Interview with Konstantinos Davlos

The representatives of the Capital Market Commissions of the whole world gathered in Athens for their three-day World Congress, thus symbolically recognizing the return of the Greek economy to the world stage.

was at the work of IOSCO (International Organization of Securities Commissions) and spoke with the president Jean-Paul Servès about all that the Capital Market Commissions of the world have set their sights on. The main topics were climate change and the transition of the economy to sustainable development, cryptocurrencies and Artificial Intelligence, but also investments in our country.

– Question: The main topic of your global conference, organized in Athens by the Hellenic Capital Market Commission, is the environmental crisis. How did you “end up” at IOSCO – which represents the Capital Market Commissions of the whole world – discussing this? And what can you do for the environment?

Jean Paul Servais: I would start by saying that IOSCO shows – due to its size – an added value in terms of our ability: to help ordinary investors, who want to invest in companies that follow ESG (Environmental, Social, Governance) requirements, i.e. ethical and environmental impact of an investment and thus help to tackle climate change.

Investors in Greece, or in Belgium where I come from, do not want to have to deal with a “soup” of national toolkits around tackling climate change, but want to operate on the basis of a global toolkit, as they now see that investment risks and opportunities transcend national borders.

– Q: And at this moment in IOSCO are you creating such a toolbox?

JP: Exactly. That is why I also believe in our ability to be useful because IOSCO is an organization whose members are Capital Market Commissions from all over the world. We have 131 national commissions – among them of course the Hellenic Capital Market Commission – which in one way or another are involved in the supervision of almost 95% of all investment activity. This means we are a true global standard setter.

For this reason we decided to be active and we support the International Sustainability Standards Board with the initials ISSB (International Sustainability Standard Board) whose president is Emmanuel Faber who is the former CEO of Danone. This organization has created standards for listed companies to provide information to investors.

So we’ve been endorsing these standards since last year, and we see this as essentially a call to action as we believe these standards are fit for purpose. I believe that these standards will be widely used by 130,000 listed companies around the world. This means collecting more data, with better quality. My point is that the better these elements (the data collected) the better we become at combating “Green Washing”, the so-called Green Washing that uses a false label of “green” marketing to convince the buying public that the goals and policies of a company are “environmentally friendly”. If one really wants to avoid Green Washing then please do not develop different “languages” of communication with the public. Only one language should be used, and that language should help to move forward with plans to transition to a green economy. So we send an overall, comprehensive message.

And I must tell you that I am satisfied to see what we have managed to do in a year, which has been fully analyzed here in Athens at the excellent global summit organized by my colleague the head of the Hellenic Capital Market Commission, Vasiliki Lazarakou.
So we are moving very quickly into a new world, with a toolbox of templates that can be used by a huge community of SECs who can speak the same “language”, just with a slightly different… accent.

– Q: The second thing that citizens see – which is much closer to your own operations – is that cryptocurrencies are coming into our lives very quickly – the EU is discussing the creation of a crypto-euro – and at the same time they also see Artificial Intelligence to come very quickly. And people are actually afraid. What can you say, or do, to make the average citizen feel safer among these “fire demons”?

JP: Thank you very much for giving me the opportunity to explain the added value and opportunities around sustainable finance. The risks and challenges that appear when talking about cryptocurrencies. In my previous answer I referred to the ordinary investor. But now I will talk about the children of the ordinary investor. For my children, for your children and for the possibility of someone investing money, or of course also losing money dealing with cryptocurrencies. And cryptocurrencies are a very good example of a risk, but also an investment opportunity that transcends the borders of countries and therefore has challenges. This means that here too the creation of a global toolbox is needed. This is also something we started last year, when we approved 18 prompts and recommendations. And you’re right that people are worried. Therefore, in this matter – in order to be useful – we promote the application of fundamental principles that we already know are overseen by established stock markets.

So we managed to achieve a generalized consensus around the world to use this toolkit. So I believe that IOSCO – which of course cannot, but also does not need to be everywhere – can show in the issue of sustainable finance and cryptocurrencies, an added value, as it talks about global investments, tackles global frauds and these can discusses at the highest international level by talking to other international organizations – such as the IMF – that share our principles.

– Q: You said the word “fraud” and that leads me to my next question. We hear more and more often about Internet scams. Ms. Lazarakou told me that on the website of the Capital Market Commission they constantly upload international online scams. I imagine all the Commissions worldwide do the same. What do we have before us?

JP: I have two things to tell you. And this issue is one that transcends national borders in the vast majority of cases. So working with IOSCO means increasing the possibility of partnerships, enforcing legality, getting better information coming from other countries. If we want to shut down a website that uses phishing, IOSCO is the right one, as we currently exchange about 5,000 cases of online fraud or insider information cases every year. When we started this program 20 years ago, we shared information on just 50 cases a year. Can you imagine the magnitude of the increase?

– Q: This is an increase approaching 10,000% in 20 years!

JP: Exactly. The second thing I would like to elaborate on what you asked me has to do with financial education. I am a firm believer in financial education. For us this means being able to speak in simple language in Greek, English or French and explain to young people: Attention! There are no miracles in the economy. If somewhere on the internet you see an incredible return on an investment, then beware. You may believe in miracles in your personal life. But there are never any miracles in finance. So when something on the internet is so good it looks unbelievable, please don’t believe it. Most likely it will lead you to a scam.

– Q: One of the reasons that the Hellenic Capital Market Commission managed to bring you to Greece for the IOSCO World Congress was the fact that Greece is a success story. But I would say from my side, that this success of Greece does not yet seem to be reflected in the course of the Greek stock market. Why is this happening; What would you say to Greek investors?

JP: First of all let me tell you that I belong to the large group of people who say – and not because I am now in Greece – that we are impressed by what is happening in your country. We are impressed by Greece’s ability to bounce back from a crisis 15 years ago. And congratulations for that. Now the problem of the attractiveness of the stock market is an issue that all European countries face. Of course, the solution to the problem cannot come from the supervisory authority alone. The point is to convince businesses looking for new ways to finance their projects to enter the market. At the same time, the essential issue is not to have the highest number of listings, but to get the money that is looking for placements, to reach the real market. This is the challenge for Greece as well. So I would say that stock markets could become a useful and complementary channel of new financing. And this is still a pan-European phenomenon that we have to deal with. That is why we make every effort from our side.