The legal department, the listing department, the operations department, the IT department. The circulars for the listed companies were sent during this period.
As I said we have never stopped working. As you mentioned, this is a very high percentage and this is a reflection of the compliance of the listed companies with the requirements of the disclosure. Disclosure required by the Commission and by the stock exchange. This is a very good indicator. We are relying on more enhanced disclosure and transparency in the market.
So, we managed the relationship with the related parties of the market through our emergency plan that helped us actually and we are following up the relationships with the stakeholders of the market during and after the resumption of trading and resumption of work of stock exchange.
Armenuhy: Great! This is showing the importance of business continuity and contingency plans which Amman Stock Exchange had before. Are there any changes in these plans after the pandemic? Have you updated them, or, they were the way as they were before?
Mazen: We are always updating our plans. Especially nowadays, as I said, there is a kind of uncertainty what this pandemic will take us to. I have to mention that thanks God, we’ve made a very successful story in confronting this pandemic and handling this crisis. We have a very limited number of cases, very limited number of deaths, 10 deaths until now around 1000 cases. So we are really proud that we faced this challenge with a limited number of casualties, with very strict rules that the majority of people have complied with the requirements of social distancing, and every needed requirement by the government and by the health authorities. This is a wonderful and successful story of Jordan in facing this very mean and dangerous pandemic.
So we are updating our plans and even regulations according to the developments in the capital market and in the economy. Also updating our risk management strategy. We have a risk management strategy in the market. By the way tomorrow we will have a meeting of the risk management committee composed of one of the board members as a chairman and a number of board members and myself. So, from time to time we review our strategies, our contingency plan, our risk strategy, our business continuity plan in order to minimize the risk facing any development. Everyone is talking about a new wave of the pandemic, we have to be ready for that. Hopefully this will not happen, I myself, I believe that it will not happen.
But again we have to prepare ourselves for every development in this regard.
Armenuhy: This is a great message for both the local and international community, and in general a great message to keep updated the risk management plan and to pay special attention to the risk management planning. When it’s coming to the implementation it’s always good to have good plans onsite and working plans, rather than to manage them during the crisis. So this is a great message that I want to stress again, that keeping updated the risk management plan, the contingency plans, having these continuous meetings with the committees, this brings success both for countries and institutions, particularly Amman Stock Exchange. Congratulations on this good management on the risk side.
One question about the cooperation that the Amman Stock Exchange is having. Before the crisis, maybe the very last meeting Amman Stock Exchange had with the Palestine Exchange. As both exchanges are members of FEAS and we are following our members’ activities. Will you please mention some details about the cooperation possibilities? As both exchanges are very active and dynamic, managed well, what are your expectations from the cooperation?
Mazen: We received the CEO of Palestine Stock Exchange before the lockdown in March. We discussed possibilities and ways of cooperation between our two institutions. There are a number of areas. When the pandemic came, the lockdown happened and now we hope this will be overcome soon, travel will be resumed and we will be able to meet and resume the discussion on cooperation between our institutions. There is a very long history of cooperation between capital market institutions of Palestine and Jordan.
Back again, when I was working at the regulator, we had a very strong relationship with the regulator of the capital market of Palestine. We have signed a cooperation agreement between two institutions. Hopefully we will reach an official form of cooperation with Palestine Stock Exchange in the future.
We are very keen to enhance deep cooperation between Amman Stock Exchange, regional stock exchanges and international ones. We are very keen to cooperate with stock exchange, stock market experts, having strategic partnerships with different markets and stock exchanges.
So, this is our main ambition to continue a very good strategic relationship with the world, with regional and international exchanges.
Armenuhy: The very last question, in your personal opinion what the world will look like after the pandemic?
Mazen: I don’t think there is a definite answer for this. Since we have very huge and big uncertainty. We noticed that the lockdown devastated countless businesses. Many of them are not expected to be open and return back to normal very soon. To be honest, there is a saying: “During a crisis be aware of the danger, but also be aware of opportunities.” I think cooperation between the world authorities should be enhanced. We have to return to globalization, but the right one. I think the whole world will be reshaped, the economies will be reshaped, the new world order will be reshaped. I am not sure what is the shape of this reshaping, but the tendency of disintegration is more dangerous than the pandemic itself.
The integration of the world economies and authorities should be based on very strong cooperative relations to face these challenges of the pandemic, to fix the damage. Maybe that will take time, this is my expectation, but we have to have policies in place, authorities should have policies in place to face the challenges.
The world should have very strong cooperation!
One of the things I’m expecting, the digitization will be one of the major developments we will witness. The world now is concentrating on social distancing. Financial sector will be different: payments, transfers of money will be through smartphones, through applications. To reach what they called a cashless environment. Fintech and digitalization will be the main evolutionary aspects of the new shape.
Armenuhy: Cooperation and technology if to sum up. We are all in this together and we need to survive together! Thank you, Mr Mazen, for a very interesting interview.
Mazen: Thank you very much for having me, Armenuhy, thank you very much for this opportunity. I wish all the good luck and safety for the whole world, for you, for your family and all families in the world. And hopefully will see you in person very soon.