Tirana Stock Exchange (TSE) Profile

The Tirana Stock Exchange (TSE), established in 2002, stands as Albania’s principal stock exchange, playing a key role in the development and functioning of the country's financial markets. Although relatively young compared to more established exchanges worldwide, TSE has become an essential institution for the Albanian economy, providing a platform for the trading of government debt, corporate debt, and shares. Its creation marked a significant step in Albania's economic modernization and its efforts to integrate into the broader European and global financial system.

The TSE was founded as a joint-stock company and is licensed by the Financial Supervision Authority (FSA) of Albania. The license, granted on July 13, 2007, allows the exchange to conduct operations as a securities market for government debt, corporate debt, and shares in Albania. The Exchange operates under License no. 78/1, issued for an indefinite period, which reflects its permanent legal status and authority to facilitate securities trading within the country. Moreover, the TSE holds full membership in the Federation of Euro-Asian Stock Exchanges, which grants it access to a wider network of exchanges across the region, promoting collaboration and strengthening its position in the global financial landscape.

The trading system employed by TSE remains largely manual, relying on the "open outcry" method. This method involves brokers verbally transmitting their orders to the stock exchange specialists, who then manually execute the transactions. While this trading system may seem outdated in comparison to the electronic and automated systems utilized by many modern exchanges, it has remained the chosen method due to the relatively small size and scale of the Albanian financial market. The open outcry system fosters direct communication between brokers and specialists, ensuring that all transactions are handled with a degree of human oversight. While it has its limitations in terms of efficiency and speed compared to electronic trading, this manual system has sufficed for the scale and volume of trading that occurs in the TSE.

As Albania continues to develop its financial markets, the TSE has been a crucial player in the effort to modernize and improve the country's capital market infrastructure. One of the significant steps taken toward achieving this goal came in November 2010, when the TSE signed a cooperation agreement with the International Finance Corporation (IFC), a member of the World Bank Group. This agreement, signed on November 10, 2010, was part of the Corporate Governance Program in Southeast Europe. The overarching goal of this partnership was to improve the quality and efficiency of Albania’s capital markets by providing training and capacity-building support to the staff of the Tirana Stock Exchange and other related entities.

Through the cooperation agreement with IFC, the TSE aimed to enhance the qualifications and skills of its staff and develop a deeper understanding of capital market operations within the Albanian financial community. The initiative also sought to build a solid foundation for improving corporate governance practices within the Albanian securities market. By providing training programs and workshops, the collaboration helped foster greater knowledge and expertise in various aspects of securities exchange, including listing, trading, clearing, and settlement processes. This initiative represented a clear step toward aligning the TSE with international best practices and strengthening its capacity to support Albania’s economic growth.

In the same month of 2010, the TSE organized a training seminar titled "Securities Exchange, the process of listing, trading, clearing, and settlement in Exchange." The seminar, held on November 26, 2010, attracted a diverse group of participants, including representatives from the TSE itself, members of the board of directors, and representatives from other key stakeholders in the Albanian capital markets, such as the Albanian Financial Supervisory Authority (AFSA) and the Registration Center Shares. The seminar provided an in-depth look at the practical aspects of securities exchange and served as a valuable educational platform for the participants.

The TSE's cooperation with the IFC and its focus on training and education have been vital for Albania's capital market development. The Albanian stock market, while small, is crucial for the country's economic growth and the broader effort to integrate Albania into the European Union. As the Albanian economy continues to modernize, the TSE is expected to play an even more prominent role in facilitating access to capital for businesses, improving market liquidity, and fostering a more competitive business environment. The training programs and initiatives that have been launched with the help of the IFC are laying the groundwork for a more professional, transparent, and efficient exchange, which will benefit both investors and companies in the long run.

The TSE’s role in supporting corporate governance reform in Albania is particularly important. A well-functioning stock exchange is not only a market for trading securities but also a critical mechanism for promoting transparency, accountability, and good governance among listed companies. The training and education programs offered by the TSE, in partnership with the IFC, have helped improve the standards of corporate governance in Albania by educating key stakeholders, including companies and regulatory bodies, on best practices. By increasing the number of companies that are listed on the exchange and ensuring that these companies adhere to sound governance practices, the TSE is contributing to the overall development of a healthy and competitive economy.

The future of the Tirana Stock Exchange looks promising as Albania continues its path towards greater economic integration with Europe. While the exchange faces challenges typical of emerging markets—such as low liquidity, limited investor participation, and a relatively small number of listed companies—there are significant opportunities for growth. By improving its infrastructure, adopting modern trading practices, and continuing to focus on investor education and market transparency, the TSE can help unlock the potential of the Albanian economy. The exchange’s commitment to improving corporate governance and building capacity within the financial sector will also play an important role in attracting foreign investment and promoting economic stability.

In conclusion, the Tirana Stock Exchange is a vital institution in Albania's economic landscape. Since its establishment in 2002, it has worked to build the infrastructure necessary for an effective securities market in Albania, contributing to the development of the country's financial system. Through its open outcry trading system, cooperation with international organizations like the IFC, and commitment to corporate governance, the TSE is laying the groundwork for the future growth and modernization of Albania’s capital markets. While the exchange faces challenges, it remains an essential tool for supporting economic development and providing Albanian businesses with access to the capital they need to expand and grow. With ongoing efforts to modernize and improve its operations, the TSE will continue to play an important role in the economic transformation of Albania.