FOLLOWING THE POLISH MODEL The BSE wants the state to subsidize the listing costs for small and medium enterprises

The management of the Bucharest Stock Exchange (BSE) wants the Romanian state to subsidize the listing costs for small and medium companies in Romania, following the Polish model, according to sources from the capital market.

BSE officials told us: "Given the very low weight of financing through the stock market, we feel that Romania could see success examples of some developed markets.

One of the most successful projects in this sector can be witnessed in Poland, through the activity of the Polish Agency for the Development of Enterprises (PARP), whose mission is to support companies by helping them implement their growth aspirations and overcoming the development barriers, with a special emphasis on the SME sector.

PARP projects are financed using structural funds, the state budget and multiannual programs of the European Commission. One of the PARP projects, called 4 Stock (www.4stock.pl), supports companies interested in getting listed on the Warsaw Stock Exchange or any other exchange, by providing a one-time non-refundable grant, which seeks to cover up to 50% of the expenses of the bonds or stock issue. We support the creation of such a project in Romania, similar to the PARP in Poland. We are confident that this kind of non-refundable grants could represent a sufficient stimulus for Romanian businesspeople to consider financing themselves through the Bucharest Stock Exchange and therefore, to provide the market with a fair competition level for the ubiquitous bank loans".

The problem is that in Poland, the stock exchange is controlled by the Polish state, and in that case subsidies would make sense, but in Romania, the Bucharest Stock Exchange belongs to private investors. Stock market sources are saying that the BSE should reduce its own commissions rather than resort to the Romanian government to subsidize the listing costs.

Lately, the government has been a reliable help for the Bucharest Stock Exchange, through the listings of companies such as Romgaz, Electrica or Nuclearelectrica, as the current management of the BSE has only succeeded in getting one private IPO at the end of last year -MedLife.

Furthermore, the management of the BSE takes every opportunity to ask the government for more listings, and is saying that the listing of Hidroelectrica is the only chance for being upgraded to the emerging market status.

In other words, a private company - the BSE - continuously asking the government to give it more product and seems to have no problems asking for subsidies for private listings. If the government does so much to help, then perhaps it should also collect the salaries and performance bonuses of the management of the BSE.