FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2013
BULGARIAN STOCK EXCHANGE
The necessity and efficiency of organized
markets have been seriously put into
question.
Ivan Takev
CEO
We observed that in 2012, similar to the
previous years, the world capital markets
remained under the strong impact of the
ongoing global financial crisis, the effect of
which has been a substantial reduction in
trading volumes. As a result, the necessity and
efficiency of organized markets have been
seriously put into question. by the government to generate a positive
effect on our market. The successful sale last
year of the 33% state-owned minority stake in
the three major electricity power supply and
distribution companies - Energo-Pro, CEZ and
EVN - through the BSE, triggered the interest of
the investors and boosted the liquidity on the
market.
Although the Bulgarian Stock Exchange
registered in the past year a 20% increase in
its turnover and a generally good performance
of its major indices, we still do not see any
significant signs of a sustainable upward trend. After these big-scale privatization deals the
government’s resources to support the stock
market seem to have been more or less
exhausted (if we don’t take into account the
possible measures it could undertake for
improving the existing regulatory framework).
This situation has stimulated the market
participants to search for innovative anti-crisis
solutions and to adjust their business models
in order to be able to face the current financial
turbulences.
In order to cope with the continuing crisis the
various countries have looked for different
solutions and launched diverse initiatives.
In Bulgaria, privatization through the stock
exchange was the main anti-crisis tool used
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.
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.
The BSE, for example, is intent on using its
expertise to further develop the clearing and
settlement infrastructure. This should facilitate
the introduction of new tradable financial
instruments on the stock market. Among our
immediate goals is also to set up and launch an
organized market for carbon emissions trading.
We firmly believe that all these efforts will further
restore the confidence in our capital market and
attract a new wave of investors and potential
issuer companies in the coming months.
FUTURE OUTLOOK
• Successful sale of the 50% state-owned
share in the exchange and the Central
Securities Depository. The process is
expected to be completed till mid-2013;
• BSE-Sofia on the way to wider international
recognition and stronger investment
appetite;
• Expansion of the clearing services portfolio
and adoption of internationally accepted
best practices in the post-trading space with
the aim to attract more foreign investors;
• Easier flow of foreign capital;
• Long-awaited recovery of the local capital
market;
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