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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2005
SARAJEVO STOCK EXCHANGE
Almir Mirica
Acting Director
In year 2002 when the Sarajevo Stock
Exchange (SASE) started operating no one
thought we could make it. Today after three
years of operations and the SASE’s
continuous development of an efficient
capital market that offers security to
investors, we can proudly say in some
market segments we are the leader in the
region.
During the past year the SASE has
accomplished exceptional results. Four new
brokerage houses were accepted for
membership and the total number of the
SASE members is now 17. The Official
Market was created and 11 Privatization
Investment Funds were listed there. The
implementation of continuous trading, under
HISTORY AND DEVELOPMENT
The Sarajevo Stock Exchange (SASE) was
founded in September of 2001 by eight
brokerage houses and commenced trading
on April 12 of 2002. The SASE is a central
marketplace for securities trading in the
Federation of Bosnia and Herzegovina.
The SASE is a joint-stock company which,
originally had eight founding members.
According to the Securities Law, the SASE
members can only be legal entities i.e.
brokerage houses with headquarters in the
Federation of Bosnia and Herzegovina
whose sole activity is trading in securities.
The SASE currently has 17 members, whose
headquarters are spread around the
Federation of Bosnia and Herzegovina, the
majority being in the capital, Sarajevo.
All members of SASE must be licensed for
trading in securities by the Securities
Commission of the Federation of Bosnia
and Herzegovina. Only those brokers
authorized by the SASE members, who have
passed a broker’s exam, which tests their
expertise in dealing in securities, are allowed
to trade. The Securities Commission defines
the manner and conditions for taking the
exam and for revoking the license. A broker
is required to hold a valid license issued by
the Commission.
Trading on the SASE is performed
electronically through an order driven
electronic trading system BTS (Stock
Exchange System). BTS is a computer
assisted information and trading system,
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With combined and coordinated efforts,
the SASE is contributing to further
development of the capital market and
of Bosnia and Herzegovina as a whole.
the name of Multi Fixing Trading Schedule
(MFTS), was introduced in the first quarter of
2004 for most liquid securities. All these
factors together with the increasing of the
trading days from two to four and enabling
investors to monitor trading in real time over
the Internet contributed to the SASE’s market
capitalization increase of almost 400% while
Bosnian Investment Funds Index (BIFX) grew
over 150% during the same period.
The SASE is not achieving this growth alone.
The reforms that the Council of Ministers is
implementing; reconstruction of the business
environment under the initiative of the Office
of the High Representative, activities of the
Capital Markets Council under the
coordination of the Central Bank of Bosnia
which enables remote entry, modification,
halt and removal of orders, automated
matching of orders and concluding trades,
supervision of orders and trades, as well as
survey of information on trading and on
listed securities.
In 2003 SASE joined the Stock Exchange
Monitor, which is an informational platform
of the Stock Exchanges in South Eastern
Europe. At the moment, there are 8
participating exchanges, which operate
markets with more than 2,190 securities and
more than 170 brokerage houses.
At the beginning of 2004, trading at the
SASE Official Market started and all 11
Privatization Investment Funds were listed
there. The Official Market is a higher level
market where only securities that meet
special conditions and are approved by the
Securities Commission and SASE’s addition
board can be listed there. Also in 2004, after
two years of trading with only call auction
trading system, continuous trading has been
introduced at the SASE under the name
Multi Fixing Trading Schedule (MFTS). Only
the most liquid securities on the SASE have
been transferred to MFTS.
In conclusion, after only two years of
operations market capitalization of SASE
has reached over US$ 2.6 billion.
and Herzegovina, and continuous
cooperation with all capital market
participants is of crucial importance for
development of stable securities markets.
With combined and coordinated efforts, the
SASE is contributing to further development
of the capital market and of Bosnia and
Herzegovina as a whole.
FUTURE OUTLOOK
The SASE finished 2004 with excellent
results. This trend is expected to continue in
2005 together with grater market efficiency
and better market transparency. SASE’s
vision for 2005 is as follows:
• introduction of first Investment Funds
together with transformation of all
Privatization Investment Funds into
Investment Funds;
• issue government securities by the
Bosnian Central Bank which will activate
trading platform for bonds on SASE;
• list additional companies currently under
privatization process;
• enact new legislation by the Parliament
enabling Net Settlement which will permit
“day trading”;
• create a portal to allow investors easier
access to annual statements and other
financial data of all companies listed on the
SASE;
• commence negotiation with companies
and offer them listing privileges under the
SASE Official Market; and
• create the SASE’s Top 15 Companies
Index.