Q: What have been the important milestones in the development of the Vienna Stock Exchange?

A: The Vienna Stock Exchange, as every modern exchange, is the driving force of the Austrian capital market, positioned in the center of Central and Eastern Europe and with historic ties dating back to the Habsburg monarchy. We are working very intensively on the integration of the Central and Eastern European Stock Exchange community. We cooperate with the stock exchanges in Budapest, Bucharest, Zagreb, Sarajevo, among others. We are interested in acquiring a stake in the Sofia Stock Exchange, which is currently undergoing a process of privatization, and we are in contact with the exchanges in Prague, Ukraine, Kazakhstan, and Russia.

The Vienna Stock Exchange is one of the oldest stock exchanges in the world, founded in 1771 during the reign of Empress Maria Theresa, but for many years the market was quite uneventful. More importantly, the modern exchange is a result of the merger that took place in 1997 between the formerly “stock exchange chamber” and the futures exchange (ÖTOB) to form the Wiener Börse AG.

Currently the stock exchange is a joint-stock company, 50% owned by the major Austrian banks and brokerage companies and 50% by the listed companies. That is a unique situation because it results in equilibrium of the banks and the listed companies. Whenever someone on the bank side wants to sell, the shares have to be offered to the other members of the syndicate within the banking side. That means that we have a revolving shareholder shift.

Q: What was the main reason behind the decision for such a structure?

A: The idea was to bring in everyone with interest on the market as a shareholder. Obviously, both the listed companies and the banks have a vested interest in a well-functioning stock market. Prior to the merger, the futures exchange was already a private, bankowned company. During the privatization in 1997, the question was how to incorporate the stock part of the market, and I believe that was a very clever construction.

Q: What are the major characteristics of the Austrian economy and how are they reflected in the Vienna Stock Exchange?

A: The Austrian economy is a social market economy. It is a mature economy, where services account for about 68% of the GDP, the industry for 30%, and agriculture for about 2%. Tourism is a very important part of our economy as we are the 10th most visited country in the world. Since 1995, we are a member of the European Union and one of its richest countries, growing at 3% and 4% annually, which is slightly higher than the average rate for the EU.

We are very well connected with the Central and Eastern European countries, where we usually rank in top one to three in terms of foreign direct investments. That includes the older members of the EU, such as Hungary, Poland, Slovenia, as well as the newest members Romania and Bulgaria. The Austrian industry, especially the banking sector, has heavily invested into those countries over the last years. That makes Austria the gateway to the new EU states because of the vicinity and the historic past.

Q: How many companies are listed on the exchange? What is the average market capitalization and industry representation?

A: Currently, we have 130 companies listed on the various segments of the exchange with total market cap of about 160 billion euro. In terms of the number of issues, the biggest sector is the financial sector, including banking, real estate and insurance. Industrial goods and services rank second, consumer products are third, followed by basic materials and consumer services.

In terms of market capitalization, finance is again the largest sector with market capitalization of 84.6 billion euro, or 53% of the total market cap. Basic materials are second with market cap of 33.7 billion euro, or 21% of the exchange, followed by industrial goods and services, and utilities. The utility sector, with only three issues, has market cap of 9 billion euro, or 5.6% of the total market cap.

In 2007, there have been six IPOs. Over the last five years, there have been 10 IPOs from the financial sector, seven from industrial goods and services, five from the consumer products and services sector, and five from technology and telecommunications.

Q: In addition to equities, what other products are listed on the stock exchange?

A: Stocks are the most prominent product in terms of income, but we also list debt instruments, such as government debt, corporate bonds, etc. We are trading exchange traded funds, or ETFs. On the derivatives side, we trade options and futures on single stocks, as well as on our main indexes - the ATX and the ATX5. The ATX is comprised of the 20 most liquid stocks, or the blue chip shares, while the ATX5 includes the top five companies in terms of market capitalization and free flow.

We also have Central Eastern European products - country indices on Hungary, Poland, the Czech Republic, Croatia, Romania, Serbia, Kazakhstan, and Russia and several regional and sector indexes. These are tradable indices and are used as underlying for structured products by large international investment banks like Merrill Lynch.

Q: Could you provide more details on the daily volumes traded?

A: Currently, the volume is about $1 billion per day, which is ten times larger that the trading volume a few years ago. Since 2002, the volume has increased by more than 1,300%. Also, the stock market capitalization has quadrupled and new volumes are generated by IPOs and capital increases. In 2006, we had $12 billion of new capital into the market, in 2005 it was about $6.4 billion, and $4 billion in 2004.

The ATX index is performing strongly, up 22% in 2006, 51% in 2005, and 55% in 2004. So we had a sustained run over the last three years and, more importantly, there is no bubble because in the same period the net profit growth of the companies comprising the index has increased in line with the stock performance. Currently, the average P/E ratio is around 14, which has stayed relatively flat and is not high compared to other advanced economies.

Q: What have been the main factors driving up the liquidity and the trading volume?