A TOPIC LAUNCHED BY THE "BURSA" NEWSPAPER BCR and the BSE fined

• The investigation on structured products reached the end

• BCR did not fulfill its obligations as liquidity provider in 136 cases

The capital market watchdog yesterday levied fines, after reviewing the trades involving structured products issued by "Erste Bank", for which the Romanian Commercial Bank (BCR) was a liquidity provider.

The Commission said: "Between June 2011 and January 2012, the Romanian Commercial Bank, in its position as liquidity provider, has broken parameters applicable to the liquidity providers in 136 cases, according to the analysis conducted by the Bucharest Stock Exchange at the request of the CNVM".

Thus, Valerian Ionescu, Valerian Ionescu, the head of the Trading And Sales Of Financial Instruments Tradable On Regulated Markets department at BCR, and Valentin Ionescu, general manager of the BSE, were fined 5,000 lei each, as the Commission thought that even though they could have prevented the aforementioned actions, they didn't.

The BURSA newspaper was the first to write, in October, that some investors had doubts that BCR was fulfilling its obligations as a liquidity provider for the turbo certificates (ed. note: "leveraged" certificates - which amplify the gains and losses obtained using the price variation).

In the beginning of this year, the Romanian Commercial Bank was sued by "Muntenia Imobiliare Development", which accused it of irregularities in its stock market operations. "Muntenia Imobiliare Development" filed a lawsuit against the Romanian Commercial Bank, accusing it of stock market irregularities.

Along with BCR, the lawsuit was also filed against its majority shareholder, "Erste Group Bank", and the Bucharest Stock Exchange.

In the case, the BSE is accused of not having thoroughly overseen the bank's activity, in her position of liquidity provider for the structured products issued by "Erste".

However, in January, Valentin Ionescu was saying that the BSE has carried out its obligations. "The moment the Stock Exchange received the information, it was disseminated in the market", he said, and he went on to say: "My layoff has nothing to do with this event concerning the structured products. As you well know, the Board of Directors of the BSE was under the pressure of revocation at the time, on November 16th, and they didn't take too long in finding me guilty for their dismissal".

According to the CNVM, in the case of trades with structured products issued by Erste Bank of August 5th, 2011, BCR did not inform the users in time on the technical issues encountered and it did communicate to investors the relevant information needed to make the trades, thus violating the provisions of art. 27 letters a) and d) of the Law no. 297/2004, as it also violated the provisions of the Code of the BSE - Market operator and parameters applicable to the liquidity providers in the case of trades involving structured products, specifically:

i) art. 16 37 (1) - did not promptly notify the BSE about the technical difficulties it was encountering,

ii) art. 16 37 (2) - did not notify immediately notify the BSE once the issue was remedied,

iii) art. 16 34 and Parameters of the liquidity provider - did not update the firm quotations within 5 minutes at most after pulling them from the market.

In the case of Valentin Ionescu, the stock market watchdog notes: "The situations where BCR did not honor the provisions of the Code of the BSE concerning the parameters applicable to the liquidity provider were communicated to the CNVM only after its requests, thus violating the provisions of art. 24 letters b) and d) corroborated with the provisions of art. 18 (2) of the Regulation of the CNVM no. 2/2006 concerning the regulated markets and the alternative trading systems with its subsequent modifications and additions".