BUCHAREST STOCK EXCHANGE
As evidenced by all market indicators, the
Bucharest Stock Exchange (BSE) experienced
its third consecutive year of growth in 2003. The
trading volume witnessed a remarkable
increase represented by 43.79% against the
previous year with market capitalization
increasing by 36.53% against YIE 2002. The
daily traded volume was US$ 1.2 million.
Stere Farmache
General Manager & CEO
In 2003 we improved
our internal
regulations making
them more flexible,
striving to meet the
market’s specific
requirements.
The BSE offers access to a modern and well-
regulated market. In 2003 we improved our
internal regulations making them more flexible,
striving to meet the market’s specific
requirements. These new rules allow us to
diversify the range of products and instruments.
Some regulations will still undergo
modifications in the future since the whole local
capital market will adopt European Union
directives to achieve full integration.
Another noteworthy evolution is that of the
bond market, which increased this year to 14
issuers. During this past year we struggled to
increase the awareness of the public at large
and relocated our headquarters to a modern
building in downtown Bucharest. We also
increased the awareness of potential investors
on the opportunities our stock market provides
by conducting seminars and meetings.
HISTORY AND DEVELOPMENT
Trading in equities in Romania dates back to
1882, a year after the legal framework was
passed. The market was very slim and from the
beginning official trading was soon substituted
by off-exchange trading. However, with the
exception of the two world wars and the
economic depression, the market grew to
significant levels reaching, in terms of listed
securities, 56 shares (banks, oil, mining,
industrial, insurance and transportation
companies) and 77 fixed income securities, in
1935.
The peak was reached in 1938 but after the end
of the Second World War, in 1948, the stock
market was left without any public companies
due to the nationalization of the entire economy.
For almost fifty years Romania did not have one
of the most vital institutions of a modern
economy.
The Institute of Corporate Governance, whose
purpose is to promote and implement
corporate governance standards with issuers at
the management level, was set up. We intend
to promote this Institute to the entire Balkan
region.
There are still steps to be undertaken in order
to expand activities in the financial market.
We are ready to introduce state-of-the-art
equipment, developed by our specialists, and
currently being used for the bond market, to
share trading.
We plan to meet the financing needs of new
companies and have a signed Memorandum of
Understanding with the Thessalonica Stock
Exchange Center to develop a new market
segment for start-ups. We are optimistic that
2004 will continue this growth trend and are
focusing our efforts toward this end.
FUTURE OUTLOOK
The Bucharest Stock Exchange (BSE) was
re-established in April 1995, by a decree of the
National Securities Commission (NSC) at the
request of 24 brokerage houses – the founding
members – to trade on the BSE. A new law on
securities was approved by the Parliament in
2002.
The BSE is a self-financing and self-regulating
institution of public interest, operating on
corporate principles. Trading is performed on
the BSE in a dematerialized environment:
Exchange operations have been conducted
exclusively through the electronic systems since
the re-establishment of the Exchange.
The adoption in 1994, by the Parliament of
Romania, of the Securities and Exchanges Act
made the reconstruction of a modern capital
market possible. Based upon the provisions of
this Act, the main institutions of the Romanian
capital market: the National Securities
Commission, the Bucharest Stock Exchange,
brokerage companies, and the National
Association of the Securities Dealers have been
set up.
Our main objective in 2004 is to change the
legal status of the BSE from a not-for-profit
public institution into a corporation, thus
enabling the creation of a consolidated market
through the merger of the BSE and the Rasdaq
Electronic Market (BER). Ultimately, our target is
to become one of the best performing markets
in the region and to foster Romania’s integration
into the European Union.
The BSE plans for 2004 are to:
• set up a new regulatory framework;
• further develop the BSE market so to
become well capitalized and liquid,
compatible with EU regulations;
• reduce operating costs and offer incentives
to market operators and investors;
• list new products (T-bonds, rights, etc.);
• promote and consolidate the “Plus Tier”
(companies from both Tier I and Tier II
adhering to the BSE’s Corporate Governance
Code);
• increase the security of the stock exchange
market;
• stimulate companies to raise capital through
the BSE;
• increase local and international public
awareness of the BSE; and
• organize professional training for the market
participants (brokerage companies and
issuers).
FEDERATION OF EURO-ASIAN STOCK EXCHANGES YEARBOOK 2003/2004
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