Download - FEAS

FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007
BULGARIAN STOCK EXCHANGE
Bistra Ilkova
CEO
The BSE’s market capitalization grew 82%
in the last 12 months to EUR 8 billion
(currently it represents 33% of the GDP),
while both indices–SOFIX and BG40–
increased respectively by 48% and 50%.
2006 was a very good year for the Bulgarian
capital market. This is the fifth year in row in
which the Bulgarian Stock Exchange (BSE)
registered a very good performance. The
BSE’s market capitalization grew 82% in the
last 12 months to EUR 8 billion (currently it
represents 33% of the GDP), while both
indices–SOFIX and BG40–increased
respectively by 48% and 50%.
I believe that in 2007 our stock market will
sustain the upward trend. We expect a
positive effect from Bulgaria’s entry into the
European Union. Many private companies
have declared their wish to be listed on the
BSE and that is why we expect a much
higher number of IPO’s this year. Attracting
new listings remains our major goal, as well
as increasing the liquidity on the market.
We plan to organize road-shows around the
country to popularize the capital market.
Another important task for us is setting up a
new segment on the BSE for small and
medium-sized companies, which are the
backbone of our economy.
An important achievement for us was the
completion of the EXTRI project–the system
for electronic disclosure of information. It was
launched in January 2007 and is among the
very few such systems, which are in
operation in Europe. By using the electronic
signature all issuers will be freed of the
enormous paper work that they had to
produce for their quarterly reports and other
documentation, required by the law.
The positive expectations for 2007 are also
linked to the new opportunities that will be
created as a result of the strategic
partnership that the BSE will enter into with
one of the leading European exchanges or
groups of exchanges through the sale of its
44% state-owned stake. All participants on
the market support the integration efforts of
our management and the government.
We plan to continue the fruitful co-operation
with international organizations and
especially with FEAS, which in the past years
has assisted us in our development and
modernization.
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 BSE 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. 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 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 EU.
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
The BSE will have to cope with new
challenges in 2007 arising from Bulgaria’s EU
entry on January 1st. As all other capital
market institutions, the BSE will also have to
fully comply and harmonize its Rules &
Regulations with the European legal
standards.
It is expected that many European investment
funds will show interest in the Bulgarian stock
market, which is good for the business as a
whole.
In January 2007 the new electronic
information disclosure system EXTREE will be
launched. It was developed by the BSE’s
software experts and will be the first
operational system of this kind in Central and
Eastern Europe.
Attracting new listings will remain a major goal
for the Exchange. A series of road-shows and
regional roundtable discussions on the
benefits of being a publicly traded company
will be organized in 2007.
A new segment on the BSE–for small and
medium sized companies–is in the planning.
The work has advanced and there is a good
chance that by the end of the year we will
have the contours of this segment.
Work will also continue on the preparation for
the launching of a derivatives market a goal
the BSE hopes to reach in 1-2 years.
PAGE 62