FTSE keeps Greece on watch list for another 12 mths

Greece's stock market will stay on index compiler FTSE's watch list for a possible classification downgrade for another 12 months, FTSE said after an annual country review.

Greece, which gained mature market status in 2001 after joining the euro zone, faces a possible change in classification to advanced emerging from a current developed market status.

FTSE first placed Greece on watch for a possible demotion in 2006. If implemented, such a move could prompt an exodus by index funds that track mature markets.

Greece has addressed most of the issues raised by FTSE, such as off exchange transactions which have been enabled by MiFID and stock lending which has been liberalised.

One remaining issue relates to omnibus accounts. The Greek exchange requires data on the final investor-owner of shares, while FTSE's clients desire information that stops at the level of broker.

MiFID, the European Union's Markets in Financial Instruments Directive, was introduced in November 2007 to dismantle barriers to competition in share trading.

Based on August data, foreign portfolios own more than 48 percent of the Greek stock market's available free float. Greek equities have a market capitalisation of about 92 billion euros — 36.8 percent of GDP.

The annual classification review is the process by which stock markets are classified as either developed, emerging or frontier within the FTSE global equity index series, tracked by institutional investors.

Markets are assessed against criteria covering custody and settlement, the dealing landscape, derivatives and the regulatory environment.

Brazil, Hungary, Mexico, Poland, South Africa and Taiwan are currently classified as advanced emerging by FTSE. The next assessment of the markets on its watch list will take place in March 2010, FTSE said.