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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2011
BANJA LUKA STOCK EXCHANGE
Milan Bozic
CEO
An increase in the demand in the last
quarter has been encouraging, and this has
been reflected in the growth of the stock
exchange index by 11.40%
Introduction by Director
During 2010, the trading on the Banja Luka Stock
Exchange was conducted in the conditions of
economic crisis. However, it can be said that
negative trends were stopped in mid-year, and that
the second half of 2010 pointed to the gradual
stabilization of the market. After a significant drop
during the first half of the year, the Stock Exchange
Index of Republic of Srpska (BIRS) recorded strong
increase of 19.33% thus erasing most of the losses
ending the year with loss of 3.6%.
The total turnover of BAM 176 million was lower by
2% compared to the previous year. However, the
structure of the total turnover improved. If the
takeovers reported to the stock exchange are
excluded, the regular turnover in 2010 increased by
32% compared to the previous year. The stock
market was characterized by low liquidity during
2010. Interest in investing in stocks has been largely
determined by the investors’ expectations regarding
the long-term impact of the crisis on the companies’
business results. An increase in the demand in the
last quarter has been encouraging, and this has
been reflected in the growth of the stock exchange
index by 11.40%.
Still present uncertainty as to the speed of removing
the consequences that the economic crisis had on
the companies’ performances has focused the
attention of investors on the bonds, which
participated with 31.7% in the total turnover.
At the BLSE, we have understood the crisis as an
opportunity to look at the real possibilities for the
development of the capital market in the Republic of
Srpska. Priority goals have been identified in the
newly adopted five-year Stock Exchange
development strategy whose implementation should
create an environment where the BLSE will become a
modern service to investors and issuers which is
integrated into the regional capital market
New Technologies
During 2010 we have continued with the
development of an integrated trading system for the
brokerage houses based on the FIX protocol.
Integrated System (Broker Office), which combines
trading, back office and accounting for brokerage
house and e-trading with DMA for clients, was first
implemented in four brokerage houses in 2010. New
technologies will be used for future connection with
other equity markets in the region and for data
distribution to international vendors.
International Cooperation
The joint road-show organized by the stock
exchanges from the former Yugoslavia in Vienna was
the most important international project in which the
BLSE was participated in 2010. Nova Banka a.d.
Banja Luka along with 30 companies from eight other
countries from the region was presented to
international investors at the road-show. Together with
other stock exchanges the first steps were made
towards linking markets through brokerage houses
cooperation within the region. The regional
cooperation will be based on the use of advanced
technological solutions.
Corporate Governance
Development of corporate governance will
permanently remain one of the most important
priorities of the BLSE. Therefore, the BLSE together
with the International Finance Corporation (IFC),
organized seminar “Risk Management and Board of
Directors”, designed for mangers of joint stock
companies. In cooperation with the Faculty of
Economics in Banja Luka we preformed a research
on the current level of the corporate governance in
the RS.
However, we believe that the greatest contribution to
the development of corporate governance in the
Republic of Srpska is our ongoing commitment to the
transparency and disclosure of detailed information
on companies and investment funds at our web
pages. With this approach we managed to keep the
leading position among the stock exchanges in the
region as a stock exchange that pays the most
attention in providing the investors with sufficient
information.
Education
Understanding trends in capital markets implies a
series of theoretical knowledge and practical
disciplines. Therefore, we always point out that the
formal education needs to pay greater attention in
educating young people in the area of finance. We
have not stopped on that, but in cooperation with the
Republic of Srpska Pedagogical Institute we have
begun a series of educational projects such as;
organization of seminars for teachers, publishing a
manual for teachers in financial markets, organizing
competitions for high school and university students
through a virtual stock exchange. Virtual stock
exchange game has sparked great interest among
high school and university students who opened
about thirty leagues of secondary schools and
universities in which compete about 1700
participants. The BLSE its understanding of socially
responsible behavior showed by creating a specific
web application for the practical teaching of
accounting that is available to all students of high
schools of economics in the Republic of Srpska. Last
year we again awarded the top three graduate works
in the field of financial markets and best ranked
competitors at virtual stock exchange game. At the
same time, in cooperation with the Chamber of
Commerce we have organized several basic
seminars for investors which were interested in
getting basic knowledge before they decide to invest
in the market for the first time. In 2010 we have
developed, and with the assistance from the IFC,
printed publication on issuing securities with the main
idea of spreading knowledge about raising funds
through primary and secondary offerings of stocks
and bonds.
Profit achieved in a challenging business
environment is an indicator of stability of operations,
and a clear sign that the BLSE will continue to pursue
its strategic development objectives.
HISTORY AND DEVELOPMENT
15.07.1998, The adoption of the Law on
Securities provided the necessary legal
framework to establish the capital market of the
Republic of Srpska.
09.05.2001, Eight banks and one company
trading in securities signed the Contract that
established the Banja Luka Stock Exchange.
14.03.2002, The first trading session took place.
20.08.2003, The first auction for state owned
capital took a place on the BLSE.
03.05.2004, BIRS – The Stock Exchange Index of
Republic of Srpska established.
01.08.2004, FIRS - The Investment Fund Index of
Republic of Srpska established.
17.09.2004, Full membership to FEAS.
20.03.2006, Introduction of continuous trading in
shares which fulfill the liquidity criteria.
18-19.05.2006, First International Conference of
the BLSE.
29.01.2007, Correspondent membership to WFE.
22.11.2007, Correspondent membership to FESE.
24.06.2008 The BLSE real-time data started to be
distributed by the Bloomberg.
19.12.2008, First IPO in the history of BIH.
09.3.2009 New trading system (BST 2.4) that
supports FIX protocol was implemented.
04.08.2009, The BLSE real-time data available via
Thomson Reuters.
FUTURE OUTLOOK
In 2011 the BLSE plans to:
• Attract new companies to list on the highest
market segment - List A
• Increase market liquidity by introduction of
market makers
• Provide trading infrastructure for primary and
secondary treasury bills market
• Implement E-Broker trading application at the
BLSE members which allows direct access
trading
• Continuously promote the importance of good
corporate governance
• Promote internationally domestic capital market
by organizing regional road-shows
• Implement systemic approach to education and
provide teaching materials for high schools
• Increase international visibility of the BLSE by
broadening the number of the international data
vendors
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