ANNUAL REPORT JUNE 2010
FEDERATION OF EURO-ASIAN STOCK EXCHANGES
BULGARIAN STOCK EXCHANGE
Our Exchange plans also to introduce some
additional technological innovations and
improvements to our trading system.
Ivan Takev
CEO
In terms of market performance 2009 was
probably the worst year for the Bulgarian Stock
Exchange in the last decade. The global
financial crisis had its hardest impact on
Bulgaria in 2008/2009 and as a result our
capital market suffered significant losses. Here
are some figures illustrating the negative effect
of the crisis on a year-to-year basis: the
trading turnover decreased by 46%, the
trading volume of shares went down by 17%
and the number of transactions – by 49%.
Nevertheless, in 2009 we managed to
preserve a significant interest among the
potential issuer companies and investors in
the stock market. We registered 51 new issues
for trading on the BSE, 1 of which was an IPO,
15 – secondary listings, 15 – bond issues, 14 -
capital increases through rights issues, 4 –
HISTORY AND DEVELOPMENT
The first Stock Exchange Act was adopted in
1907 and regulated the structure and
operations of stock and commodities
exchanges. The Securities, Stock Exchanges &
Investment Intermediaries Act was adopted in
July 1995, which led to a process of stock
exchange consolidation. In July 1997, the
present Bulgarian Stock Exchange-Sofia was
established. In accordance with the
requirements of the new law, a Securities &
Stock Exchange Commission was set up.
On 9 October 1997 the Commission officially
licensed the BSE-Sofia. The first trading
session on the regulated market took place on
21 October 1997. By the end of 1999 there
were 32 companies listed on the Official Market
and about 1,000 companies admitted for
trading on the Free (OTC) Market as a result of
the mass privatization program. On 6
December 2001 the Commission officially
licensed the BSE-Sofia to organize an
Unofficial Market, which replaced the Free
Market and set clear rules for regulation of all
companies traded on the Exchange.
In December 1999 a new Public Offering of
Securities Act was adopted by the Parliament.
The law is aimed at providing protection for
investors and creating prerequisites for the
development of a transparent capital market in
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mutual funds and 2 –REIT’s. The main index
SOFIX showed a more stable performance
and gained almost 20% in the same period.
We believe that in 2010 the country will be
slowly getting out of the economic recession,
which will also have a positive effect on the
financial sector, incl. the capital market. We
expect a gradual increase in public offerings
and new listings, as well as an ongoing
process of regaining the investors’ trust in the
stock market.
As of January 20th 2010 a new management
board has been put in place by the general
shareholders assembly of the BSE. The new
board sees as its main mission for the
coming period (1) to improve the trust and
communication among the key players and
Bulgaria with criteria similar to those of the
European Union.
The Securities & Stock Exchange Commission
was first renamed the National Securities
Commission, but in March 2003 it was
replaced by a new supervisory body - the
Financial Supervision Commission (FSC). More
than just a name change, the move pulled
together the regulation of a number of financial
(non-banking) sectors under one body. The
regulatory changes during the year directly
improved conditions for investors and issuers,
as well as underlined the government’s
commitment to encourage wider overall
development of the capital markets.
FUTURE OUTLOOK
Although 2009 was characterized by a certain
stabilization of the Bulgarian capital market and
the stock prices even registered an increase of
around 25%, the overall situation remained
extremely volatile. There are certain signs lately
that the crisis is slowly coming to an end,
which gives many analysts the reason to
believe that 2010 will be the year of the
recovery.
Despite the difficulties on the market, causing
low trading volumes and turnover, lack of new
listings and investors’ interest, the Bulgarian
Stock Exchange followed a pro-active strategy
institutions on the Bulgarian capital market, (2)
to help modernize the post-trading services in
order to enhance dual listings and launch
derivatives trading in the near future and (3) to
further improve the image of the BSE in the
country and abroad by raising its operational
efficiency.
After having been successfully connected to
the Deutsche Boerse trading platform XETRA
in June 2008, our Exchange plans also to
introduce some additional technological
innovations and improvements to our trading
system, which should make the Bulgarian
market even more attractive to the foreign
investors, as well as to the local ones.
with the aim of attracting new companies and
regaining the investors’ trust. This will remain
the core policy of the BSE in 2010, while at the
same time efforts will also be pursued to
develop new services for the members and
introduce new instruments on the market. The
exchange plans to launch this year a new
segment for structured products, mainly
warrants and certificates.
The key players on the market welcomed the
government’s plans to privatize fully or partially
through the stock exchange some of the state
owned monopolies. Special attention is given
to the idea to list stakes of energy producing
and energy distributing companies. The overall
perception is that such listings will not only
boost the liquidity on the market, but attract a
substantial amount of foreign investment.
Among the BSE’s priorities in 2010 will be to
improve the post-trading procedures in close
co-operation with the Central Depository in
order to facilitate the clearing and settlement of
transactions executed by foreign dealers, as
well as to promote dual listings.
Co-operation with partner exchanges from
FEAS, development of common strategies for
attracting global investors will also remain an
important part of BSE’s activities in 2010.