JUNE 2013 - FEAS

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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013BUCHAREST STOCK EXCHANGE• accessibility, through the accessinfrastructure at the level of internationalstandards; and• security, by using the BVB technicalplatforms which have proved their reliability,safe functioning and provided backupsystems and operating continuity plan.4. Improve the corporate governance andfunctioning of the BVB as a GroupBVB’s activities in this direction focused both onthe improvement of the corporate governanceframework within BVB, as well as on promotingthe Corporate Governance among participantson the capital market.At BVB’s level, one of the actions was theinclusion in the 2011 Annual Report of a chapterdedicated to corporate governance. Also,a project team was set up to amend BVB’sArticles of Incorporation, intended to bringmore clarity, to ensure the compliance with thebest corporate governance and transparencystandards and to eliminate any unjustifiedbarriers in shareholders’ rights exercising. Theproject is also aimed at revising and updatingthe Articles of Incorporation at BVB Group level.BVB’s Board intends to increase BVB’scompliance to its own Corporate GovernanceCode. At present, the work on the Company’sCorporate Governance Statute, the InformationDissemination Policy, the Company’sProcedure on General Meetings and the PublicConsultation Procedure is in progress. Theseprocedures also depend on the approval ofthe Articles of Incorporation which shall besubmitted to the next General Meeting ofShareholders for approval.During 2012, 32 Board meetings took place,of which 20 with the presence of the membersof the Boards, the remaining 12 implyingelectronic communication media.With regard to promoting the CorporateGovernance principles among the capitalmarket participants, besides the participationto various dedicated events (in partnershipwith the Corporate Governance Institute,Fondul Proprietatea, Bloomberg, Deloitte,PwC Romania), BVB signed with OPSPI theAddendum to the Cooperation Memorandumbetween the two institutions, through which CGIwould provide state-owned companies withconsultancy services to prepare them in viewof their privatization/listing. Towards the end ofthe year, discussions with EBRD materializedin the launching of a joint project focused onthe development of the corporate governanceand reporting practices in companies listedin Romania according to the BVB CorporateGovernance Code, the development ofguidelines for implementation of the Code, thedesign of a method to monitor the complianceof the issuers with corporate governanceprinciples and the development of a dedicatedindex.Also, BVB participates to a joint project with theCentral Depository, on processing corporateoperations in compliance with Europeanstandards in the field.BVB was also involved in the process ofamending various laws, an example in thisregard being the shareholders’ representationmatter.5. Simplify and improve regulations, reducebureaucracy and apply international bestpracticesBVB granted special care to identifying theproblems raised by investors, participantsand issuers. A survey was organized amongparticipants, investment banks, law firms, etc.,in order to adapt the tender books for futureoffers to be initiated by OPSPI to the realitiesof the market, the outcome representingthe subject of a conference to which allinvolved parties were invited, benefiting fromthe opportunity of a direct and constructivedialogue.A priority for 2012 was to promote thesimplification and standardization of the foreigninstitutional shareholders’ access to generalmeetings of the companies listed with BVB.BVB organized consultations and debateswith regard to the foreclosure of securitiesthrough the capital market, aiming to clarify theinconsistencies between the Civil ProcedureCode and the legal and regulatory frameworkapplicable to the capital market. At BVB’sinitiative, a joint work group was organizedin collaboration with other capital marketinstitutions, to the end of finalizing the stepsfor the design of a legal framework proper forthose aspects.Another project was the collaboration with otherentities of the BVB Group in order to promotethe formal segregation between the tradingaccounts and the settlement/custody accountsto the purpose of ensuring the compliance withthe international global accounts standardsand practices. To this purpose, with the NSCsupport, a first step could be finalized, namelythe extension of the use of global accounts toall spot markets managed by BVB.BVB participated to consultations organizedby the Private Pension System SupervisoryCommission (CSSPP) and other authorities,on matters that have an impact on the capitalmarket, by promoting principles favoring thedevelopment of this important segment of themarket economy. Moreover, BVB initiated thestandardization process for documents relatedto the listing on the stock market and issuers’reporting, a first step being finalized with regardto the alternative trading system CAN-ATS. In2012, BVB also focused on the clarification ofthe RASDAQ market and not-listed securitiesmarket statutes, by participating to theconsultations organized by the NSC andoffering solutions and the required support.Currently, this project is in the phase precedingthe phase of a law draft.6. Increase BVB’s and issuers’ visibility,along with increasing awareness of theimportant role of the Romanian capitalmarketDuring 2012, BVB executed a number of PRand marketing programmes to the purpose ofpositioning the capital market as instrumentfor financing and promoting existing issuersand financial instruments on the local marketamong the investors.Various events were organized, whereBVB developed partnerships with mediainstitutions (Wall-street.ro, doingbusiness.ro,etc), brokerage firms (Tradeville, Intercapital),issuers (Fondul Proprietatea - FP) and otherorganizations (Junior Achievement Romania,British School of Bucharest, Bloomberg etc)for the purpose of developing educational andtraining programmes intended to promotethe capital market as financing alternative,BVB’s products and services (structuredproducts, derivatives, ETFs) and capital marketmechanisms. The sequence of events named“Open Doors Day at the BVB” continuedwith 19 new editions, and also other eventsand projects were organized, such as the3 editions of the “BVB Afterschool Investor”project, the “BSB the Apprentice” investmentgame, the “Job Shadow Day” event, thetrading competition for students, developed inpartnership with Junior Achievement Romania(JAR) and Tradeville, as well as the internshipprogramme within BVB. In addition, thefollowing seminars were organized:• for the companies within the Property Fundportfolio (in partnership with the PF and theCorporate Governance Institute), regardingcorporate governance issues in state-owedcompanies,• for financial managers of companies listedat BVB and of companies included in theFP’s portfolio, regarding the Bloomberginvestment solutions which may supportmanagers in their decision-making process.In order to increase the visibility of the listedcompanies and financial instruments, BVBhas organized many official openings of thetrading sessions, promoting both issuers fromregulated share market, as well as investmentalternatives: new structured products, newissuers on ATS (international companies or ProVorbas, the first Romanian company listed onATS), corporate bonds or ETFs.With regard to the positioning of the capitalmarket as financing alternative, BVB organizedand participated as partner, in conferences,roadshows, workshops and various otherevents, along with partners such as the LondonStock Exchange, the Brokers’ Association,KPMG Romania, Citibank, Salans Romania,Goldman Sachs, EBRD, Wood&Company, theMinistry of Economy, Commerce and BusinessEnvironment (through OPSPI), Erste GroupBank AG, Medien Conferences, Wall-street.ro, etcPAGE 34
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013BUCHAREST STOCK EXCHANGE7. Develop the dialog between BVB andrelevant institutions/authoritiesBVB promotes a constructive dialogue with theNSC, to the end of promoting proposals aimingthe development of stock exchange market.Following the meetings with the NSC membersat BVB’s Board level, joint working groups wereset up at executive level intended to implementthe actions agreed by the senior management.In addition, regular meetings with therepresentatives of the relevant authorities wereorganized to promote strategies proposed byBVB (such as the promotion of a stimulatingtaxation framework for issuers and investors,the development of privatizations through stockexchange mechanisms). A success in thisregard was the amendment to the Fiscal Code,by which the number of tax statements afferentto earnings/losses of value from transfer ofsecurities (other than shares and securities forclosed companies) was reduced, becomingeffective starting with January 1, 2013. Hence,the four quarterly statements submitted beforethis amendment were replaced by only oneannual tax statement, the number of paymentsfor the tax owed following such operationsbeing also reduced.A remarkable event of the year was thepartnership with the London Stock Exchange,which was marked by the official opening of atrading session at BVB followed by the officialopening of a trading session at the LSE by adelegation built up of representatives of thecapital market in Romania and chaired by arepresentative of the Government of Romania.Various events were organized for the purposeof mutual knowing, experience exchange andjoint projects’ promotion.During the year, BVB organized presentationsat several international events to the end ofpromoting the Romanian capital market, itspotential and also the announced privatizations.8. Increase BVB’s educational roleOne of the objectives of this strategic directionis to change BVB into an opinion leader withregard to the capital market. To this end, aneducational programme was designed, itsbeneficiaries being students, investors, issuers,companies and mass-media.The collaboration with Junior AchievementRomania, a non-profit organization whichimplements economic, entrepreneurial,financial and professional orientation educationprogrammes in schools, generated severalactivities and events which involved the capitalmarket, the stock exchange investments,trading competitions and official prizeawarding. Hence, 4 conferences, 2 webinarswere organized in the country, as well as theJob Shadow Day event for 2 high-schoolstudents wishing to become brokers. A tradingcompetition was also organized in partnershipwith JAR and Tradeville, to which more than 500students participated.The collaboration with the Bucharest School ofBusiness has led to the inclusion of the stockexchange investment among the stages of “TheApprentice” contest.The “Afterschool BVB” Programme, a neweducational programme, opened the sequenceof interactive practical seminars, following theinterest expressed by investors for technicaland practical information. The project scopefor 2012 was to intensively train more than 150existing and potential investors, Wall-street.roreaders, in the field of financial instruments andstock exchange mechanisms used by BVB.BVB has organized several internshipprogrammes of which 11 students fromeconomic and legal areas benefited,contributing in this manner to their familiarizingwith the special procedures and mechanisms,training them either for a professionalorientation, or for the capacity of investor.The conferences and seminars organized byBVB or to which BVB actively participates arelikely to have the largest impact, due to theopportunity of a direct dialogue with a greatnumber of participants. In this regard, 2012was a very intense year, the 17 conferencesand seminars representing a record numbercompared to previous years. Among otherevents organized by BVB or to which BVBparticipated as partner, the following are worthmentioning:• an educational seminar for companies inthe portfolio of Fondul Proprietatea, duringwhich a presentation of the GEO 109/2011and its effects was made (in partnership withthe Corporate Governance Institute and FP);• an educational seminar for financialmanagers of the companies listed with BVBand of those included in FP’s portfolio (withthe support of Bloomberg);• the “Capital Market Maturity” conference(organized in partnership with Wall-street.ro);• an interactive workshop regarding the DOsand DON’Ts survey on tender books andexecution of public offers for state-ownedcompanies through BVB (in partnership withOPSPI and Erste Group Bank AG).BVB has also actively participated in:events for institutional investors, organizedby Wood&Company in Warsaw, by ErsteBank in Vienna and by FP in Bucharest, the“Entrepreneur, seeking financing” conferenceorganized by Wall-street.ro, the seminar onstock exchange education, organized byWall-street.ro in partnership with Pioneer AssetManagement, the sequence of conferencesorganized by International Business Promotion,“New reality in business. Road towardperformance”.BVB was equally concerned with continuing theseries of events under the “Open Doors Dayat the BVB” programme, aiming to familiarizea high number of visitors with the basicprinciples of the stock exchange operations,the presentations under this programmebeing adapted according to the age andknowledge level specific for each targetedgroup. The transparency level with regard toBVB’s events and activities increased, with dailycommunications on new products, novelties inthe regulatory field, events, decisions of BVB’sBoard, official openings intended to mark someevents or to honor certain personalities.HISTORY AND DEVELOPMENTThere are more than 125 years since the firsttrading floor opened its doors in the centre ofBucharest, very close to the National Bank, onthe 1st of December 1882. This event followedthe first “Law on bourses, mercantile tradersand intermediaries” enacted in 1881, followingthe French model. This bill was the legalframework for the functioning of the stock andmercantile exchanges in Romania.It developed into a very dynamic exchange dueto the companies listed, mainly from sectors likebanking, mining, oil, insurance and transport.During the wars, as the entire Romanianeconomy flourished, the Stock Exchange alsorecorded its booming period. In 1935 there were56 shares listed and 77 fixed income securities.After a peak in 1938, the Stock Exchange wasclosed in 1948, when the new communistregime nationalized all companies.A new beginning for the Romanian capitalmarket was in 1994 when Romanian Parliamentpassed the first capital market law, settingup the legal framework for creation of all newcapital market institutions.The Bucharest Stock Exchange was reestablishedin April 1995, and the first tradingday took place on 20 November, same year.From the beginning, the entire trading processtook place in a dematerialised environment.The most recent regulations are harmonizedwith the latest EU legislation regarding thecapital market.Institutional changes took place also during its15 years of operation. Set up in the beginningas a public interest institution, Bucharest StockExchange went through a demutualisationprocess in 2005. The BVB externalised theregistry/ clearing functions and the new CentralDepository was set up at the beginning of 2007,having the Exchange its main shareholder.BVB, along with the Central Depository, theCorporate Governance Institute, the newly setup Bucharest Clearing House for the derivativesmarket and Investors Compensation Fund, iscurrently part of the BVB Financial Group.PAGE 35
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