FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT APRIL 2011
BULGARIAN STOCK EXCHANGE
It is important to note that we achieved one
of our major goals and that is to list the BSE
on the exchange.
Ivan Takev
CEO
For Bulgaria year 2010 was a third “crisis year”
in a row thus influencing negatively the general
performance of all market participants. The
main BSE index SOFIX lost another 15% of its
value in comparison to the end- 2009 levels.
Total market capitalization of all traded issues
decreased by 9%. There were only 36 newly
registered issues on the exchange compared
to the 50 in the previous year.
Despite the general negative trend that
marked the whole of 2010, toward the end of
the year there were clear signs that the capital
market was regaining the investors’ trust. In
just a month and a half since the beginning of
2011 the SOFIX index rose by 25%, the
turnover and traded volumes sharply
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
Bulgaria with criteria similar to those of the
European Union.
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increased. There are serious indications that
this positive trend will be sustained throughout
the year due to the improved local and
international economic environment.
In 2011 we will continue to implement our
Development Strategy (2010-2012) and more
specifically will concentrate our efforts on
introducing new financial instruments,
improving the market infrastructure and trading
facilities, attracting new companies to the BSE
and promoting regional co-operation. We are
also actively supporting amendments to the
legal framework, especially concerning the
post-trade processing, which will facilitate dual
listings and derivatives trading.
It is important to note that we achieved one of
our major goals and that is to list the BSE on
the exchange. In fact, since January 6th 2011
BSE shares are publicly traded and are in the
focus of local and foreign investors. This new
status that we acquired as a company brings
with it many additional obligations, but the
BSE staff is well qualified to respond to these
new challenges.
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. For the Bulgarian Stock Exchange 2011 will be
crucial in many ways, due to a series of
important events that will take place. First,
since January 6th, 2011 the exchange has
officially become a publicly traded company
and will have many obligations to fulfill as an
issuer. Second, significant privatization deals
are planned to take place throughout the year,
which should give a serious boost to the stock
market. And third - negotiations are expected
to start with potential strategic partners, who
are interested in acquiring the 50% government
controlled stake of the BSE.
FUTURE OUTLOOK Further efforts will also be put into attracting
new listings, boosting the liquidity and
introducing new financial instruments. All these
are ongoing commitments by the BSE
management and staff that are laid out in the
2-year BSE strategy for the development of the
market till 2012.
The Bulgarian capital market remained
stagnant in 2010 despite the widely expressed
hopes that the consequences of the global
financial and economic crisis would be
overcome in shorter delays. As it turned out,
the overall stock market performance remained
weak throughout the year and far under the
levels of the pre-crisis period.
The expectations of the local analysts and the
market participants are that 2011 will be
characterized by a continuous upward trend
and growth of all the indices. This is linked
among other things to the positive
developments in the Bulgarian economy and
financial sector registered in the last couple of
months.
Regional co-operation being among the
important factors for attracting institutional
investors to Southeast Europe, the BSE will
continue in 2011 to promote new forms of
interaction and common initiatives with the
neighboring exchanges that will make the
regional market more visible on the global
investment map.