FEAS Yearbook FEAS Yearbook 2002 | Page 30

FEDERATION OF EURO-ASIAN STOCK EXCHANGES > YEARBOOK 2002/2003 > PAGE 28 BULGARIAN STOCK EXCHANGE LETTER FROM THE CHAIRMAN In the last twelve months we continued our policy of diversifying the instruments traded on the BSE. The year 2002 was a relatively good year for the Bulgarian Stock Exchange (BSE). This is best illustrated by the more than 100% increase of the official BSE index, SOFIX, on a year-on-year basis. The overall turnover and trading volumes remained stable throughout the year and even registered an increase. 2002 was the year in which the European Commission praised the efforts of the Bulgarian people during the long transition period and recognized our economy as a “functioning market economy.” This is a very important step toward the full integration of our country into the European Union. The constantly improving performance of the Bulgarian economy will undoubtedly have a positive effect on the development of the capital market. The current government has given its support and has taken concrete measures to transform the stock market making it more modern and efficient and in compliance with international and European standards. An important step in this direction is the implementation of a large-scale program for privatization of state-owned companies through the stock exchange. This will increase the supply of attractive issues in the stock market and will also increase investors’ demand. In the last twelve months we continued our policy of diversifying the instruments traded on the BSE. We now offer a wide variety of shares, government, corporate, municipal and mortgage bonds, along with Bulgarian Depository Receipts, based on foreign stocks and indices, and some specific Bulgarian instruments such as compensatory notes. Our management also continued its efforts to develop new services for our members. By the end of 2002 we started testing the new Client Order-Book Online System (COBOS), which should be operational in the first weeks of 2003. Through this innovation we hope to attract a wider investor base and facilitate stock market transactions. On an international level the BSE remains active in different projects and initiatives intended to promote regional and pan- European cooperation. A Memorandum of Understanding was signed with the Moscow Interbank Currency Exchange and further steps were taken to develop relations with partner exchanges in Southeast Europe – the Istanbul, Athens, Macedonian, Romanian, Croatian and Belgrade stock exchanges. Representatives of these exchanges participated in an international roundtable hosted by the BSE, dedicated to the problems of “Privatization Through the Stock Exchange.” Our discussions showed that we have common problems and common goals, some of which we can reach through common efforts. Apostol Apostolov Chairman HISTORY AND DEVELOPMENT The First Bulgarian Stock Exchange (FBSE) was inaugurated on 8 November 1991 and started trading in May 1992. In 1996, the newly established Securities and Stock Exchange Commission (SSEC) introduced the requirement that all listed stocks must have their prospectuses approved by the Commission in order to trade on the FBSE. As no company was able to comply with the new SSEC requirements, trading on the FBSE was suspended on 23 October 1996. The Bulgarian Stock Exchange-Sofia (BSE) was licensed as a new entity by the SSEC in October 1997, replacing the FBSE. Operations on the BSE floor began on 21 October 1997. Due to the mass privatization process, several million Bulgarians became small investors, creating a solid base for the development of a large and liquid capital market. On 12 January 1998, the Exchange launched its official floor, trading shares in the first listed company - Elkabel. By the end of 1998, there were 19 companies listed on the Official Market and 1,000 companies from the Mass Privatization Program were admitted for trading on the Free (OTC) Market. By the end of 2002 the number of listed companies on the Official Market of the BSE reached 32. Major industrial companies, banks, holding groups and investment funds are among the issuers in this market. Over 300 companies are still being traded on the Free Market; amendments to the Law on Public Offerings of Securities allowed the least traded companies on the Free Market to close and delist. In the meantime, new trading instruments were introduced – government, corporate, municipality and mortgage bonds, as well as Bulgarian Depository Receipts. The Law on Public Offerings of Securities, which was adopted by the Bulgarian Parliament in December 1999, replaced the Securities, Stock Exchanges and Investment Companies Act (1995). New amendments were added to the new law in the spring of 2002, which provide for even greater protection for minority shareholders and creates further prerequisites for the development of a transparent and efficient capital market in the country. FUTURE OUTLOOK In 2003 the BSE proposes: to implement new services to improve the operational efficiency of the trading infrastructure and better satisfy the needs of the investment intermediaries and members of the BSE; to put forth efforts to attract high-quality issues while increasing liquidity, as well as trading volumes; to develop initiatives promoting cross-border cooperation among stock exchanges, and eventually dual listings; and to develop educational programs while publicizing stock trading among the general public.