ANNUAL REPORT JUNE 2010
FEDERATION OF EURO-ASIAN STOCK EXCHANGES
BANJA LUKA STOCK EXCHANGE
We have understood the crisis as an
opportunity to look at the real possibilities
for the development of the capital market in
the Republic of Srpska.
Milan Bozic
CEO
Introduction by Director
During 2009, the trading on the Banja Luka Stock
Exchange (BLSE) was conducted within the
limitations imposed by the global economic crisis.
Low liquidity of the stock market is a result of
uncertainty regarding its long-term impact on
companies’ business results. Therefore, the
attention of investors has been largely focused on
bonds. The total turnover of BAM 180 million was
lower by 52% compared to the previous year. The
stock exchange index (BIRS) almost fully
recovered at the end of the year after the
significant decline in the first half of the year, thus
ending year with the 3.5% loss.
At the BLSE, we have understood the crisis as an
opportunity to look at the real possibilities for the
development of the capital market in the Republic
of Srpska. Priority goals have been identified in
the newly adopted Stock Exchange development
strategy whose implementation should create an
environment where the BLSE will become a
modern service to investors and issuers which is
integrated into the regional capital market.
Primary Market
At the beginning of the year, the stocks of private
company that successfully completed the first
IPO in Bosnia and Herzegovina were listed on the
BLSE. The significance of this event for the future
development of the capital market is greater than
it illustrates the amount of issue (BAM 0.86
million). In the six secondary public offerings of
shares on the stock exchange has been raised
BAM 7.3 million. BAM 17.7 million has been
borrowed through the three issues of municipal
bonds and another BAM 2.1 million by bonds of a
micro-credit institution. Six bonds issued by Brcko
District and two bonds issued by the Republic of
Srpska for the settlement of old foreign currency
savings and war damage in total value of BAM
109 million were listed on the BLSE.
New Technologies
The special attention has been given to
strengthen the technological basis of the BLSE,
through the introduction of the FIX protocol in the
stock exchange trading system and development
of integrated trading systems for the brokerage
HISTORY AND DEVELOPMENT
15.07.1998 The adoption of the Law on
Securities provided the necessary legal
framework to establish the capital market of the
Republic of Srpska.
09.05.2001 Eight banks and one company
trading in securities signed the Contract that
established the Banja Luka Stock Exchange.
14.03.2002 The first trading session took place.
20.08.2003 The first auction for state owned
capital took a place on the BLSE.
03.05.2004 BIRS – The Stock Exchange Index of
Republic of Srpska established.
01.08.2004 FIRS - The Investment Fund Index of
Republic of Srpska established.
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houses based on the FIX protocol. These
systems provide a completely new opportunity for
investors in terms of ability to monitor in real-time
their positions on the stock exchange and to
execute transactions. In future, new technologies
will be used to connect with other capital markets
in the region and for international data
distribution.
International cooperation
The joint road-shows organized by the stock
exchanges from the former Yugoslavia have been
the most important international projects in which
the BLSE was participated in 2009. At road-
shows in Belgrade and Vienna, Telekom Srpske
together with 30 companies from six other
countries was presented to investors. In
cooperation with the Vienna and Sarajevo SE the
first investible index that includes shares of
companies from the Republic of Srpska and
Federation of BiH was created. The index should
serve as a basis for creating the first derivatives
on the domestic securities by foreign investment
institutions. Together with other stock exchanges
the first steps were made towards linking markets
through brokerage house cooperation within the
region. This regional cooperation will be based on
the use of advanced technological solutions.
governance will permanently remain one of the
most important priorities of the BLSE. Therefore,
the BLSE together with the International Finance
Corporation (IFC), has created a scorecard; a tool
for monitoring the implementation of standards of
corporate governance in accordance with the
OECD principles. In cooperation with the Athens
SE seminars for companies dedicated to the
most important aspects of corporate governance
listed the official market were organized. However,
we believe that the greatest contribution to the
development of corporate governance in the
Republic of Srpska is our ongoing commitment to
the transparency and disclosure of detailed
information on companies and investment funds
at our web pages. With this approach we
managed to position the BLSE in the region as a
stock exchange that pays the most attention in
providing the investors with sufficient information.
Data Distribution
The availability of data on securities listed in the
Republic of Srpska has significantly increased
after the final implementation of ISINs. Data from
the BLSE is available in real-time through ten
vendors such as; Thomson Reuters, Bloomberg,
SIX Telekurs, TeleTrader Europoint, etc. Significant
news in the field of data distribution is related to
an agreement with the Vienna SE. According to
agreement the Vienna SE undertakes the
marketing and distribution of BLSE data in the
future as part of data-feed package in which are
included data from the Vienna, Budapest,
Ljubljana, Prague, Bucharest and Sarajevo SE. Education
Understanding trends in capital markets implies a
series of theoretical knowledge and practical
disciplines. Therefore, we always point out that
the formal education needs to pay greater
attention in educating young people in the area of
finance. We have not stopped on that, but in
cooperation with the Republic of Srpska
Pedagogical Institute we have begun a series of
educational projects such as; organization of
seminars for teachers, publishing a manual for
teachers in financial markets, organizing
competitions for high school and university
students through a virtual stock exchange. The
BLSE its understanding of socially responsible
behavior showed by creating a specific web
application for the practical teaching of
accounting that is available to all students of high
schools of economics in the Republic of Srpska.
At the same time, in cooperation with the
Chamber of Commerce we have designed basic
and advanced seminars for investors which will
be periodically organized in the future.
Corporate governance
The valuation of securities is in direct correlation
with the view that investors have about the quality
of corporate governance in the companies.
Therefore, the development of corporate Profit achieved in a complex business
environment is an indicator of stability of
operations, is a clear sign that the BLSE can
continue to pursue its strategic development
objectives.
17.09.2004 Full membership to FEAS.
01.01.2006 ERS10 - Index of ten companies from
Electric Power System of Republic of Srpska was
established.
20.03.2006 Introduction of continuous trading in
shares from the Free Market which fulfill the
liquidity criteria.
18-19.05.2006 First International Conference of
the BLSE was held.
29.01.2007 Correspondent membership to WFE.
22.11.2007 Correspondent membership to FESE.
24.06.2008 The BLSE real-time data started to be
distributed by the Bloomberg.
09.3.2009 New trading system (BST 2.4) that
supports FIX protocol was implemented.
04.08.2009 The BLSE real-time data available via
Thomson Reuters. FUTURE OUTLOOK
In 2010 the BLSE plans to:
• Increase the market liquidity
• Increase the quality and quantity of securities
offered to investors
• Increase the efficiency of the stock exchange
trading system
• Support the primary market development
• International promotion of domestic capital
market to foreign investors
• Implement systemic approach to education
• Maintain partnership with capital market
institutions and listed companies