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Wired and (Somewhat) Willing, the Amman Exchange Evolves

How the Arab world's fourth-largest exchange is moving to electronic trading from dry-erase boards.

AMMAN -- Riyad Suliman, two pens in hand, strolls among dry-erase boards that act as quote machines for the

Amman Financial Market

. For two hours each weekday, he takes the orders of the exchange's predominantly middle-aged brokers, none of whom wear jackets or bear IDs that distinguish them as professional middlemen. Some, including Suliman, leave the floor briefly to welcome a guest or to get a cup of the strong, sweet coffee that is ubiquitous in Jordan.

Welcome to the Arab world's fourth-largest stock exchange. With none of the adrenaline rush that permeates Wall Street's Big Board, it is at once civilized and primitive. Prayer beads are as common as cell phones, and casual gossip, as opposed to frenetic shrieking, is the order of the day.

All that, however, may be about to change.

The French government and the

Paris Bourse

are helping the AFM convert to a fully electronic trading system. The conversion, which has been delayed, is now scheduled to be completed by 2000, ushering out the era of face-to-face communication that has served Jordanian financiers so well and ushering in a new era, complete with all the stress, as well as efficiency, of digital brokering.

The advance toward technology coincides with Jordan's grudging embrace of increased privatization, a concept the Hashemite kingdom had long resisted. Newly crowned

King Abdullah

, however, has agreed to ratchet up the pace of privatization in order to secure

World Trade Organization


International Monetary Fund

loans and Western government debt forgiveness.

Already this process has started to improve confidence in the AFM, which has a total market capitalization of $6 billion -- about 1/25th of


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U.S. market value. When the government sold 33% of its holdings in

Jordan Cement Factories

to France's



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, the AFM price index rose about 2%. Expect more such deals in the future, analysts say.

"The acceleration of the privatization program is expected to have a positive impact on the stock market," predicts Lina Abu Rub of the Amman-based

Export & Finance Bank's

investment-banking unit.

Yet greater public ownership doesn't translate into total market freedom. The AFM bars stocks from moving more than 5% above or below their opening price on a given day. By comparison, the

New York Stock Exchange

has no rule pertaining to individual stock fluctuations, though it does enact pauses in trading when the

Dow Jones Industrial Average

drops by certain levels. The AFM says its rules aim to prevent the large price fluctuations and speculation that have crippled or stalled other international markets in recent years.

Nor does privatization exclude government ownership of shares. The Jordanian government, through

Jordan Investment

, is one of the largest players in the AFM, controlling about 11% of market capitalization.

The AFM's relationship with the Paris Bourse isn't its only international partnership. Regional economic practicalities have pushed it into the arms of the

Kuwait Stock Exchange

, which has entered into a cross-listing agreement with the AFM.

The agreement with Kuwait, which was struck in May, underscores both Jordan's growing internationalism and its interdependence with the Arab world that Jordan broke with when the late

King Hussein

sided with

Saddam Hussein

during the 1991 war.

Nearly half of the shares of the 167 companies listed on the exchange are held by non-Jordanians, mostly by Palestinians living in other parts of the Persian Gulf region. More than half the Jordanian population has Palestinian origins, and more than 300,000 were expelled from the region during the conflict.

The equity market, however, is bringing the region closer together.

"We are like brothers," Munir Tuffaha, a hotelier and AFM participant, says of natives of the area. "We may argue for a day, three or seven years, but we will not be against each other forever."

As the bell sounds at noon, announcing the end of the trading day, and the men take their conversations from the floor to their offices nearby, it is clear that, for now, the AFM's efforts will remain focused on the transition from a genial meeting ground to a sophisticated international exchange.