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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010BULGARIAN STOCK EXCHANGEOur Exchange plans also to introduce someadditional technological innovations andimprovements to our trading system.Ivan TakevCEOIn terms of market performance 2009 wasprobably the worst year for the Bulgarian StockExchange in the last decade. The globalfinancial crisis had its hardest impact onBulgaria in 2008/2009 and as a result ourcapital market suffered significant losses. Hereare some figures illustrating the negative effectof the crisis on a year-to-year basis: thetrading turnover decreased by 46%, thetrading volume of shares went down by 17%and the number of transactions – by 49%.Nevertheless, in 2009 we managed topreserve a significant interest among thepotential issuer companies and investors inthe stock market. We registered 51 new issuesfor trading on the BSE, 1 of which was an IPO,15 – secondary listings, 15 – bond issues, 14 -capital increases through rights issues, 4 –mutual funds and 2 –REIT’s. The main indexSOFIX showed a more stable performanceand gained almost 20% in the same period.We believe that in 2010 the country will beslowly getting out of the economic recession,which will also have a positive effect on thefinancial sector, incl. the capital market. Weexpect a gradual increase in public offeringsand new listings, as well as an ongoingprocess of regaining the investors’ trust in thestock market.As of January 20th 2010 a new managementboard has been put in place by the generalshareholders assembly of the BSE. The newboard sees as its main mission for thecoming period (1) to improve the trust andcommunication among the key players andinstitutions on the Bulgarian capital market, (2)to help modernize the post-trading services inorder to enhance dual listings and launchderivatives trading in the near future and (3) tofurther improve the image of the BSE in thecountry and abroad by raising its operationalefficiency.After having been successfully connected tothe Deutsche Boerse trading platform XETRAin June 2008, our Exchange plans also tointroduce some additional technologicalinnovations and improvements to our tradingsystem, which should make the Bulgarianmarket even more attractive to the foreigninvestors, as well as to the local ones.HISTORY AND DEVELOPMENTThe first Stock Exchange Act was adopted in1907 and regulated the structure andoperations of stock and commoditiesexchanges. The Securities, Stock Exchanges &Investment Intermediaries Act was adopted inJuly 1995, which led to a process of stockexchange consolidation. In July 1997, thepresent Bulgarian Stock Exchange-Sofia wasestablished. In accordance with therequirements of the new law, a Securities &Stock Exchange Commission was set up.On 9 October 1997 the Commission officiallylicensed the BSE-Sofia. The first tradingsession on the regulated market took place on21 October 1997. By the end of 1999 therewere 32 companies listed on the Official Marketand about 1,000 companies admitted fortrading on the Free (OTC) Market as a result ofthe mass privatization program. On 6December 2001 the Commission officiallylicensed the BSE-Sofia to organize anUnofficial Market, which replaced the FreeMarket and set clear rules for regulation of allcompanies traded on the Exchange.In December 1999 a new Public Offering ofSecurities Act was adopted by the Parliament.The law is aimed at providing protection forinvestors and creating prerequisites for thedevelopment of a transparent capital market inBulgaria with criteria similar to those of theEuropean Union.The Securities & Stock Exchange Commissionwas first renamed the National SecuritiesCommission, but in March 2003 it wasreplaced by a new supervisory body - theFinancial Supervision Commission (FSC). Morethan just a name change, the move pulledtogether the regulation of a number of financial(non-banking) sectors under one body. Theregulatory changes during the year directlyimproved conditions for investors and issuers,as well as underlined the government’scommitment to encourage wider overalldevelopment of the capital markets.FUTURE OUTLOOKAlthough 2009 was characterized by a certainstabilization of the Bulgarian capital market andthe stock prices even registered an increase ofaround 25%, the overall situation remainedextremely volatile. There are certain signs latelythat the crisis is slowly coming to an end,which gives many analysts the reason tobelieve that 2010 will be the year of therecovery.Despite the difficulties on the market, causinglow trading volumes and turnover, lack of newlistings and investors’ interest, the BulgarianStock Exchange followed a pro-active strategywith the aim of attracting new companies andregaining the investors’ trust. This will remainthe core policy of the BSE in 2010, while at thesame time efforts will also be pursued todevelop new services for the members andintroduce new instruments on the market. Theexchange plans to launch this year a newsegment for structured products, mainlywarrants and certificates.The key players on the market welcomed thegovernment’s plans to privatize fully or partiallythrough the stock exchange some of the stateowned monopolies. Special attention is givento the idea to list stakes of energy producingand energy distributing companies. The overallperception is that such listings will not onlyboost the liquidity on the market, but attract asubstantial amount of foreign investment.Among the BSE’s priorities in 2010 will be toimprove the post-trading procedures in closeco-operation with the Central Depository inorder to facilitate the clearing and settlement oftransactions executed by foreign dealers, aswell as to promote dual listings.Co-operation with partner exchanges from<strong>FEAS</strong>, development of common strategies forattracting global investors will also remain animportant part of BSE’s activities in 2010.PAGE 76
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010BULGARIAN STOCK EXCHANGEOFFICIAL 6 MONTH STATISTICSUS$ millions# Shares millionsTotal Volume Average Daily Volume Total Volume Average Daily VolumeStocksJul-09 28.54 1.24 20.20 0.88Aug-09 127.11 6.05 141.47 6.74Sep-09 56.28 2.81 36.10 1.80Oct-09 33.41 1.52 32.62 1.48Nov-09 46.21 2.20 32.62 1.55Dec-09 81.99 4.56 50.41 2.80TOTAL 373.55 3.06 313.43 2.54BondsJul-09 12.79 0.56 0.01 0.00Aug-09 10.34 0.49 0.01 0.00Sep-09 10.62 0.53 0.01 0.00Oct-09 10.19 0.46 0.01 0.00Nov-09 26.19 1.25 0.02 0.00Dec-09 9.72 0.54 0.01 0.00TOTAL 79.85 0.64 0.07 0.00OtherJul-09 4.53 0.20 10.07 0.44Aug-09 0.89 0.04 4.29 0.20Sep-09 0.89 0.04 3.87 0.19Oct-09 0.90 0.04 2.88 0.13Nov-09 1.07 0.05 6.07 0.29Dec-09 1.54 0.09 12.11 0.67TOTAL 9.82 0.08 39.29 0.32MarketCapitalization(US$ millions)IndexMONTHLY STOCK VOLUME VS INDEX(US$ millions)StocksIndexMONTHLY MARKET CAPITALIZATION(US$ millions)Jul-09 7,587.89 356.01Aug-09 8,436.44 454.00Sep-09 9,138.00 480.14Oct-09 8,797.32 457.61Nov-09 8,703.30 451.76Dec-09 8,647.19 427.27140120100806040200Jul Aug Sep Oct Nov Dec50045040035030025020015010050010,0009,0008,0007,0006,0005,0004,0003,0002,0001,0000Jul Aug Sep Oct Nov DecCONTACT INFORMATIONContact Name Mr. Panteley Karassimeonov E-mail bse@bse-sofia.bg Website www.bse-sofia.bgPAGE 77
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