FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2012
BULGARIAN STOCK EXCHANGE
After its successful debut last year as
a public company, BSE will be certainly
perceived as an attractive partner by
foreign exchanges.
Ivan Takev
CEO
Due to the turmoil in the global financial
markets and the overall economic uncertainty,
in 2011 Bulgarian Stock Exchange continued
to operate within a very complex business
environment. Restoring confidence in the
stock market is one of the primary goals of the
Exchange; however, it has turned out to be
quite a challenging task, although it has to be
acknowledged that other factors, like the pace
of recovery of the Bulgarian and European
economy, also play an important role in
improving the overall situation.
Among the measures that are to have a serious
impact on the market is the introduction of
additional requirements to the companies
listed on the highest segment of the BSE,
the Premium Market. As of 1st March 2012,
all issuers that are traded on the Premium
segment shall be obliged to disclose
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.
regulated information to the public in both the
Bulgarian and the English languages. Any
non-compliance with the disclosure rules is
to be sanctioned and the companies will be
eventually transferred to the less prestigious
market, the Bulgarian Alternative Stock Market
(BaSE). After its successful debut last year as a public
company, BSE will be certainly perceived as an
attractive partner by foreign exchanges where
the 50% controlling government stake in our
Exchange will be put up for sale. Negotiations
with potential strategic investors are expected
to commence this year.
The lack of IPOs and newly listed companies
on BSE in the last couple of years, which is
due to the stagnant and uncertain economic
situation, has not diminished our ambition to
attract good performing private companies
to the stock market. This is to remain a major
goal of ours in 2012, along with the broadening
of our investor base and the launch of new
financial instruments. I would like to avail myself of this opportunity
to reiterate once again the important role
that FEAS plays in promoting regional co-
operation. Thanks to the continuous efforts of
the Organization, its member exchanges have
received invaluable assistance where tackling
different issues linked to the development of the
stock markets.
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. Improvement in the corporate governance
quality of local public companies will be among
the main priorities of BSE-Sofia in 2012. Recent
changes in the Exchange rules set additional
requirements to the companies listed on the
highest Exchange segment, Premium. Effective
as from March 1 all Premium companies will
be obliged to disclose regulated information
to the public, both in Bulgarian and English. In
addition, issuers that do not disclose regulated
information according to the terms specified
will be periodically transferred to the Bulgarian
Alternative Stock Market, BaSE.
FUTURE OUTLOOK 2012 Further efforts will also be put into attracting new
issuers and investors, as well as introducing
new financial instruments. All these are ongoing
commitments by the BSE-Sofia management
that are laid out in the 2-year BSE-Sofia
development strategy till the end of 2012. In
addition, negotiations are expected to start with
potential strategic partners that are interested in
acquiring the 50% controlling government stake
in the Bulgarian Stock Exchange.
The Bulgarian capital market has been suffering
from very low investors’ activity since the start of
the crisis, which naturally results in low overall
liquidity. The outflow of foreign investors marked
the start of the crisis and their return perhaps
will mark the turning point in the recovery. The
overall stock market performance remained
weak throughout the year and far under the
levels of the pre-crisis period.
The year ended with the successful privatization
of the 33% state-owned stake in the electricity
distribution company EVN through the Bulgarian
Stock Exchange. The sale of the state–owned
stakes in the other two electricity distribution
companies, E.ON and CEZ, and their listing on
the Exchange are expected to be finalised by
end-June of the current year.
Bulgarian Stock Exchange has always put
significant efforts to develop the regional co-
operation among stock exchanges in Southeast
Europe. In 2012 the Exchange will continue 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.
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