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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010SARAJEVO STOCK EXCHANGEZlatan DedicGeneral ManagerIn 2009, we have analyzed all investor’sobstacles and started removing them.Above all we wanted to adequately showinvestors that our capital market is worthyfor them and offers substation returns ontheir investments.In its eight year of operation the SarajevoStock Exchange (SASE) has accomplishedlower trading results than in previous year. Themost illustrative example is the total turnover in2009 with the amount of 112 million Euros was54% lower than in 2008.However in 2009, we have analyzed allinvestor’s obstacles and started removingthem. Above all we wanted to adequatelyshow investors that our capital market isworthy for them and offers substation returnson their investments. The access to the greaternumber of information was enabled with newdata available on new Capital Market ofFederation of Bosnia and Herzegovina webportal, joint project of SASE, SecuritiesCommission and Central Registry. Ouropenness to investors drew their attention andgave incite and confidence to the capitalmarket in the Federation of Bosnia andHerzegovina.We had three more IPO done on SASE whereit was collected more than 1.82 million Euros.There was one more mutual fund founded in2009, with several others currently inpreparation. Also we expect the pensionreform to bring additional demand to themarket. We hope that the adoption of the newSecurity Market Law will give the market moreoptions for further expansion. One morereason for greater investor’s interest in capitalmarket in the Federation of Bosnia andHerzegovina is the announcement forinfrastructure projects especially in energy,telecommunication and road constructionsectors, and announcement for privatization ofcompanies who are pillars of Bosnianeconomy. All these factors will ensure pastsuccess to continue into 2010 where SASE willagain exceed all expectation.HISTORY AND DEVELOPMENTThe Sarajevo Stock Exchange (SASE) wasfounded in September of 2001 by eightbrokerage houses and commenced trading onApril 12 of 2002. The SASE is a centralmarketplace for securities trading in theFederation of Bosnia and Herzegovina. TheSASE is a joint-stock company which originallyhad eight founding members.The SASE currently has 17 members, whoseheadquarters are spread around theFederation of Bosnia and Herzegovina, themajority being in the capital, Sarajevo. Allmembers of SASE must be licensed for tradingin securities by the Securities Commission ofthe Federation of Bosnia and Herzegovina.Trading on the SASE is performedelectronically through an order driven electronictrading system BTS (Stock Exchange System).BTS is a computer assisted information andtrading system, which enables remote entry,modification, halt and removal of orders,automated matching of orders and concludingtrades, supervision of orders and trades, aswell as survey of information on trading and onlisted securities.At the beginning of 2004, trading at the SASEOfficial Market started and all 11 PrivatizationInvestment Funds were listed there. The OfficialMarket is a higher level market where onlysecurities that meet special conditions and areapproved by the Securities Commission andSASE’s addition board can be listed there. Alsoin 2004, after two years of trading with only callauction trading system, continuous trading hasbeen introduced at the SASE under the nameMulti Fixing Trading Schedule (MFTS). Only themost liquid securities on the SASE have beentransferred to MFTS. In 2006 anothersignificant milestone was achieved with listingsof the first three companies on the SASEOfficial Market. From the 500 issuers which arelisted on the Sarajevo Stock Exchange,currently 14 are on the Official Market. Turnoveron SASE has risen substantially, which can beillustrated by the fact that in 2007 it rose up to961.5 million US$ - more than in 2005 and2006 combined. There were 4 mutual fundsfounded in 2007, and more are currently inpreparation. In 2009 as a result of globalfinancial crisis sharp decrease in turnoveraffected SASE where we finished the year with153.7 million US$.FUTURE OUTLOOKIn 2009 global financial crisis affected theSarajevo Stock Exchange where we finishedthe year with decrease in turnover from 2008.However 2010 promises better results togetherwith accomplishment of greater efficiency andtransparency of the Capital Market in theFederation of Bosnia and Herzegovina. SASEfuture outlook for 2010 includes followingactivities:• Issuance of first municipal bonds whichwould increase trading on the bond market.• Continue to list strategic companies currentlyon SASE Free Market to SASE Official Market.• In cooperation with regional stock exchangesdevelopment of South-eastern European Index• Continuation of privatization of the Stateowned capital through the Sarajevo StockExchange.• Attract new issuers through Initial PublicOffers.• Increase public and investor relationstogether with new educational projects.PAGE 140