FEDERATION OF EURO-ASIAN STOCK EXCHANGES
SEMI ANNUAL REPORT OCTOBER 2006
BULGARIAN STOCK EXCHANGE
In the first half of 2006 the market
capitalization of the BSE rose to EUR 5
billion, accounting for 21 % of Bulgaria’s
GDP.
Bistra Ilkova
CEO
The Bulgarian Stock Exchange performed
well in the first half of 2006. The turnover
reached EUR 600 million, which is a 30%
increase compared to the same period of
2005. The market capitalization of the BSE
rose to EUR 5 billion, accounting for 21 % of
Bulgaria’s GDP. Both our indices–SOFIX and
BF 40–held their upward trend and set new
records.
All market participants are happy with these
developments and hope that the dynamic
will be preserved in the next 6 months.
We expect new listings and this will be a
major task for us in the coming months–to
attract good-performing private companies
to the Exchange. This is part of our Action
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 BSE 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. 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 December 6, 2001 the
Commission officially licensed the BSE 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
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Plan that focuses on our preparation for the
country’s forthcoming entry into the EU
(January 1st, 2007).
In the second half of the year we will
continue to work on several major projects.
Our experts just completed the work on the
new Corporate Governance Code, which will
come into effect in the third quarter of 2006
and will be mandatory for all companies
listed on the Official market of the BSE.
We hope to be able to finish by the end of
the year the work on the electronic system
EXTREE for the dissemination of information.
It will give the opportunity to all issuers to
disseminate financial reports, corporate
news, ad hoc information through electronic
protection for investors and creating
prerequisites for the development of a
transparent capital market in Bulgaria with
criteria similar to those of the EU.
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
After having registered good results for a
fourth consecutive year, the BSE plans to
continue its dynamic development in 2006.
Among the technological innovations that
will be implemented at the beginning of next
year is the new electronic information
disclosure system X3. Through this system
the issuers will disseminate all the relevant
company and price sensitive information
continuously and simultaneously to the BSE,
means and using an electronic signature and
send it simultaneously to the BSE, the
Financial Supervision Commission and the
Central Depository.
Our aim is also to continue to develop our
international relations and contacts to
individual exchanges or alliances of
exchanges. We are in the process of
deliberating on the future of the BSE and the
role it can play in a pan-European
environment. We also give great importance
to our membership in FEAS, because it gives
us the possibility to acquire important
knowledge and exchange views with our
partners.
the Financial Supervision Commission and
the Central Depository, using the electronic
signature.
At this stage of the development of the
Bulgarian capital market it is becoming more
and more important to have new listings,
attract a larger number of small and
institutional investors, as well as increase
liquidity. The Marketing Strategy for 2006
and onwards, which was approved by the
Board of Directors, will be a useful
instrument in pursuing this goal. In view of
the EU accession of Bulgaria in 2007 many
private firms show interest in becoming
publicly listed companies and in having a
better exposure in the pan-European
environment.
The BSE will also follow closely the process
of integration, the mergers and alliances
between stock exchanges in Europe.
The debate on the different models of co-
operation will continue and the final decision
will take into consideration the interest of all
participants on the Bulgarian capital market.