JUNE 2013 - FEAS

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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 BUCHAREST STOCK EXCHANGE Key figures in 2011 New listed companies: Fondul Proprietatea, Concefa, Retrasib, Electromagnetica, Artego REITs: New Property Investments New shares on the BVB Alternative Trading System: E.ON AG, Deutsche Telekom AG and Bayer AG, Christian Dior, Danone, Heineken and L’Oreal shares News: • the trading session for structured products and securities traded within ATS International was extended. • global accounts and non pre-validation mechanisms availability for the shares in the BET index developed by BVB. • new Market Makers for BVB regulated spot, derivatives and ATS markets. Derivatives market: new futures contracts with commodities, index, shares and currencies as underlying. Structured products: certificates turbo long and short issued by Erste Group Bank AG and Raiffeisen Centrobank AG with index, shares, commodities, currencies as underlying. FUTURE OUTLOOK How does 2013 look like: • SPO for 15% of Transgaz shares - oversubscribed offer, process finalized on April 22 • IPOs of SOEs included in the privatization program - Romgaz in H2.2013, Nuclearelectrica TBD, Hidroelectrica TBD, Posta Romana TBD • Support the IPOs and listing of the SOEs and private companies on the domestic exchange • Consultancy for IPO rolling and listing of SOEs in a joint BVB-OPSPI pilot program • Support the IPOs of private Romanian companies with sizes between 20-60 EUR m • BVB, on the medium term, to achieve upgrade from frontier to emerging market, as per MSCI Market Classification Framework. In order to upgrade, there are no criteria on economic development to be achieved, BVB already fulfills the market accesibility criteria, but does not comply with the size and liquidity requirements (at least 3 large companies, with minimum capitalization of US$ 898 m, float capitalization of US$ 449 m and 15% of ATVR liquidity) • To improve by the capital market institutions the trading and post-trading mechanisms and the regulatory framework in order to ease and to make cost effective the access of foreign investors to the market • Develop the corporate governance framework at national level by supporting the implementation of the Corporate Governance Code, the GEO 109/2011 and the recruitment of private managers for SOEs • Design a national strategy for capital market, which will consolidate a series of objectives to be reached in a predictable and encouraging regulatory and fiscal environment. The main purpose of BVB is to fulfill its primary role of offering a consistent financing alternative to Romanian companies CAPITAL MARKET DEVELOPMENT AND ECONOMIC OUTLOOK External Factors • Coming from the changes in the EU capital market regulatory framework, as well as from the European economic and business climate • MIFID2 and the effects of its implementation, like the tighter requirements on portfolio management, investment consultancy and investors protection. On local market, Corporate Governance training needs to be intensified • EMIR and the effects on the derivatives market and the CCP • The foreign stock-exchanges consolidation process brings pressure to small exchanges in terms of market accessibility and pricing policy Internal Factors • Coming from the macroeconomic climate and the domestic capital market architecture • The roll of the public offers through BVB, based on a pre-established calendar • The functioning of the domestic capital market as per the best practices in the field, so that foreign investors trade on BVB at the standards they are used to “back home” Key Information Contacts National Securities Commission www.cnvmr.ro National Bank of Romania www.bnro.ro National Institute of Statistics www.insse.ro Ministry of Public Finance www.mfinante.ro Romanian capital market www.kmarket.ro Romanian Asset Management Association www.aaf.ro Private Pension System Supervisory Commission www.csspp.ro CONTACT INFORMATION Contact Name Ms. Ileana Botez E-mail communication@bvb.ro Website www.bvb.ro PAGE 36
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 BULGARIAN STOCK EXCHANGE The necessity and efficiency of organized markets have been seriously put into question. Ivan Takev CEO We observed that in 2012, similar to the previous years, the world capital markets remained under the strong impact of the ongoing global financial crisis, the effect of which has been a substantial reduction in trading volumes. As a result, the necessity and efficiency of organized markets have been seriously put into question. Although the Bulgarian Stock Exchange registered in the past year a 20% increase in its turnover and a generally good performance of its major indices, we still do not see any significant signs of a sustainable upward trend. In order to cope with the continuing crisis the various countries have looked for different solutions and launched diverse initiatives. In Bulgaria, privatization through the stock exchange was the main anti-crisis tool used by the government to generate a positive effect on our market. The successful sale last year of the 33% state-owned minority stake in the three major electricity power supply and distribution companies - Energo-Pro, CEZ and EVN - through the BSE, triggered the interest of the investors and boosted the liquidity on the market. After these big-scale privatization deals the government’s resources to support the stock market seem to have been more or less exhausted (if we don’t take into account the possible measures it could undertake for improving the existing regulatory framework). This situation has stimulated the market participants to search for innovative anti-crisis solutions and to adjust their business models in order to be able to face the current financial turbulences. The BSE, for example, is intent on using its expertise to further develop the clearing and settlement infrastructure. This should facilitate the introduction of new tradable financial instruments on the stock market. Among our immediate goals is also to set up and launch an organized market for carbon emissions trading. We firmly believe that all these efforts will further restore the confidence in our capital market and attract a new wave of investors and potential issuer companies in the coming months. HISTORY AND DEVELOPMENT The first Stock Exchange Act was adopted in 1907 and regulated the structure and operations of stock and commodities exchanges. The Securities, Stock Exchanges & Investment Intermediaries Act was adopted in July 1995, which led to a process of stock exchange consolidation. In July 1997, the present Bulgarian Stock Exchange-Sofia was established. In accordance with the requirements of the new law, a Securities & Stock Exchange Commission was set up. On 9 October 1997 the Commission officially licensed the BSE-Sofia. The first trading session on the regulated market took place on 21 October 1997. By the end of 1999 there were 32 companies listed on the Official Market and about 1,000 companies admitted for trading on the Free (OTC) Market as a result of the mass privatization program. On 6 December 2001 the Commission officially licensed the BSE-Sofia to organize an Unofficial Market, which replaced the Free Market and set clear rules for regulation of all companies traded on the Exchange. In December 1999 a new Public Offering of Securities Act was adopted by the Parliament. The law is aimed at providing protection for investors and creating prerequisites for the development of a transparent capital market in Bulgaria with criteria similar to those of the European Union. The Securities & Stock Exchange Commission was first renamed the National Securities Commission, but in March 2003 it was replaced by a new supervisory body - the Financial Supervision Commission (FSC). More than just a name change, the move pulled together the regulation of a number of financial (non-banking) sectors under one body. The regulatory changes during the year directly improved conditions for investors and issuers, as well as underlined the government’s commitment to encourage wider overall development of the capital markets. FUTURE OUTLOOK • Successful sale of the 50% state-owned share in the exchange and the Central Securities Depository. The process is expected to be completed till mid-2013; • BSE-Sofia on the way to wider international recognition and stronger investment appetite; • Expansion of the clearing services portfolio and adoption of internationally accepted best practices in the post-trading space with the aim to attract more foreign investors; • Easier flow of foreign capital; • Long-awaited recovery of the local capital market; PAGE 37
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JUNE 2013 - FEAS

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