FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT APRIL 2009
BUCHAREST STOCK EXCHANGE
CEE economies were eventually hit by the
international crisis, its effects prevailing
during the second half of 2008.
Stere Farmache
General Manager & CEO
CEE economies were eventually hit by the
international crisis, its effects prevailing
during the second half of 2008. Despite the
fact that the “subprime crisis” was tearing
down the financial markets in the USA since
2007, Western Europe showed the first major
signs in mid 2008. It fiercely hit the local
market during the autumn months of 2008.
HISTORY AND DEVELOPMENT
Bucharest Stock Exchange celebrated in
2007 its 125 anniversary since its first
opening in 1882. At that time, the market was
dominated by stocks of companies from the
fields like banking, oil, mining, insurance and
transport. In 1935 there were 56 shares listed
and 77 fixed income securities. After a peak
in 1938, the Stock Exchange was closed in
1948, when the communist regime
nationalized all public companies.
In 1994, the Romanian Parliament passed the
first capital market law, setting up the legal
framework for creation of the new and
modern capital market. The National
Securities Commission, the BSE, brokerage
companies, and the National Association of
the Brokerage Houses have been set up
based on the provisions of this law.
The BSE was re-established in April 1995,
and the first trading day took place on 20
November. The entire trading process took
place from the beginning in a dematerialized
environment. The most recent law, Capital
Market Law 297/2004 is the third one passed
in this field and aims to harmonize the local
legislation with the latest EU Directives
regarding the capital market.
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With the globalization of the international
financial markets and a substantial
dependence on international funds, the local
stock market began to feel a sharp decline in
cash. Hence, the stock prices plunged with
percentages hard to imagine a year ago and
moreover seemed irrational considering the
promising financial results and
macroeconomic performance. This showed the higher connection of the
local stock market with the international cash
flows and as a result determined extremely
low liquidities.
Institutional changes took place also during
its 13 years of operation. Set up in the
beginning as a public interest institution with
the support of a governmental loan,
Bucharest Stock Exchange succeeded to
become a reputable public institution. With
the structural changes that took place in the
Western countries, Bucharest Stock
Exchange went through a process of
demutualization in 2005, and the 67
intermediaries, members at that time of the
BVB, became the shareholders a the newly
set-up joint stock company. Also, as the new
law required, the function of clearing
&settlement was externalized. The new
Central Securities Depository was set up at
the beginning of 2007 and BVB is its main
shareholder. Along with the Institute of
Corporate Governance, the Central
Depository and the newly set up CCP
(Central Clearing Counterparty) for the
derivatives market, BVB is currently part of
the BVB Group. of the BVB: diversification of the BVB
“products”, incentives for the demand
(“investors”) and development of the IT
infrastructure.
FUTURE OUTLOOK Last but not least, the restructuring of the
Rasdaq market segment of BVB ( a trading
platform created for state companies
privatized through the Mass Privatization
Program) and creation a new alternative
trading system in line with the EU legislation,
will represent another challenge of 2009.
Given the international context, we look with
moderate optimism towards 2009 and we are
committed to implementing our mid-term
development strategy. This means, in general
terms, remaining faithful to the three
principles that can secure an organic growth
We can say that in 2008 the general financial
context at the international level negatively
shaped the evolution of the main stock
market indicators: the level of indices, market
capitalization and turnover, all of which
plummeted towards the end of year.
We will focus this year on evaluating the
listing opportunities of the Exchange,
following the demutualization process of
2005. As this was also the desire expressed
by the BVB shareholders during the last
Annual General Meeting and considering the
international concentration of this “business”
(e.g. NYSE Euronext, Nasdaq OMX), we think
that this objective is a strategic one. Hence,
we will greatly consider the international
context regarding the timing of the listing.
Another objective of 2009 will be represented
by the marketing diversification activity of the
indices dissemination. We believe that we will
achieve this goal through a strategic
partnership with an important international
data-vendor.